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I'm going to charge an amount that's fair to me for my time and effort learning about ACA for those new forms. And, I might raise the amount I charged last year for the then-new NII forms. I might even raise prices for anyone who sends me tax information after a certain date, maybe 15 March, whether or not I put them on extension.

Is the $2,664 penalty comprised of $2,000 early withdrawal penalty plus $664 of estimated tax penalty and Failure to Pay penalty combined? If that's the case, you should prepare a pro-forma of the original return to show her the total penalty she would have paid on the original return if the $20K withdrawal had been included. That figure would include the estmiated tax penalty up through the filing date. That sum is hers to pay, although I'd at least make an effort to get all or part of it waived or abated. The remainder of the penalty is on you. I understand the reasoning behind refusing to pay interest, but I personally don't agree with it, so I'd probably pay all the interest. I say that because the interest is added at about 3-4% per year, and the client could only have earned about 1% per year or less if the money were in a savings account. Given that I feel obligated to pay most of the interest, I'm not inclined to quibble over the 1%. Form what you said about her comments, she probably isn't going to return no matter what you do. So this becomes an issue of your integrity and how you feel about the way you handled it, rather than client retention. Decide what you're willing to do based on what is fair and reasonable for you and the client, give the client your numbers and reasoning, and move on. I might decide to discount their fee next year as an additional mea culpa, but I wouldn't commit to that at this point. It all depends upon the client's attitude (if they do return). Some clients come to regard any mistake on your part as something to hold over your head in perpetuity. For them, the discount is essentially offset by the PITA premium. For others, who are reasonable and appreciate the way you settled it, you might want to do anything from a discount to a "no charge" return next year. But no sense staking out your position on that issue until their position is known.

Agreed! If congress wants to do the correct thing ---- make all reporting required by January 31 (even February 15) for everybody (business and personal) and everything. Then have the tax season begin two - three weeks later. The matching should then be there, the fraud should be lessoned and so on. Also, make congress make the rules/law for the tax year at a minimum a year before (anything required/changed for 2014 had to be done prior to December 31, 2012; 2015 done, etc. prior to December 31, 2013 - and so on). That way, everyone involved has time to implement the needed/required forms, requirements, etc. Business knows what to expect and can plan properly. The same for us as practitioners and for the people we serve. The answer is actually easy --- it just takes guts and doing the correct thing --- over gaining power and re-election for themselves.

I don't think that you can ever get in trouble for sending a 1099MISC when you are not required to, but if you fail to send one that is required there are definitely penalties. So I strongly encourage my clients who even remotely might be required to file the 1099MISC to go ahead and send it. As long as you get the numbers right, the other party should be reporting the income whether they receive a 1099MISC from your client or not, so it should not make a difference to them and might keep your client out of trouble. So why not?

Unless they stop trying to issue refunds at light speed, none of those changes will deter the fraudulent returns at all. It takes time to verify. Americans have become spoiled with high speed refunds which has thrown open the door for the fraudulent returns. Make the standard refund time 6 weeks.

Reconciling the bank accounts helps ensure that the client has recorded the payroll properly in the subsidiary records or journals, and also that the payments of liabilities have been recorded at the actual amounts paid. If you are doing the bookkeeping, that should be part of the process. If you aren't doing the bookkeeping, you should ask if the client is reconciling the bank accounts, otherwise, how do you know if the transactions are recorded in the proper period and at the proper amounts.

my e&o carries a $1000 deductible so I never had to use it, even in one case where I paid $3000 in penalty, I felt it wasn't worth it to get higher premiums going forward. I always pay penalties but hardly ever pay the interest. Unless its a great client I figure the interest paid is what they earned on their having the money in their account during the period. I will also usually give the next year free is it was a blatant screw up. Also in the o/p its not up to the client to hit the insurance policy, they make the claim against the preparer and its up to the preparer to decide to make a claim or not.

And 95% never question, the price is just the price. Of the 5% who do question, most accept a simple explanation, those that don't should probably be either hiked up or fired next year. The peace of mind you gain is priceless, and they can usually be replaced with some referral who will appreciate you.

She called the wrong phone number and/or does not understand and/or did not give them accurate information. Get her in your office, call the number on the website. Here is the correct number: Identity Protection Specialized Unit, toll-free at 1-800-908-4490 so we can take steps to further secure your account. They will want Form 14039 filled out and appropriate documentation attached. Forget the website.

According to the speaker at a OSCPA seminar that I went to in January , the ongoing status of the 1099 Misc requirements with respect to landlords is unclear due to the way the various rules & regulations are tangled up. Basically he said that at first glance it appeared that the requirements were removed, but that a closer reading left real doubt. His said that he was having all of his landlord clients file 1099 Misc until such time as the situation became clearer.

I agree with your position on this!!!

since we need the December bank stmt to tie out the numbers we will only have about 2 weeks to get all w-2's done

And shortening the amount of time that preparers have to get W-2s filed is only going to result in more corrected W2s IMHO. We already have to have them done and out by the end of January for the employees, but we typically hold the copy for SSA for about 15 days in case the employee notices an error in his social security number or address. (He could have noticed it on his paycheck all year long, but of course they don't look at that except to cash it.)

Do you make copies of your clients records?

On the federal side you should be able to have the penalties waived under FIRST TIME ABATEMENT. I do not know about the state. I have paid interest and state penalties for clients when I was positive the mistake was mine.I have also split these items when I felt It was also partly client's fault.I have never used my E&O insurance.

With all of us fretting over the proper application of tax laws and splittings hairs over rule interpretations I was surprised at what i saw on 60 Minutes last night. After years of hearing efile ballyhooed by the Service touting instantaneous matching of taxpayer records with their returns when filed I find that it was as like as not a farce. The Service is paying out billions in fraudulent refunds by paying them BEFORE any record matching on a taxpayer's return is done. An individual who reportedly ripped off some millions of dollars explained how easily it can be done. You have to wonder why this guy is being interviewed by 60 Minutes instead of being in prison. In China he would have been executed. With all this crap going on is there any wonder the public has no problem with cheating if they can ?

Christian, "instantaneous matching of taxpayer records" means name, Soc Sec number, and birthdate, which are instantaneously matched with Soc Sec records. That's why you get such quick rejects when someone else has already claimed a child or filed a return for the same taxpayer. At least IRS does prevent taxpayers from filing twice. Matching with income reporting is done way after tax season ends. The last IRS commissioner was on a mission to get "real-time" matching, but he and Lois Lerner have both retired. And Jack is right, the focus on "light speed" refunds has made all the fraud possible. The IRS began to advertise quicker refunds in an effort to get people to efile. Well, efile has caught on, and the agency is way ahead of its goals for percent of individual returns efiled (still have a way to go for entities). They don't have to convince anyone to efile any more. So move up the date for payer reporting to Jan 31 or Feb 15 and don't issue any refunds until March or April so the numbers can be matched. How hard is that? Politically it may be too hard. The people who get the big refunds file early, need their money NOW, and are most likely to get refundable credits. It would sound awful if Senator or Rep. So and So approved delaying poor people their refunds, even if many of these people never vote. And of course the law would have to be changed so the IRS doesn't have to pay interest on refunds paid more than 60 days after a claim is filed. Someone is power has to muster the courage to just do it. Their defense that it will prevent billions of dollars in fraudulent refunds might just catch on with the electorate.

Ah, that's why it won't happen. Power and re-election for themselves is ALL the various legis-vermin care about. Even the ones who went to DC as "reformers". Remember that tax cheat Rangel was the anti-corruption candidate who unseated Adam Clayton Powell. Back while I was still learning to read...

I charge a Base Price (minimum) for every return. List what forms are included. Any other form is charged based on the complexity and extensiveness of the form. I too, put full freight price on the sheet and discount for the simple ones. This keeps in the client's mind, the amount I could charge them (establishing value) then I show a discount. This is the place I go to when I hear the ubiquitous complaint: "Why is it costing me more than last year?" I point out that the fees are the same, but because of ________ the discount is less. "Would you prefer that I charge you the same every year with no discounts?" "The price would be consistent that way."

Thanks for the explanation. I just may try this out on these extensions I have. I might also look at a few samples from this year and see how it might be different. With (intentional) lack of business growth as I edge into retirement, I will feel the income decline but want to know that I am still providing the value to my remaining clients while charging fairly.

I charge full freight for each and every form -- and then discount (shown on the bill) for simple forms. Say for example my Sch B fee is $50 -- and someone has one account at Bank X that earned $135 interest. I will discount that form $45 (down to $5). Same with the AMT form -- prepare it and charge it on EVERY return -- then discount it for the simple returns (the just-out-of-college kid who makes less than the AMT personal exemption, etc). Clients LOVE seeing that discount. I also have additional fees for any accounting that needs doing - that gets added as an hourly charge or is charged separately (depending on the client). Sch D/Form 8949 is $3 per item. So if someone sells one share of IBM, it's $3. If someone has a managed account with hundreds of trades -- well, you can multiply. Even when the info is provided in a spreadsheet, I charge -- because I check it, line by line. And find (rare) errors.

This is also my reason for not charging by the form. I would like to find an equitable way to file by the form without gauging the client.

I am intrigued with charging by the form except that many forms can be easy with few entries or quite complicated with many entries. How do you manage to be fair with, for example, a Schedule B with one interest and maybe one dividend, total exceeding $1500, and one with 8 interest accounts and a dozen or so div entries some with foreign tax credit and maybe municipal allocations? And then Schedule A has its own issues from top to bottom!

Since I (generally) charge by form, my prices go up with each new form required. The very few questions I have had on price I have pointed to the additional forms required this year and told the clients to take up the issue with their legis-vermin.

The tech stuff may have us all wowed into thinking we can solve all our problems. The problem is us.

What I'm feeling is a sense of frustration. When I first came into this profession - we had to know only tax law and peripheral areas of tax law. Now - we not only have to be conversant with tax law - but be compliant conscious on foreign tax reporting, HEALTH CARE reporting, EIC compliance - i.e. - we have to have eyes in the back of our heads to watch over each and every step a client takes during the year - and most clients don't appreciate what we have to know, nor are willing to PAY the value of those services. They just listen to the advertising commercials of the storefront preparer factories and expect US to match their fee structure.