Getting sued for malpractice

[army judge]

No, what would they do exactly?

Probably remove (via arrest or summons/complaint) an annoyance, or anyone disturbing the sanctity of your office/business.

 

[Tax Counsel]

Said client just showed up at our office threatening that if we don't pay him, he's going to go to the IRS, the board of accountancy, district attorney, etc.

An empty threat. What does he think the IRS is going to do? If returns your father did for him were fradulent then he may also be considered by the IRS as a party to the fraud. After all, the client is supposed to review the return before signing it and make sure it's correct before the client signs the return right under the language on the return that the taxpayer attests under penalty of perjury that the return is accurate. That's not something the client will want to deal with.

What this former client clearly doesn't realize is that the law has a statute of limitations (SOL) by which a criminal or civil complaint must be filed with the court. If the government or the plantiff waits until after the SOL has run the court will simply dismiss it as untimely. For example, for most federal felony crimes the SOL is five years from the date the crime was committed, and for tax evasion it is six years. If the U.S. DOJ doesn't get the criminal complaint within the SOL period the defendant walks free. There are a few crimes for which there is typically no SOL, the most common of which is the crime of murder.

When I worked as a revenue officer for the IRS at the start of my tax career I had a lot people come to my office wanting to turn someone (usually someone they greatly dislike) in for tax evasion. The vast majority of those people had no evidence to support the claim other than they "just knew he did it". Those reports just ended in my shred box. The IRS has too much work to do to spend resources chasing down unsubstantiated claims of wrongdoing. Most other law enforcement agencies are similarly overstretched and won't bother following up on someone's hunch that a person has committed a crime.

There is no time limit for the IRS to examine a fraudulent return and assess the extra tax, civil fraud penalty, and interest but the IRS needs concrete evidence to work from, not vague claims of tax evasion. And that rule applies to fraud by the taxpayer, not the return return preparer. It's a rule meant to ensure the government gets all the tax that is due. The return preparer doesn't pay the tax for his/her clients so the IRS and DOJ will be limited in how far back they can go on this.

In every state I'm familiar with what the former client is doing would clearly fall into the category of blackmail or extortion.

Don't say another word to the former client and discuss what's going on here with a lawyer. Whatever you do, don't make the same mistake the former clien is making by threatening to report his apparent extortion unless he backs off of his demand for the money.