Discussion:Offering Clients a referral fee for referring a friend-Enrolled Agent

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Discussion Forum Index --> Business Growth Community --> Offering Clients a referral fee for referring a friend-Enrolled Agent


Efras (talk|edits) said:

6 January 2011
Is it legal for an Enrolled Agent to offer referral fees/gift cards to clients who refer friends?

I could not find any information that would answer this question on the internet.

Thanks.

Kevinh5 (talk|edits) said:

6 January 2011
and you won't get many answers here until you fill in your profile as requested numerous times in your signing up for an account process tonight, and again before you asked a question on the tax forum (where this originally was posted), and even in the pink notice at the top of the forum.

Efras (talk|edits) said:

6 January 2011
Thanks for you response. I thought I updated my profile. Anyway my profile is updated now!

Trillium (talk|edits) said:

6 January 2011
Thx. As this is a practice mgt question rather than a taxation issue, I've moved the discussion over to the Pr Mgt/Bus Gr forum. Any time you have a question about whether an EA/CPA/tax pro is "allowed" to do something, Circular 230 should be your first stop. But also, see if any of these discussions help, or give you more research ideas: Search referral discounts, or Search "client referrals".

Kevinh5 (talk|edits) said:

7 January 2011
There is no prohibition on EAs paying out a referral fee. Many do, others don't. Trillium's searches will give you more details.

NewYorkEA (talk|edits) said:

January 7, 2011
It's fine. I offer an incentive and it has worked well for me in the past. Some people tell clients they will apply the incentives to next year's tax prep fee, but I think they prefer to get money or a gift card.

Rgtaxservice (talk|edits) said:

7 January 2011
Is there a difference between between a referal fee and a referal discount? And if so, does the preparer have to 1099 the client for the referal fee?

Personally, I award referal discounts towards tax prep fees.

Efras (talk|edits) said:

8 January 2011
Thanks so much for your answers.

Rgtaxservice. I would think that you would need to issue a 1099-MIS if the amount is over $600. See this website. 1099-misc. instructions http://www.irs.gov/instructions/i1099msc/ar02.html#d0e650

NMexEA (talk|edits) said:

8 January 2011
Unless you are also a lawyer. Then referral fees are strictly forbidden.

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