client requests refund of tax prep fees

[fredazcpa]

Need some opinion

Facts, I did a 2013 return, client (now ex) he sold rental house and I missed that he was eligible for Sec 121 exclusion, the prorate.

I found this out via email, when he sent me an email, that they had gone to another prepare and they have amended  returns filed (Federal and State) and are claiming the refunds

My policy has always been, if I make an error, I will fix the error, cover penalties  as need and then the next return is on me, so far there only has been maybe half a dozen over the last 30 years that I have had to fix. 

Also when I review a new clients returns and find an error, I tell the client about the error and tell them to speak with the person who made the error, because most of the prepares that I talk with around here will fix the problem as I do. And most of the time the client will do so and then have me carry on from there, doing the current year.   But if the client ask me to fix the return, then of course I charge for the work.

 The only problem that may come up is if there is tax due, in the State of Arizona the CPA eitics says I must fix or have proof that is fix, if not I must disengage (which has happen)

The ex client is asking for a refund of the years fees, which I have no problem with, but he is asking also for the cost of the Amended return.  In light of my policy I do not feel that is due him.

the ex client is the son of a client that I have worked with for over 15 years.

 

You thoughts on this is appreciated if you have time

thank you

 

 

 

 

Edited February 3, 2016 by jklcpa
edited title for clarity

[Catherine]

My two cents...

Tell him your long-standing policy.  Offer the return of the prep fee (that you say you have no problem with) and the free return next year (IF and only if you would want him back a s a client).  Tell him you would have prepared the amended return gratis but since he decided to go elsewhere he took that option out of your hands.  

If you really want him back and/or you really want to keep the parents as clients, you could offer to pay the amended return up to the amount YOU charge for those returns (when you do them).  Or you can simply say you have offered what you believe is fair, and stop talking.  Once you make that point (as they say in sales) the next person person to talk, buys.

[michaelmars]

no way would I let him double dip, refund your fee or cover his cost but not both.  The fact that he even let another cpa look at your work and then didn't give you the chance to fix it says that he isn't coming  back anyway. He lost faith in you or was shopping around.  since the return was in your system the fix would have been 10 minutes but the new guy had to recreate the return first and then amend. Probably paid full prep charges to that guy.

[Jack from Ohio]

I agree with Michael.  Here is what I would tell him:

"Since my fees were for the preparation of the return, you received services for my fee.  The fact that you chose to use another professional to make changes does not change the fact that you received the services you paid for from me.  Your choice to not allow me an option to correct an "alleged error or omission" indicates that you were willing to take on additional expense based on someone else's judgment."

"Therefore, there will be no refund of my preparation fees, as you received full benefit for them."

"Good Luck with your new tax accountant."

 

Anytime a client takes my work to someone else without contacting me first, they end up as former clients.  I do not tolerate them second guessing me without contacting me with questions.

[RitaB]

If you mess up, you make it right.  The client has every right to consult whomever they want.  Refund your original fee (for the return you goofed, it happens) and be as gracious as possible about it.  No, you don't have to pay the other accountant, too, but if you feel you should, go ahead.  You never know what good might come out of it.