Liability issues in checking a tax return

[Naveen Mohan from New York]

I recently joined Intuit/Turbo Tax CPA/EA network. In a very first case, they passed on a 2013 tax return that taxpayer started but could not finish. I was given W-2 and all print out from Turbo Tax work papers.

 

My problem is this:

 

1. I did not get any source documents except W-2 rest was all worksheets in which taxpayer had entered the information.   

 

2. Obviously I do not use Turbo Tax in my tax practice so I actually had to do the entire tax ground up.

 

Potential clients got upset because according to him my charge was too high for just checking his return. The only way I could see around it is if I were to buy Turbo Tax just for that and have potential client give me his turbo tax file.

 

Those of you who have been in this business for a long time, how do you handle if some body off the street comes in to have you check their self prepared return or need help in finishing the return. How do you know that client entered all the data correctly.

 

since it is your name that is on the tax preparer line what about the liability issues.

 

Thanks for your help. 

 

Naveen Mohan

[JohnH]

I tell people I don't grade papers.  If they want me to check their return, they must pay me for the time to do a preparation from the ground up.  Even at that, the processing time involved in setting up a new client means the first year's return is often much less profitable than subsequent years.

 

You can't build a strong business based on providing the cheapest service for one-time bargain shoppers.  Catering to that crowd just makes you one of many people out there trying to see how cheaply they can work.  It's a no-win situation for you.

[Jack from Ohio]

I will not participate in any venture with Turbo-Tax in any manner, shape or form.  You have a taste of what you will be getting.

 

RUN FORREST RUN!!!

[jklcpa]

I never check self-prepared returns. I'm in the business of preparing returns not checking them, and if I found something wrong, then what? That person would want my advice on how he could fix it up himself and wouldn't want to pay me what my time is worth for that advice or for me to teach him, or for me to prepare it. (Used him as generic for him or her)  The only return that I sign my name to is one that I've prepared and done my due diligence on.

[MsTabbyKats]

I wouldn't bother with this one.

Whenever I get this kind of request I tell the potential client that if I do the return he may end up owing more tax...and I don't rely on his input.

They usually pop up when someone self prepared and doesn't like the results.

I also ask to be paid in advance when someone tried to do it.

Walk away....

[easytax]

I agree withal the above.

 

For a "BRAND NEW" client I will review (for free) several years previously filed - completed returns but if they need amended or "filed" it is standard cost.

 

 

I have had several non-clients wanting me to check their work; and two clients who wanted me to "check" their NEW preparer (new guy gave a GREAT price but...).

 

All were told I would happily check the work --- at the same price I would normally "do" their tax return preparation as the same work was involved in checking as was involved in "doing" original return.

 

Several walked away, one of my "old" clients said OK and did leave me for the "new guy", one client said OK and understood why the charge from the "new guy" was so low and came back to me.

 

 

If they want a "calculation check" with just numbers entered - perhaps a slightly less cost as it is just imputing numbers *** BUT *** if they want an opinion or anything other than a number check, why would I do that for less than normal fee? Bottom line ---- time and effort and our cost to do does NOT change if we are "checking" or "doing" the tax return - so fees stay the same.

 

   Your choice, what is your time, expertise and more importantly your reputation worth?

[Richcpaman]

I tell people I don't grade papers.  If they want me to check their return, they must pay me for the time to do a preparation from the ground up.  Even at that, the processing time involved in setting up a new client means the first year's return is often much less profitable than subsequent years.

 

You can't build a strong business based on providing the cheapest service for one-time bargain shoppers.  Catering to that crowd just makes you one of many people out there trying to see how cheaply they can work.  It's a no-win situation for you.

I really like the "I don't grade paper's" answer.

 

Checking a return is the same as preparing it for me.  Same fee.

 

None of my clients spend $35-55 buying TurboTax and checking up on me.  Yet, these folks have spent that, and then want to save *money* because they have *done all the work*.  No, they haven't. 

 

Nor have they done the training.

 

Rich

[kcjenkins]

Offering to 'review' prior returns [not the current year] is a good way for someone who has spare time to build up their client bases.  A waste of time for someone who has a full client base.  Sometimes worth making an exception for someone referred by a good client.   

[Jack from Ohio]

Offering to 'review' prior returns [not the current year] is a good way for someone who has spare time to build up their client bases.  A waste of time for someone who has a full client base.  Sometimes worth making an exception for someone referred by a good client.   

Turbo-Tax does not meet the definition of "a good client" by any set of standards.  The people who start with Turbo-Tax are only looking for cheap costs and maximum refunds.  They rarely give a damn about rules and laws.

 

NO WAY will I ever be connected with them.  My advice is the same to the OP.  RUN FORREST RUN!!!

[pikester1967]

Guess I've taken a somewhat different approach this season regarding reviewing returns and assisting taxpayers. I'm volunteering thru the VITA/TCE program two days per week. Appears to be a win/win situation as I get continuing education credits, based on my level of assistance, plus the liability issue is covered by the Federal Volunteers Act. 

 

Comments would be appreciated since is the first year I'll be providing this community outreach type service.

[Jack from Ohio]

Guess I've taken a somewhat different approach this season regarding reviewing returns and assisting taxpayers. I'm volunteering thru the VITA/TCE program two days per week. Appears to be a win/win situation as I get continuing education credits, based on my level of assistance, plus the liability issue is covered my the Federal Volunteers Act. 

 

Comments would be appreciated since is the first year I'll be providing this community outreach type service.

I have several personal-professional opinions that will prevent me from ever participating.  I wait to hear your feelings after tax season is over.

[Pacun]

Naveen,

 

I thought Turbo Tax dictated what it is charged to the client. I started enrolling in the program and I was under the impression that they will charge the client and the preparer will get a percentage. Since I charge a low price, I figured the percentage I was going to get from Turbo was going to be higher than what I charge. I am hesitant to continue my enrollment but I will see.

[Naveen Mohan from New York]

Pacun:

 

Problem is that for checking the return, Turbo tax is advertising $ 49.95 but in order to check it you have to do the whole return yourself unless you also buy turbo tax and the client gives you his data file to upload.

 

The first lead I got from them the prospect gave 50 opages printout from Turbo Tax and his W-2. It took me over 2 hours to untangle what prospect has submitted to me and then I had to enter it in ATX to verify the answer. I treed to bill $ 268.00 for 1040 Sch. A with 2106. Sch. B, 6251, 8889,8959, 6251 and state return and I think my bill was very fair but prospect wants to pay $ 49.95 because that's what Turbo Tax advertised for checking a return..

 

How are you going to make money even if you get 70% of the posted $ 49.95 price?  

[Jack from Ohio]

Pacun:

 

Problem is that for checking the return, Turbo tax is advertising $ 49.95 but in order to check it you have to do the whole return yourself unless you also buy turbo tax and the client gives you his data file to upload.

 

The first lead I got from them the prospect gave 50 opages printout from Turbo Tax and his W-2. It took me over 2 hours to untangle what prospect has submitted to me and then I had to enter it in ATX to verify the answer. I treed to bill $ 268.00 for 1040 Sch. A with 2106. Sch. B, 6251, 8889,8959, 6251 and state return and I think my bill was very fair but prospect wants to pay $ 49.95 because that's what Turbo Tax advertised for checking a return..

 

How are you going to make money even if you get 70% of the posted $ 49.95 price?  

RUN FORREST RUN!!!

[JohnH]

How are you going to make money even if you get 70% of the posted $ 49.95 price?

You're not.

[jklcpa]

Pacun:

 

Problem is that for checking the return, Turbo tax is advertising $ 49.95 but in order to check it you have to do the whole return yourself unless you also buy turbo tax and the client gives you his data file to upload.

 

The first lead I got from them the prospect gave 50 opages printout from Turbo Tax and his W-2. It took me over 2 hours to untangle what prospect has submitted to me and then I had to enter it in ATX to verify the answer. I treed to bill $ 268.00 for 1040 Sch. A with 2106. Sch. B, 6251, 8889,8959, 6251 and state return and I think my bill was very fair but prospect wants to pay $ 49.95 because that's what Turbo Tax advertised for checking a return..

 

How are you going to make money even if you get 70% of the posted $ 49.95 price?  

 

 

I don't understand exactly what Turbo Tax expects you do if you don't have original source docs. How could you, or anyone, check the return?  Are you supposed to be reviewing the input, or are you supposed to check the program for its accuracy, or only for illogical entries, or just what are you supposed to be doing?  You really shouldn't need TT or to redo any work if you are acting only as a reviewer.

[Pacun]

Thank you for the info. I am not registering because that's the main core of the business they will give you (reviewing returns). You do need to recreate the return and even if you had turbo tax, you still need to know where the numbers came from.

[FreedomTaxed]

In a very first case, they passed on a 2013 tax return that taxpayer started but could not finish.

 

I did not get any source documents except W-2 rest was all worksheets in which taxpayer had entered the information.

 

Two primary pieces of information. Suggestions:

 

1. If the taxpayer can't or won't complete his tax filing in TurboTax, then he's buying your service; he needs you, and your work is for sale. If you do work for free instead, that's nice... just admit it. You may feel this is a social responsibility in this case.

 

2. If you cannot perform due diligence on the tax return, then refuse to do the work. Due diligence implies a certain minimum of original documents must be supplied to you. You might wish to have the taxpayer to print out his worksheets and then sign them for your files.