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Discussion:Two preparers - any Circular 230 issues?

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Discussion Forum Index --> Business Growth Community --> Two preparers - any Circular 230 issues?

Guya (talk|edits) said:

14 March 2009
One of my very long-standing clients had a huge gain last year so he will owe well over $1 million to the IRS. He has large numbers of complex multi-national investments in any case.

He sent me his 2008 US tax data which I am working on. He has e-mailed today to say that this year he is also having another preparer do the same return and will file whichever gives the best result!

Are there any problems with me continuing?

Kevinh5 (talk|edits) said:

14 March 2009
only if you interpret the challenge as needing to find fictitious deductions and credits.

Kevinh5 (talk|edits) said:

14 March 2009
H&R Block is now charging $29 for it's 'second look'. Last year it was free. If they find additional deductions and credits, they will, of course, prepare another return (and charge for it).

Genskitty (talk|edits) said:

March 14, 2009
The Second Look was not free last year. Yes, we will charge for it, but the $29 is waived. The taxpayer does not pay for both the Second Look and the amended return. Only for one of the other.

Kevinh5 (talk|edits) said:

14 March 2009
When was it free? Just a few years ago?

ChrisV2 (talk|edits) said:

15 March 2009
I wonder if the client is lying just to get you to obsess over every nook/cranny of his return. If he is, then I'd say he is evil...brilliant, but evil.


I'd tell him to have the other preparer finish the work first, then send it to you -- guaranteeing that you will find at least one additional dollar of benefit.

David1980 (talk|edits) said:

15 March 2009
I would tell him that in that case, I need the prep fees up front. Otherwise you're going to do all the work and he may tell you "Oh, I'm going with the other guy" and refuse to pay you. And if the other guy is willing to take fictitious deductions from either fraud or lack of knowledge you're screwed, unless you can explain why the lower refund/higher amount due return is correct and convince him not to cheat. But my experience has been the "shoppers" don't care if the return is correct, they only care about the $ on the bottom line.

CrowJD (talk|edits) said:

15 March 2009
What is the best result? I mean, my mechanic can probably get my numbers down, but jeez.

You don't mention it, but is this being done on a contingency? Is that permitted?

Kevinh5 (talk|edits) said:

15 March 2009
no, contingency fees are not allowed on original returns

Circular 230, and all that, don'cha know

David1980 (talk|edits) said:

15 March 2009
Well bummer. Guess you could let the other guy do the return and charge your own "2nd look"... Certainly is a risk in even spending the time on the return of no money.

AEM CPA (talk|edits) said:

15 March 2009
Who cares what he files as long as you get paid.

Genskitty (talk|edits) said:

March 15, 2009
The Second Look used to be call the Double Check Challange and that was a free service

Guya (talk|edits) said:

15 March 2009
Deductions are important but not the main thing. He has rental properties in 6 countries so there are grey areas such as about which exchange rates to choose, depreciation and whether these are QBUs. Most of the income is from vesting/sale of foreign stock awards. These add similar issues over exchange rates plus questions about which year(s) to source the compensatory income and whether section 865 makes any or all of his capital gains foreign source for foreign tax credits.

I have the experience to know what the issues are because I do these kind of returns all the time (even though of course I get some stuff wrong!). I don't know who the other preparer is so I don't know if he or she handles enough complex foreign returns to know what the issues might be.

Lizzit (talk|edits) said:

15 March 2009
Yeah, Guya, I think the idea of reviewing the other return is brill. Alternatively, charge 100% of the fee upfront. Heck, I reviewed one you did last year, and not unsurprisingly there was nothing wrong on it, and I told him so. They sometimes just get a bit nervous, and having a double check can give them enormous peace of mind.

Come to think of it, we all know you don't make mistakes very often, or at least I do, so you could tell the client that if s/he's nervouse about accuracy, they can have their returns reviewed by an independant preparer, and then send them to an alumni of your company like me or Karen or whomever. You've got a good-sized list of something like five or ten preparers who used to work there and now have their own practices. It'll save the client 100's in double-tax-prep fees, and you'll keep the client. That is, if you want a trouble-maker in the first place...  :-)

I'm going to have to raise my fees soon anyway; costs are just huge this year with Nikki on maternity leave (yes! spread the good word!).

Pink Pearl (talk|edits) said:

15 March 2009
A new client of mine this year had H&R do a second look on her returns. H&R amended the last three years and got her back almost $3,000 each year plus interest. 1099INT from US Treasury was almost $1,000...sweet...only problem is the H&R preparer removed the total amount of prizes and lease value of pink Cadillac from Sch C amounting to $20,000 each year and put it on line 21 and reduced her SE income by the same amount. She declined my offer to "re-amend"...

Genskitty (talk|edits) said:

March 15, 2009
Rehtorical question:

Why in the hell did the preparer do that? Unless, he/she did not know what they were doing and refused to ask for help. Obviously

Pink Pearl (talk|edits) said:

15 March 2009
H&R got a $450 fee to amend them...had to do something good to make it worth that I guess. H&R has lots and lots of very good preparers but they have some who are in for the commission I think...

IDrinkYour Milkshake (talk|edits) said:

15 March 2009
H&R Block is a joke. Their clients may have "people", my clients have "professionals". New client went to H&R earlier this year. H&R stated they needed 1099-A and/or 1099-C from short-sale. Client then was referred to me by a friend. I asked a simple question. "When did the short sale occur?". He answered, "Late January this year". I had him verify the date by showing me the escrow statement. Of course, he won't get a 1099 until next year. Next client, H&R did their previous year return, last name was spelled wrong. Next client, 1120S prepared by H&R did not reflect any distributions or officer salaries, even though both were taken. Sure, client didn't mention it specifically (distributions were on Balance Sheet, Officer wages were lumped in w/ regular wages on P&L), but then H&R didn't bother to ask either. I can go on and one... but I'm sure I'm preaching to the choir here. Bottom line, quit billing yourself out as tax experts when you clearly post job opening on Craigslist that read "Become a tax professional, no experience required".

IDrinkYour Milkshake (talk|edits) said:

15 March 2009
I also love how their basis schedules never seem to reflect prior years...

Genskitty (talk|edits) said:

March 15, 2009
Pink you are absolutely right, I know a few preparers who are not that good.. I had a Client come in with an IRS Letter saying that he owed $73,000. When I looked into it the preparer left off sale of stock but included the interest and dividend from the 1099. When all was said and done the client broke even. There is EA who I work with personally. He is probably the only EA that I will not have represent my clients at an IRS audit.

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