Tax pros hike fees by more than 20%: NATP

[Elrod]

Tax preparers are planning double-digit increases in their fees, according to the National Association of Tax Professionals newly released 2023 Fee Study.

"Our study found an average cost for a new client in 2023 to be $218 versus $174 in 2021, an increase of just about 23%," said Tom O'Saben, director of tax content and government relations at NATP.

https://www.accountingtoday.com/news/tax-pros-hike-fees-by-more-than-20-natp

[Lee B]

Wow, my absolute lowest fee is $295.

[Christian]

You are in an affluent area likely. Average fee of $218.00 would terminate my business although I have myself raised fees.

 

[Lee B]

Oregon requires every one to licensed plus 30 hours of CPE every year. With the number of baby boomers retiring,

we actually have a shortage of accountants and preparers. The national tax prep firms actually charge more than I do.

[mcb39]

My practice would never withstand that kind of increase, at least until they start to check around.  My rates are always based on the client's ability to pay and personal circumstances.  My business is not all about money.  My  business puts the client first.  I can do that because of my personal circumstances and the fact that I pay for extras; not for living expenses.  Also, I have a deep sense of compassion and helping out the little guy.

[Sara EA]

The original owner of our firm seemed to have no rhyme or reason to his fees, until it hit the new owner and me that he was often charging based on ability to pay.  That applied mainly to wealthier clients, who had exorbitant fees.  Those with six-figure incomes with little more than W2s, Sch A, and bank interest were on the hook for $600 or more (and this was 20 years ago).  A family-owned group of businesses that was making tons of money was charged triple just for monthly bank reconciliations compared to our other business clients.  When he sold the firm, some of the clients did question their fees.  We reduced most of them, many before they asked.  So charging based on ability to pay works both ways.

Like most of us, I do a bit of pro bono work and have a few clients whose fees I haven't raised in forever because I know they are struggling.  For the majority, though, I am not one to give away my work.  I have professional credentials, years of education and experience, and I give every return the time including research if needed to best serve that client.  For this, I should be paid.  We don't have many EITC clients, but even though they are low income we don't undercharge.  There are risks involved with that category, and the extra due diligence takes time.

[Corduroy Frog]

My average is half the national average discussed, might be why I have repeat customers.  I also live in a low-cost small town, and have little overhead.  My wife's daughter helps me with the paperwork, and that is the extent of my massive staff.  I also have write-up work for CPAs steady work in the off-season.

Also Tennessee has no State income tax to prepare.  However, being long and narrow, we are never far from another of our eight contiguous states, all of which have a state income tax.  For me, if I have to prepare a state return, it takes me quite awhile, except for Alabama, where I have several customers.  The format of the various states is fascinating - they're all different.

[Medlin Software, Dennis]

35 minutes ago, Corduroy Frog said:

The format of the various states is fascinating - they're all different.

Selfishness and perceived job protection is a factor. Commonality would reduce budget and staff. States sort of agreed to a common format for certain payroll data, but over time they all added tweaks, in some case, for no apparent reason.

Some state programmers are better than others, or they think they are sneaky enough to make more work. What I mean is some cannot seem to trap carriage return characters at the end of a line (yet proclaim their format IS the same as SSA). This is just one of many sad examples.

Frustrating at times, but awkwardly, also ensures life long work for those here.

[Patrick Michael]

I too have many long time clients, many retired, that I charge according to their income, with a $125 minimum .  Several of the smaller preparers in my area retired last year and two of the larger firms raised their minimum to $600.  I was getting many calls from prospective new clients and decided that the minimum for any new clients was going to be $195.  Many balked at the fee at first, but then called back when they discovered they couldn't find anyone to do them for less.  I don't really need new clients so I'm raising the minimum to $225 this year to make the extra work worth it

[Medlin Software, Dennis]

If I could wave a wand and go back 40 years, I would be charging a flat rate for my payroll software, and a separate fee by state, for the states with WH.  (See the thread on the upcoming AL change.  I will likely be spending many hours on a small percentage of customers this fall.)

I may actually implement something along this in a few years, keeping the fee the same for the no hassle (no state WH states) and only the next increase for the rest of the states.  Have to balance it though, as more prices means more complication, and zero chance of automated orders, so never mind .

[schirallicpa]

I raised prices last year and will raise again this year.  None of my software or paper product suppliers have left their fees low.  And min wage is a killer.  Last year I cut hours, but that doesn't help me much.  I end up working more myself and I can't do that either.  I live in a small low-income town in western NY and I will lose some clients.   But the population here seems to have the money to buy alcohol, drugs and cigarettes.  

[Lion EA]

After very small increases for many years, this year I raised my fees 10%. I'm going to do that again for next tax season. Only a couple of arguments. I'm trying to lose clients, but didn't lose any over my fees. Maybe I need to increase 15%!!!

10% over prior year for SAME return; new forms or issues receive new prices.

[WITAXLADY]

For the most part, I raised prices 20% this year - but have been way too low for too long. And will go up at least 10% again.

However, my issue is how to raise the prices when some of the clients have listened over the years and send their paperwork in so well organized - I can fly through it and should lower their prices!!

When I think I will get flak, we talk about the rising cost of everything else - labor, paper, toner, etc and they agree all is up.

Many of the lower end do their own - 1 S corp is using turbo - good luck!

And I do need to downzie

D

[Catherine]

19 hours ago, WITAXLADY said:

my issue is how to raise the prices when some of the clients have listened

Charge them the new price, then give them a discount for superb organization.

[WITAXLADY]

funny!! that is what my son said!

[Catherine]

21 hours ago, WITAXLADY said:

funny!! that is what my son said!

I've done the discount thing for years. Builds in extra where the clients are a PITA (although a few have gotten surcharges - one guy got a $50 "staple removal" charge after I spent a half and hour (and several fingertips) removing so. many. staples. it wasn't funny - after having warned him the year before not to staple stuff! following year there were paperclips - he learned). And allows you to reward the best clients with a discount. I've gotten a few thank-you notes for the discounts! Real-life 'thank you' pretty cards mailed to the office. Those get put in the client's file.