A New York federal judge agreed to toss a housing partnership’s suit accusing accounting firm CohnReznick LLP of professional negligence and fraud, finding that the district court doesn’t have jurisdiction over the dispute.
U.S. District Judge Naomi Reice Buchwald said Tuesday that the court lacks subject matter jurisdiction over the case brought by AMTAX Holdings 227 LLC, rejecting AMTAX’s argument that the action raises substantial issues that relate to federal tax law. Rather, the judge said the issues are related to a right of refusal and purchase option agreement.
AMTAX was formed exclusively to build 185 affordable housing units in Boston in exchange for low-income tax credits. The partnership sued in early 2023, claiming CohnReznick had violated its fiduciary duty when it created a secret calculator of the project’s mandated selling price to benefit the general partner.
CohnReznick’s calculation threatens to shift an $8.5 million tax burden from the general partner’s nonprofit parent company in Boston, Tenants Development Corp., to the partnership in a case before a state court in Massachusetts that has cost the partnership $500,000 in legal fees, AMTAX said at the time.
