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Read section 1.121-1(b)2: (b) Residence—(1) In general. Whether property is used by the taxpayer as the taxpayer's residence depends upon all the facts and circumstances. A property used by the taxpayer as the taxpayer's residence may include a houseboat, a house trailer, or the house or apartment that the taxpayer is entitled to occupy as a tenant-stockholder in a cooperative housing corporation (as those terms are defined in section 216(b)(1) and (2)). Property used by the taxpayer as the taxpayer's residence does not include personal property that is not a fixture under local law. (2) Principal residence. In the case of a taxpayer using more than one property as a residence, whether property is used by the taxpayer as the taxpayer's principal residence depends upon all the facts and circumstances. If a taxpayer alternates between 2 properties, using each as a residence for successive periods of time, the property that the taxpayer uses a majority of the time during the year ordinarily will be considered the taxpayer's principal residence. In addition to the taxpayer's use of the property, relevant factors in determining a taxpayer's principal residence, include, but are not limited to— (i) The taxpayer's place of employment; (ii) The principal place of abode of the taxpayer's family members; (iii) The address listed on the taxpayer's federal and state tax returns, driver's license, automobile registration, and voter registration card; (iv) The taxpayer's mailing address for bills and correspondence; (v) The location of the taxpayer's banks; and (vi) The location of religious organizations and recreational clubs with which the taxpayer is affiliated.

Be careful if it looks like one house is their principal residence, but they told their state &/or locality that the other house qualifies for a homestead credit or senior tax relief or.... Is this a new/potential client? If so, you might want to decline if you don't feel they are giving you the whole story. If this is a continuing client, you probably have a good feel for which is their principal residence. What address was on their tax returns? Other official documents? Mailing address for important things like bills? Does their insurance company list a principal residence and a second home; an address where their cars are garaged? How far apart are their houses? Do they go to doctors, church, recreation near one house. Which house has their good furniture, artwork, photo albums, near & dear stuff? GLG gave you the code section.

I've been dealing with a letter for a client on and off for over a year, mostly hold time, waiting for the call backs that never come, etc. Yes, I could've done $500-1,000 in other returns during that time, probably 5 times that. I do NOT like to deal with letters; they break the flow of my tax preparation, have deadlines unknown until the letter arrives, etc. I have a call with Protection Plus on Friday to explore. A colleague asked me if what we provide to Protection Plus goes against our WISP and other data protections issues? Anyone know? Does PP get info upfront, when filing, or not until a letter arrives and I tell them to take it off my plate?

Are they in the same state or different states? If different, the state they file tax as a resident, where cars are plated, voter registration, etc. should tell you which is main home. Also, many states offer some kind of RE tax exemption for primary or main residence which would indicate which is the main home.

I had one case for tax year 2021 that ended up taking over a year and a half to settle (state issue). Had I billed for that time, it would have exceeded the amount of tax at issue - which itself was over $1,500. Why didn't I bill for it? High school friend of my older daughter, who had quit work to go back to school for some special certification program. Can't get blood out of a turnip, or money out of a starving student.

I wouldn't do it, but is it any different than paying for an extended maintenance contract on a car or a dishwasher?

But of course the cost will be passed on to the client. If its $10 for every return you prepare, then raise your rates $20. $10 to Protection Plus, $10 to you. Let clients know all returns now include it and that will justify the increase. Might be a win win situation. Especially preparers who typically do 500 or more returns a year. Extra $5000 in revenue and you no longer have to deal with letters.

It looks like they charge you $10 for every return you prepare, including any you may prepare at no charge. That's $1,000 for every 100 returns. How many notices per 100 returns do you receive? One? Possibly two? If it's more than 2 I'd say people need to look into their procedures. Is it worth $500- $1000 to you to have someone else write a correspondence, or to ascertain if the notice is correct?

I spoke with a rep yesterday. It sounds great. I have clients who sometimes get letters that take up my time and energy in the off season. They are often wrong but as you said still require a response. The rep said that I could opt to act as a middle man between them and my client or I could simply say, “I have a team of EA’s and CPA’s working with me who will handle the matter.” If I wanted to be completely hands off. I would probably opt to stay involved in the process but still it would be nice to have someone else to deal with the IRS. Also the $2500 return preparer error benefit was attractive. I’ve only had to cover minor penalties a couple of times in my 36 years but you never know.

Proseries offers it. My issue is, will clients use it if needed. Or will they just keep asking us to handle the issues when they arise ? Guess I need to research how Protection Plus handles issues.