IRS errors on paper filings

[Karen Lee]

The last couple of years I have experienced a number of errors made by the IRS on paper filing. These errors do take up a bunch of time to resolve and they are normally input errors. Not a single problem on an e-file. Am I suppose to get a message here? Don't paper file? I am in a rural area and my people are very distrustful of this whole cyber thing. I keep hearing that they aren't going to give the IRS their account numbers etc and I have to just really hold it in when they are talking to me because I just want to laugh...If they have a bank account or a job the IRS HAS their number.

Back to the subject...how do you charge for fixing problems that were created by the IRS...should I be promoting e-filing...if e-filing is not an option my client wants to use should I have a separate rate for preparation...is this an uncommon problem and just my experience?

Karen Lee

[jainen]

>>how do you charge for fixing problems that were created by the IRS...<<

It is difficult to charge extra for the fact that your work product failed IRS input, regardless of the reason. This is undoubtedly the biggest argument in favor of e-filing, and the main reason tax preparers in California were so compliant when e-file became mandatory.

[Pacun]

You should charge extra for printing double, killing more trees, the envelope, cutting all W-2s and organizing the package for the mail. Efiling is the best and I believe the IRS will be able to audit returns every 5 years once everything is efiled. Of course you will never be audited if you have only one W-2, single, no itemized deductions.

[GeneInAlabama]

how do you charge for fixing problems that were created by the IRS

If you offered efiling and they refused it, then I think it would be fair to charge for straightening out IRS errors. I would warn them that filing paper is more likely to cause errors, but if they want to anyway, there will be an additional charge for straightening it out. I would charge by the hour or fraction of an hour if that is all it takes.

Gene

[GeneInAlabama]

Of course you will never be audited if you have only one W-2, single, no itemized deductions.

I worked as a tax auditor for a couple of years a long time back. The type of returns you described are the ones we started our training with and then moved up from there. You do NOT want to be audited by an inexperienced auditor. The very first audit I did was a woman named "Queenie". I was probably more nervous than she was.

Gene

[jainen]

>>I would charge by the hour or fraction of an hour if that is all it takes.<<

The problem is that you gave them a finished return that barely made it past the IRS mailroom. The client doesn't want to hear any excuses, especially the "it's sombody else's fault" kind. H&R Block dominates the industry by the simple basic guarantee that if you have a problem with the IRS, they'll take care of it -- for free.

Surely you can provide better service at a lower price than some big corporation?

[JohnH]

I think you should factor in a reasonable amount of time to fix the occasional IRS error without charge to the client. To me, this sort of time is an overhead expense - no different than rent or utilities. Since you never know where it's going to come from or which clients it may affect at any given time, it needs to be built into your base rate. Also, no charge for straightening out your own errors (assuming you ever make one). As jainen said, the client really doesn't understand why the error happened and they are not usually in a mood to pay for fixing it regardless of who made the error. Of course, straightening out IRS notices for client errors (forgetting to give you 1099's, W-2G's, etc) should be charged at full rate, plus a premium for having to open up the software for two years back.

I don't efile, but in deference to Pacun I think I'll plant a couple of trees to make up for all the returns I've paper filed so far this year. Or will Al Gore sell me wood offsets in place of carbon offsets?

[joanmcq]

I warn people if their circumstances will likely result in a notice, like the clients whose trustee fees were reported in Box 7 of the 1099 rather than Box 3. I can pretty much guarantee they'll get a notice asking for SE tax and will have to write a reply, just like I did last year. Or the domestic partner where the mortgage interest has the partner who is no longer paying it as first on the mortgage. I just tell them to let me know if a notice shows up and I'll take care of it....no charge.

[Karen Lee]

Thanks...

Karen

[OldJack]

I have maybe one IRS letter to a client per year and that usually has nothing to do with paper filing. Now you folks want to charge your clients for paper filing when you are paying extra to efile and you are not charging for that? I sure am glad that my clients don't want to efile. I certainly don't want to spend all that time with those efile bounce back errors and waiting for those confirmations. :lol:

[mcb39]

I DO E File; probably 90% of returns, but I do not charge to straighten out an IRS error either on paper or otherwise. I agree with John and Old Jack that these charges should be factored in. They aren't my fault, but they aren't the clients' fault either. They come to me because they trust me to get it done correctly. And, they trust me to fix it if the IRS messes up. They come in traumatized with their letter and I explain that, often, it takes one phone call to straighten it out. I am not in this business to draw blood. I will also never be rich, but I sleep very well...