ACA Impact & Return Pricing

[HV Ken]

 

Ken, what is your ACA fee going to be, at recent seminars I have heard of fees from 100-200 for people that go to the exchange and had life events!

 

Also the new capitalization charges are going to add 50% to most of my real estate clients and 25% to all others with depreciation.

I discussed this with my major business clients and they say they understand, once I showed them a sample of the forms and calculations involved.

 

Hi Michael!  I just attended a seminar yesterday where the presenter proposed a 3-tier approach based on the ACA need of the particular return.  His statement was that at a minimum, he expects an additional 15 minutes per return in the simplest case, and up to an hour or more on the most complex case.  In the best world, if each client takes an additional 15 minutes, that is 25% less returns you can process using the same time and resources from one year ago.  

 

This additional time is a significant problem for a tax practice.  Assume the average is an additional 20 minutes/return as the majority will probably be ask a couple of questions and get to just put an X in the box.  If you have 400 clients, 400 clients * 20 minutes/client = 8000 additional minutes.  8000 additional minutes is roughly 135 additional hours.  In a 10 week season, that's an extra 13.5 hours per week.  I know I can't merely absorb that impact.  That is equivalent to a new part-time employee!

 

His proposal was to determine your "base" fee (charge for your average return), and then use a 25%, 50% and 75% factor for each of the three tiers.  So, assume your base fee (your average return) to be $350.  The 3 tiered ACA fees would be:

Tier 1 = $87.50

Tier 2 = $175.00

Tier 3 = $262.50

and this additional fee will be clearly listed on the invoice as an ACA preparation fee so as not to confuse it with the tax preparation fee.

 

Until I get my software and start to play with the process, I am not sure exactly how I am going to price this, but before this seminar I was already thinking about a minimum $75/return bump, also listed separately on the invoice.

 

[HV Ken]

I am curious how the box stores are going to handle and price this....  

 

Or how the box software is going to handle this....

[Jack from Ohio]

I am curious how the box stores are going to handle and price this....  

 

Or how the box software is going to handle this....

I am looking forward to a big influx of new clients this year, and lots of work when the notices come out a year from now.

[HV Ken]

I am looking forward to a big influx of new clients this year, and lots of work when the notices come out a year from now.

 

Hi Jack!  Have you given any thought on your pricing for ACA?

[Jack from Ohio]

Hi Jack!  Have you given any thought on your pricing for ACA?

I use a base price plus.  My base will increase $25 if it is only the one question with a yes answer.  If it is more than the one question, it will be a minimum of $75 or more, depending upon how much time it takes me to get the information from the client.

 

I will bill this additional as ACA additional costs.  I want every taxpayer to know the source of this extra "tax" they are paying.

[ILLMAS]

I think this is going to be a good topic, this what I have to put up with in my city:

 

(2)    a "Disclosure Form," which describes and lists the tax preparer's cost of services in compliance with ordinance 4-44-030. A Disclosure Form must contain the following information:
(A)     a written list, description, and price of the tax preparation service offered by the tax preparer;
(B )    a written list, description, and price of all miscellaneous fees associated with tax preparation services, including filing fees and processing fees;
©     a written estimate of the total charge to the consumer based upon the tax preparation services the consumer has selected to purchase;
(D)     a written estimate of the period of time the consumer can reasonably expect to wait for his tax refund; and
(E)     a certification from the tax preparer indicating that the tax preparer has reviewed each disclosure with the consumer and that the tax preparer has verbally reviewed all the required disclosures with the consumer.

[HV Ken]

I think this is going to be a good topic, this what I have to put up with in my city:

(2)    a "Disclosure Form," which describes and lists the tax preparer's cost of services in compliance with ordinance 4-44-030. A Disclosure Form must contain the following information:

(A)     a written list, description, and price of the tax preparation service offered by the tax preparer;

(B )    a written list, description, and price of all miscellaneous fees associated with tax preparation services, including filing fees and processing fees;

©     a written estimate of the total charge to the consumer based upon the tax preparation services the consumer has selected to purchase;

(D)     a written estimate of the period of time the consumer can reasonably expect to wait for his tax refund; and

(E)     a certification from the tax preparer indicating that the tax preparer has reviewed each disclosure with the consumer and that the tax preparer has verbally reviewed all the required disclosures with the consumer.

 

UGH!

[Jack from Ohio]

I think this is going to be a good topic, this what I have to put up with in my city:

(2)    a "Disclosure Form," which describes and lists the tax preparer's cost of services in compliance with ordinance 4-44-030. A Disclosure Form must contain the following information:

(A)     a written list, description, and price of the tax preparation service offered by the tax preparer;

(B )    a written list, description, and price of all miscellaneous fees associated with tax preparation services, including filing fees and processing fees;

©     a written estimate of the total charge to the consumer based upon the tax preparation services the consumer has selected to purchase;

(D)     a written estimate of the period of time the consumer can reasonably expect to wait for his tax refund; and

(E)     a certification from the tax preparer indicating that the tax preparer has reviewed each disclosure with the consumer and that the tax preparer has verbally reviewed all the required disclosures with the consumer.

I used to question why I live in Ohio.  Now there are at least 3 states I am glad I do not live in and the list grows every day.

[Jack from Ohio]

I think this is going to be a good topic, this what I have to put up with in my city:

(2)    a "Disclosure Form," which describes and lists the tax preparer's cost of services in compliance with ordinance 4-44-030. A Disclosure Form must contain the following information:

(A)     a written list, description, and price of the tax preparation service offered by the tax preparer;

(B )    a written list, description, and price of all miscellaneous fees associated with tax preparation services, including filing fees and processing fees;

©     a written estimate of the total charge to the consumer based upon the tax preparation services the consumer has selected to purchase;

(D)     a written estimate of the period of time the consumer can reasonably expect to wait for his tax refund; and

(E)     a certification from the tax preparer indicating that the tax preparer has reviewed each disclosure with the consumer and that the tax preparer has verbally reviewed all the required disclosures with the consumer.

I wonder how the big box stores handle this?

[ILLMAS]

Any business that has a professional license is exempt from this disclosure, CPA, attorneys, EA etc....  Big boxes have to follow the same procedure, the city does routine check up, I had a city inspector stop by my office this past season, first time he stopped by I was working out of the office, he was supposed to stop by following the day at a certain time and never showed up.  He finally stopped by 3-4 weeks later to review my disclosure.  The city imposed this ordinance to curb tax preparers that prey on senior citizens or businesses that charge a fee based on the refund.  Our city also requires for you to have a city business license as a tax preparer service or if you have a general business license, they require for your to update your license and include tax preparer service, another fine if you don't.

[HV Ken]

I was hoping this would generate more discussion.  Have people not given this issue any thought?

[frazzled]

Nightmare tax season coming up. Tax extenders status, unknown. Filing season start, unknown. Repair reg, f3115 confusion. ACA debacle. My right hand executive administrative assistant has brain cancer and I will really miss her. She made the office operate smoothly and helped me keep my sanity.

Price increases are necessary to compensate for this ACA mess, but they will not be popular, and I will be the bad guy.

[mcb39]

Nightmare tax season coming up. Tax extenders status, unknown. Filing season start, unknown. Repair reg, f3115 confusion. ACA debacle. My right hand executive administrative assistant has brain cancer and I will really miss her. She made the office operate smoothly and helped me keep my sanity.

Price increases are necessary to compensate for this ACA mess, but they will not be popular, and I will be the bad guy.

 

I am still mulling the situation over.  I, of the kind heart, find it hard to penalize clients for something that is not their fault.  They actually need us more than ever.  I will also have a new right hand this year, but am hoping she will work out very well.  She is older and wiser and eager to learn.  Even paid her own way to go to two day seminar with me.  I have my AFSP certificate now (for what it's worth).  I have the feeling that many of my clients will be exempt from the ACA penalties; either for being retired or low income.  Take your pick.  (Am SO sorry to hear the reason why your assistant will be missing). 

[NECPA in NEBRASKA]

I will be charging extra and showing the amount separately for the ACA and anyone that will need to comply with the new capitalization regs. Most of my businesses will be put on extension, unless we find that we don't have to made retroactive changes with the form 3115. 

[michaelmars]

I am still mulling the situation over.  I, of the kind heart, find it hard to penalize clients for something that is not their fault.  They actually need us more than ever.  I will also have a new right hand this year, but am hoping she will work out very well.  She is older and wiser and eager to learn.  Even paid her own way to go to two day seminar with me.  I have my AFSP certificate now (for what it's worth).  I have the feeling that many of my clients will be exempt from the ACA penalties; either for being retired or low income.  Take your pick.  (Am SO sorry to hear the reason why your assistant will be missing). 

 

 

The whole need for filing a return is not their fault we could just have a national sales tax instead.  Does your mechanic charge for your annual inspections? They aren't your fault either.  If you want to absorb the time/cost that is your business decision but you are in this field to make money otherwise you could just volunteer to do returns for free.  Of course there will be clients that I feel sorry for ie low income people that are in the exchange and will show consideration but I am here to make money and this is going to be a killer year in time and effort on every return and I plan on getting compensated for it.  If I don't get to see my family for 3 months I expect to make that much more to be able to have quality time with them other times.

 

-rant over!

[Lion EA]

Well, it sure ain't MY fault, either!  And, I'm taking hours and hours of CE on topics like ACA and Repair vs. Cap Regs and expect to do a lot of re-reading of my texts over the next two months and have already been having conversations with select clients and will be pouring over biz returns over the next two months before clients are bringing in their 2014 info.  They WILL pay for my knowledge and thoroughness.  When needed, Form 3115 will cost a lot.  Even my examination to determine that 3115 is NOT needed will cost something.  And, all the ACA forms will have a fee, even the box to be checked that no further forms are needed.  It's not the time it will take me to check the box that I'll charge for, it's my knowledge to know what to do if I check the box or don't check the box.

[HV Ken]

And, all the ACA forms will have a fee, even the box to be checked that no further forms are needed.  It's not the time it will take me to check the box that I'll charge for, it's my knowledge to know what to do if I check the box or don't check the box.

 

Surgeons call that the KWTC fee!  (Know Where to Cut)

[NECPA in NEBRASKA]

I went to a tax update yesterday and according to the speakers and their texts, there is more to it than just checking the box. You need to know if the insurance met the ACA standards, how many people were covered, how many months of the year, etc. They even suggest keeping some verification of the insurance in your records for future problems, such as with the IRS or if the client gets any letters from them down the road. All in all it was another depressing day. I have to call a few more clients about the ramifications of the DOL 11/6 notification, it's not just S corps. The penalties would bankrupt most small businesses. If they don't change these technical rules, no one should provide health insurance for their employees. My policy is grandfathered in for one more year. I went to the exchange and to get a policy close to what I have, it will be about $400 more per month. I thought that it was supposed to be more affordable. I am too old to want to drop to a policy with fewer benefits. 

[Lion EA]

Exactly, you have to determine all the facts for all the family members to know if you check the box or go to one of the forms.  You have to ask a few questions and then repeat them for each family member.  It's not Yes or No.  I'm glad I'm on Medicare.

[Jack from Ohio]

The IRS is doing NO verification for 2014 for any of the questions.  This from Karen Hawkins directly.  Additionally, no preparer penalties for tax year 2014 either.

 

For 2014 there is no need to go any further when the client says they have MEC.  There is no verification method, so nothing for me to keep records of.

 

2015 tax year will be entirely different.

[SunTaxMan]

At this point, recognizing that factors may change, I think I like the idea of segregating, on the client's invoice, the time spent on ACA consideration. Mentioning this is the appointment letter and/or engagement letter would also seem like a wise idea.

[mcb39]

The IRS is doing NO verification for 2014 for any of the questions.  This from Karen Hawkins directly.  Additionally, no preparer penalties for tax year 2014 either.

 

For 2014 there is no need to go any further when the client says they have MEC.  There is no verification method, so nothing for me to keep records of.

 

2015 tax year will be entirely different.

 They told us the same thing at the seminar that I attended.  They have no method in place to verify the information for 2014.

[HV Ken]

The IRS is doing NO verification for 2014 for any of the questions.  This from Karen Hawkins directly.  Additionally, no preparer penalties for tax year 2014 either.

 

For 2014 there is no need to go any further when the client says they have MEC.  There is no verification method, so nothing for me to keep records of.

 

2015 tax year will be entirely different.

 

I still want to get them trained this year.  A little time spent this year on education will hopefully reduce the time requirement in the future.

 

I also want them to get used to there being two charges on their invoice: the tax prep charge and the ACA prep charge.

[mcb39]

Of course, we still want to do the best job that we can with what we have to work with.  Just because the teacher isn't looking over our shoulder, doesn't give us the right to be lax.  We have a moral obligation here.

[RitaB]

And we ought to try to be consistent with clients, too.  Don't need to give them a bunch of winks this year and then read them the riot act next go round.  They need to think we're tax professionals.  They have enough mechanics and hair dressers.