How We Can Compete vs. TurpoTax

[gkaiseril]

This makes me wonder: I have had issues with my clients and billing at times. How do others handle the question "What happened here - I don't feel like it took that much time!" I bill by the hour, not a fee basis. At times, I feel almost embarrased to send the bill out, stupid as that may sound.

Thoughts?

This is like the joke of the IBM computer engineer who goes to a big corporation, looks the big IBM mainframe, and as the VP of Information Systems looks over his shoulder, types some lines into the console. Then takes a hammer out his brief case, walks to a corner of the mainframe and tape the corner 6 inches above the floor. Hands the VP a bill for $2,000.00 dollars.

The VP yells, "I could have hit the #$%* for less money.

To which the engineer replies, "But I know where to hit it!"

You are like an engineer, doctor, attorney, or dentist. You are not only charging for your time to fill in the tax return, but also for your time and cost to learn how to fill in the tax return.

Further, if you provide some additional resources like pamphlets, newsletter, organizer, and specific advice for the client's situation, they will feel they are getting something that Turbo Tax does not provide for them. This could be a simple as when a client's child is ready to apply for college, discuss the tax credits for education, or supplying an extra copy of the return for the FAFSA.

[Black Bart]

Billing

This makes me wonder: I have had issues with my clients and billing at times. How do others handle the question "What happened here - I don't feel like it took that much time!" I bill by the hour, not a fee basis. At times, I feel almost embarrased to send the bill out, stupid as that may sound.

Thoughts?

ATG

I guess (if I felt feisty that day) I'd just say "It DID take that much time. These things aren't that simple -- if they were you'd be doing it yourself." It always depends on the person and whether you want to keep the guy. But still, I know what you're talking about -- everybody's got their own idea of about how much time they think you spent and roughly how much it's worth.

I don't use a strict hourly rate or a strict flat fee, but rather a combination of what I figure those forms are worth plus a seat of the pants estimate of how much time and trouble it's going to take. Since I don't state X hours on an invoice, there's no amount of hours for them to disagree with. Nevertheless, they usually have a max figure in mind, so I give a general estimate if they ask or if I think I need to warn this particular guy in advance.

I don't do work in front of a customer unless I have no other choice (maybe an out-of-towner who doesn't want to come back).

[Roberts]

What reasons make the most sense to clients and to prospective clients to come pay a Tax Professional instead of using TurpoTax, etc.?

JMO but I don't compete with Turbo Tax. TT works if you have an ultra easy return or you are very comfortable with your tax situation. Those people really don't need my services anyway. My services are for people with returns and tax situations more complex than my clients tax knowledge. Look at the questions posted on this board. Those are posted by tax professionals. Now imagine what it's like if you only thought about taxes for 3 hours per year.

[fliszt]

Otis, all of the posts

give you good answers. I have a new client now that was/is a paper audit for 2006. Client did a lot of things wrong on TurboTax. He didn't calc his cost basis on shares sold from his ESOP -- in fact he was waaaaay off. His wife cashed in her 401 and he took a 1st time home buyer credit. (It was his 3rd home). His donations were off. His Home Mtg interest deduction was way over the actual. His state refunds were not reported. Just a lot of stuff wrong. First I want to say the client was not trying to cheat. He is in high management at a retail electronics company. The 2006 amendment has now produced required amendments for 2007 and 2008 plus state amendments for Ohio and MN. After seeing all the things done improperly, I said to him, Mr. xx, I don't know if you're going to come back to me for your 2009 taxes but want ever you do DO NOT USE TURBO TAX again! He promised to see me w/his 09 stuff. I really like this person and think he is very honest, but nieve in terms of taxes.
Hope this helps explanation helps you a little bit.
Larry

[Corduroy Frog]

Cheaters

Let's face it, Larry, there are some TurboTax users with whom we will NEVER be able to compete.

Reason being, their program continually flashes their refund/due on the screen with every entry. And there are those people who will keep tinkering with their contributions/propertytaxes/businessexpenses until their desired refund is achieved, or they don't have to owe money.

Moral Turpitude? Of course. But these folks are out there, and so long as they can do this and get away with it, they will never be interested in using a tax professional. They can be nagged at about the consequences of what happens when they're caught, but unless IRS begins to audit more of them and hold their feet to the fire, the odds of them being caught are small indeed.

[S T]

Timely Post

Interesting Post - as I just completed a phone call with a client that has 3 more classes to obtain his BS in Accounting.

So while I was congratulating him, I inquired as to how he was going to proceed in his business life along, now with his new accounting degree and college degree. He said the same, still selling "mobile homes" Conversation went on and it was discussed are you going to go for a CPA, or EA or any other degree - Well no - Client states just wants his degree, probably won't utilize in any field or apply for a job.

Interesting side note, is that he prepared his own personal tax returns on Turbo tax in 2007 and fortunaltely was conservative, did not take many business deductions. I prepared the tax return for 2008, and did ask about several business deductions that he had not considered. But this Accounting Major, does NOT have a clue about taxation.

In fairness, this is a client that is more than ULTRA conservative - but I am asking myself, what good ?? is this education?? I guess he will eventually apply it at some point in time. Maybe in business Mgmt somewhere along the line.

On the otherhand - I see what Snags or Larry has seen , those t/p that are preparing their own tax returns on Turbo Tax, are watching the amount owed or refunds as they are entering data - thinking that what ever they file are final, and there WILL not be any further notices. Little do they know that the IRS can send them a notice a few years down the road, particularly if it is one of the CP 2000 notices for matching entries. Let's not even talk about the Office Audit

Not that I have had that many Office Audits, but I have always questioned the
Auditors about "Franchise Store Fronts" and "Turbo Tax" etc, and the auditors reply "oh we love them" !

Sandy

[fliszt]

Sandy, you

made me lol with that "oh we love them".
Hope you have a nice day!!! I'm going golfing now.
See ya.

[AuditorTurnedGood]

As a relatively new college graduate (now 5 years ago I suppose) I can tell you, all the theory in the world in college has nothing whatever to do with actual practice. I loved my tax professor (he's why I do what I do now) and he was incredibly good at what he did (he was an IRS Special Agent before teaching - rumor has it he carried a gun), but the actual practice of taxation is WAY different.

ATG

[Black Bart]

Exactly right

...TurboTax...program continually flashes their refund/due on the screen with every entry. And there are those people who will keep tinkering with their...expenses until their desired refund is achieved, or they don't have to owe money.

...so long as they can...get away with it, they will never be interested in using a tax professional....unless IRS begins to audit more of them...odds of them being caught are small indeed.

I didn't know that TurboTax flashes a refund/due figure after each entry -- that's a great incentive right there to keep punching 'til the right number comes up. Of course there are many honest users as well some fraud, minor larceny, laxity, etc., but I believe there's also a vast amount of incompetence and a general attitude of "I don't care about the details; just send it off -- nothing will happen."

Like Sandy said, IRS auditors love them, but that doesn't address the sheer magnitutude of the problem. The caught fish may go to a pro, but a river of satisfied millions continue to swim on without a hitch. Until enforcement's increased, the public perception will remain -- (as Frog said earlier) "It tastes great!"

[erchess]

If you can't beat em join em

Tax Slayer offers to produce CDs labeled with your brand. Crosslink offers DIY software for you to run n your server. Drake gives you a free website you can set up to your liking. They collect the fee and give you the lion's share of it There are probably other options I'm not aware of but the point is that these are all ways we can compete for shares of the self preparer market.

[Black Bart]

Disagree

Tax Slayer offers to produce CDs labeled with your brand. Crosslink offers DIY software for you to run n your server. Drake gives you a free website you can set up to your liking. They collect the fee and give you the lion's share of it There are probably other options I'm not aware of but the point is that these are all ways we can compete for shares of the self preparer market.

Sorry to be a wet blanket, but I don't think any of these things are a realistic solution to the TT threat. You're talking about doing something that's virtually a business unto itself. Who could possibly conduct their tax practice while hand-holding clueless do-it-yourselfers right in the middle of tax season?

[Uncle]

You might, just possibly, not understand.

Sorry to be a wet blanket, but I don't think any of these things are a realistic solution to the TT threat. You're talking about doing something that's virtually a business unto itself. Who could possibly conduct their tax practice while hand-holding clueless do-it-yourselfers right in the middle of tax season?

When a DIY, clueless or not, logs unto my website to attempt their tax returns, I do not do anything. I don't even know about them. If they give up and ask me to complete the return, or ask me for advice, we switch to regular fees. In the last two years that I have offered a DIY option, not a single one has ever called me or asked advice. If I do not actually check on the numbers that have logged in and finished their return, the only time I know they are there is when I receive a deposit into my bank account.

[Black Bart]

Okay;

You might, just possibly, not understand. When a DIY, clueless or not, logs unto my website to attempt their tax returns, I do not do anything. I don't even know about them. If they give up and ask me to complete the return, or ask me for advice, we switch to regular fees. In the last two years that I have offered a DIY option, not a single one has ever called me or asked advice. If I do not actually check on the numbers that have logged in and finished their return, the only time I know they are there is when I receive a deposit into my bank account.

since you do understand and nobody's asked for advice in two years, how many DIY customers are represented by those bank deposits?