Discussion:Sign as paid preparer if not paid directly?
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| Revision as of 21:21, 16 May 2008 Jdugancpa (Talk | contribs) (Crow is correct) ← Previous diff |
Current revision Bean (Talk | contribs) (Good points All.) |
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| Your engagement letter probably should be signed by both the ER and the EE and should include acknowledgement that a conflict could arise and that they agree to have you perform the work anyway. Refer to Circ230 re conflict of interest disclosure.}} | Your engagement letter probably should be signed by both the ER and the EE and should include acknowledgement that a conflict could arise and that they agree to have you perform the work anyway. Refer to Circ230 re conflict of interest disclosure.}} | ||
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| + | {{ForumReplyPost|UserID=Bean|Date=18 May 2008|Text=Good points All. Well noted. Checked IRC and Regs and did state that I would need to sign as preparer. Larry- It is sweet deal, but I need to be careful and revise my engagement letter as others suggested. Company will pass this cost as one of the employee fringe benefits, taxable to employees as wages. Still a small sized company with little less than 50 employees, has potential to grow. This tax prep service was client's idea, I never suggested; but still nice.}} | ||
Current revision
Discussion Forum Index --> Tax Questions --> Sign as paid preparer if not paid directly?
| 16 May 2008 | |
| One of my corporate clients is thinking about offering staff employment benefits: health insurance, pension plan, free tax preparation service...That's where I come in. If I were to prepare all their employees' tax returns, they will pay me a reasonable fixed retainer fee - which is not bad, but would I still sign as paid preparer although the taxpayer's not the one paying me directly but their employer is. First time having to consider this situation, does anyone know or have same experience?? | |
| 16 May 2008 | |
| What are the other options?: Non-paid preparer, self-prepared?
You are being paid. It doesn't matter by who, I think... | |
| 16 May 2008 | |
| §301.7701-15. Income tax return preparer
(a) In general. --An income tax return preparer is any person who prepares for compensation, or who employs (or engages) one or more persons to prepare for compensation, other than for the person, all or a substantial portion of any return of tax under subtitle A of the Internal Revenue Code of 1954 or any claim for refund of tax under subtitle A of the Internal Revenue Code of 1954. | |
| 16 May 2008 | |
| Your client is the individual that you prepare the return for. The employer is also your client as to it's own return.
As to each individual employee's return: In my opinion, you need a signed agreement with the employer which states that if a conflict arises between the employer's (payors) desire etc., and an issue affecting an individual, you will resolove it in the individuals favor. i.e. he who pays does not call the shots as to this group. This may be seen as overkill, and it may be overkill, but I've seen conflicts arise where I would never have guessed they would. I would also add that each individual employee's return is absolutely confidential to that individual, and is not shared with anyone, including the employer. I would imagine the tax preparation benefit would be considered a taxable bonus, would it not? A taxable benefit? I don't really know, I'm asking? If it is, may as well make it payable to the employee anyway, and the problem goes away. Of course, idiv. TP could keep the bucks and not hire you. Surely you are not suggesting that the employer write the whole thing off as it's own tax preparation fee? | |
| 16 May 2008 | |
| Yes. Your would be a paid preparer. Yes. You need to have an engagement letter with each individual. Yes. The employees receiving would have a fringe benefit for the value of your services provided to them. As a result, the company would deduct the fee they pay you but the employee would recognize the fee as income (probably on their W-2).
Sounds like a good deal for you | |
| 16 May 2008 | |
| Yes. Your would be a paid preparer. Yes. You need to have an engagement letter with each individual. Yes. The employees receiving would have a fringe benefit for the value of your services provided to them. As a result, the company would deduct the fee they pay you but the employee would recognize the fee as income (probably on their W-2).
Sounds like a good deal for you, | |
| 16 May 2008 | |
| The conflict letter I spoke of would be with the employer (if the employer does end up as direct payor to you).
If it's taxable to the employee anyway, I'd be a lot cleaner from a conflict of interest perspective to just pay the employees for this benefit, then have employer tell them that you have agreed to a special price, and gently steer them to you. There are gross up formulas on the net if employer wants to cover the exact cost. | |
| 16 May 2008 | |
| Crow is correct about conflicts of interest. You meet with EE who tells you ER is a dirty rotten scumbag and he is looking for a new job. Guess what: Now you have a conflict because you know something told confidentially that could impact the ER.
Or, ER comes upon hard times and discusses layoffs with you. Your EE client is thinking about buying a new home, what do you think? You have a fiduciary duty to the EE that you cannot meet without violating your confidentiality with the ER. Your engagement letter probably should be signed by both the ER and the EE and should include acknowledgement that a conflict could arise and that they agree to have you perform the work anyway. Refer to Circ230 re conflict of interest disclosure. | |
| 18 May 2008 | |
| Good points All. Well noted. Checked IRC and Regs and did state that I would need to sign as preparer. Larry- It is sweet deal, but I need to be careful and revise my engagement letter as others suggested. Company will pass this cost as one of the employee fringe benefits, taxable to employees as wages. Still a small sized company with little less than 50 employees, has potential to grow. This tax prep service was client's idea, I never suggested; but still nice. | |
