A while ago, I was a guest speaker on a webinar with my good friend Nate Hagerty at TaxProMarketer.com. They were talking about using Google Ads to generate tax resolution leads and some promising statistics they had generated for some of their tax pro clients. The cool thing was this was specifically on tax resolution keywords.
Nate asked me what were some of the biggest mistakes tax resolution tax pros make. So, I thought I would share what I talked about and a few others mistakes we make (yes, I have made many of these myself. School of hard knocks is what they call it).
Big Mistake Tax Pros Make
Probably one of the biggest mistakes I see tax pros make is that they include tax resolution work (calling the IRS for transcripts, setting up an installment agreement (IA), or preparing financial forms) in with the tax prep fee for clients.
Most tax professionals don’t enough for tax prep let alone include additional services like IRS collections work. Same goes for exam/audit related work. Many practitioners get a CP2000 or correspondence exam notice from their clients and they will include it with the current year tax prep. Meaning you need to charge extra for these services (unless it can be determined that somehow the notice was due to your error).
DON’T DO IT! These services are way too valuable. In most cases, the collections or exam work is way more valuable than the tax prep. I charge $750 base fee for a 1040, $750 as a minimum for handling an IRS notice reply and $500 for a Guaranteed IA (GIA) (they owe less than $10k). The last national average I saw for a 1040 was about $280 and $540 for a business return. Most tax pros charge $25-100 for a GIA, if they charge anything at all.
First, these projects take extra time to deal with and second, they are separate engagements. If you do an engagement letter for a 1040, I bet if you look at the language used, it does not cover notice reply or any other representation work. That means you can (and should) charge separately for this extra work.
All the best,
Dan Henn, CPA, CTR™, NTPI Fellow
Tax Pro Academy, LLC