TUSCUMBIA, Ala. (WHNT) – Alabama District 3 House candidate and Tuscumbia Mayor Kerry Underwood is being sued for more than $75,000 in a lawsuit alleging negligence and malpractice, according to court records.
Underwood, an accountant, is the founder of Underwood CPA Inc., and a member of Leigh, King, Norton, & Underwood, LLC, which are both also listed as defendants in the case, records show.
News 19 has reached out to Underwood for comment. He advised that any questions on the lawsuit should be addressed to his lawyer. Underwood’s lawyer declined to comment, as did the attorney for the plaintiffs.
The plaintiffs are listed as Meagan Richardson, Courtney Thompson, and the clothing boutique company they founded, Nellie Mae, LLC. The complaint was filed on August 31, 2021, in Colbert County Circuit Court.
According to their complaint, Thompson and Richardson began working professionally with Underwood CPA, Inc. in 2010. In 2016, the lawsuit claims, they began to receive notices in the mail from the IRS and Alabama Department of Revenue concerning non-compliant tax matters.
The plaintiffs claim they notified Underwood each time they received a notice, and “Underwood would assure Plaintiffs that the IRS or Alabama Department of Labor had made an error and that he would otherwise timely resolve the issues,” according to the lawsuit.
In 2019, the plaintiffs say they discovered that a tax lien had been filed against them by the Alabama Department of Revenue for failure to pay back taxes and penalties.
After an audit from another CPA, the plaintiffs say they discovered that Underwood had failed to properly account for, pay, and address those tax-related issues, according to the lawsuit.
According to the complaint, the plaintiffs claim that these actions resulted in compensatory damages worth $75,776.04.
In response, the defendants filed a motion to dismiss and a counterclaim to the complaint on October 1, 2021. In that motion, the defendants asked that they be paid $5,000 as compensation for attorney’s fees, court records show.
In the motion to dismiss and counterclaim, Leigh, King, Norton, & Underwood, LLC, argues it should not be named in the lawsuit.
“The Plaintiffs’ complaint fails to state a claim upon which relief can be granted against the Defendants LKNU. The Plaintiffs’ complaint is based upon work performed by Kerry Underwood and Underwood & Associates prior to the formation of LKNU. The Defendants LKNU never entered into a contractual relationship with the Plaintiffs and therefore cannot be sued for breach of contract by the Plaintiffs,'” according to the defendants’ motion to dismiss.
The defense filing also says the claims against Underwood are also not justified.
“The responsibility for payment of taxes is upon the taxpayer,” the filing argues. “Once the Plaintiffs received notice from the taxing authorities that taxes were allegedly owed by the Plaintiffs, it was incumbent upon the Plaintiffs to pay the taxes. The Defendants were not in-house accountants or employees of the Plaintiffs and were therefore not responsible for the tax debt under federal law.”
Underwood is on the ballot on November 8 for District Three of the Alabama State House of Representatives.