Fee increase

[Bees Knees]

3. As for number of preparers, Bees, we didn't lose any i think. They just didn't register, but will still be in the thick of things, either working in an office where another RTP can sign the return or gravitating to "self prepared" returns. You know, kitchen table types. (grin

Have you been to a tax seminar in the last 10 years? Ever notice how old we are?

The PTIN registration and e-file mandate was the last straw for many preparers who were looking for a good excuse to retire...which is exactly what many of them did.

[Burke]

I am finding that I am needing to bill extra for "consultations" rather than trying to incorporate a lttle extra work during the year in the basic tax preparation fee, or just a tax question now and then. These would be sessions in which I do quarterly estimated tax revisions for the self-employed, est taxes for clients who liquidate assets -- stocks and/or IRA's/annuites, as well as various and sundry things that don't have anything to do with their taxes, like filing for insurance benefits for a deceased spouse, handling pension screw-ups, other help with financial affairs. These are usually older clients which cannot handle anything on their own (or shouldn't). Even ex-clients call me when they get a letter from the IRS (those who have dropped out of the filing requirement threshold). I like to help,but.......

[BP.]

increased regulation on tax professionals and the shortage of tax professionals,

http://www.irs.gov/newsroom/article/...252284,00.html

Plus increased demand for services? Today's IRS News Release on Taxpayer Advocate's Report to Congress.

[ChEAr$]

a couple of more points

1. No discounts. I've seen these on last years' bills in case of new clients. And my regular fees are usually less than other preparers' discounted fees. Giving a discount implies that I'm not really sure of my value to the client. Oh, and no referral fees either; just fair prices for all.

2. The form 8940 may call for a few more entries per transaction, but we can still duplicate brokers' statements as long as the columns match up. So not much change there I think.

3. As for number of preparers, Bees, we didn't lose any i think. They just didn't register, but will still be in the thick of things, either working in an office where another RTP can sign the return or gravitating to "self prepared" returns. You know, kitchen table types. (grin

[Gretel]

I am adding to my original post. The year I did sent the fee increase letter was the first year I didn't have any complaints about fees. Sending this letter still didn't mean there wouldn't be exceptions, actually I had quite a few, so I also looked at each client's situation.

This year I plan major increases for clients with stock sales, minor for all other clients and I don't think I want to do any EIC tax return for less than $200 for new clients. I only will accept new EIC clients if their situation is pretty clear to me. I haven't made up my mind fully yet, kind of want to see who shows up.

[JohnH]

Hourly Rate - IMHO the only rational way to price the 8949.

[DTS]

I have already raised most fees similar to Sandy, but I've been thinking I'd raise my base price about 3-5%, which seems enough for me. For the most part I'm OK with my prices as they are and clients are too, but every year I always raise a few items a little.

I have been wondering about what to charge on Form 8949. Not sure my old Sch D prices will cover the new form.

Would you share your thoughts on pricing this new form?

D

[JohnH]

Bees:

I like the way you think, my friend.

[Bees Knees]

Something to consider: From TTB page 26-1:

100,000 Tax Return Preparers Missing
IR 2011-74. The IRS announced that 100,000 tax preparers did
not comply with the new PTIN registration rules. The IRS will
send letters to these preparers. Over 700,000 preparers did comply
with the new rules. In an effort to find other missing preparers,
the IRS is sending letters to taxpayers who appear to have
had assistance with their returns, but lack tax return preparer
information. The letters will inform taxpayers how to file a complaint
against preparers who failed to sign returns and explain
how to choose legitimate tax preparers.

Note: Prior to the PTIN registration requirement, the IRS
had estimated that there were somewhere between
900,000 and 1.3 million tax return preparers.

Point: Even assuming the lower original estimate of 900,000 preparers, that means we lost 200,000 from before PTIN registration to after the requirement to register – or 23% of our profession. If you believe we had closer to the 1.3 million estimate when all this started, that means we have lost 47% of our profession in the last few years.

Combine the increased regulation on tax professionals and the shortage of tax professionals, any economics major will tell you that means prices should go up.

[ttbtaxes]

I think it's always best to forewarn clients that a fee increase is in store for the upcoming tax season. Selective discounts are a good idea. Perception is reality.

I raised fees last year across the board when e-filing was required. Not one client groused because I told them it was a program i never thought was in their best interest but was forced into.

Clients will also be forewarned this year about the Schedule D/Form 8949 transactions.

Almost four decades ago, a senior partner told me his philosophy about billing. He said, "If I raise my fees 10%, I am not going to lose 10% of my clients. So, I make more money with less effort." I agree wholeheartedly although, as we all know, there is an elasticity to this theory. At some point, the rubber band breaks,

I'm no where close to that.

[S T]

Good Point

JH - really a good point - I have an itemized list that I revamp every year =- adding and subtracting items - Such as the Schedule M, changing the Schd D entries for 1099B line items, etc, increasing line items. This entire form is calculated Manually by me and sometimes I am not so objective.

At any rate, get to the bottom add it all up - then I have a discount line - so over years past, I have left some of the line item amounts the same, and lowered the discount fee, or vice versa - depending on the client.

I really try to analyze the fees based on the client and the client needs, and then how much time that client really is asking of me.

Guess I would never make it in a Store Front Walk In Office and what the Computer Fees generate.

Sandy

[JohnH]

Another good approach might be to raise fees across the board, then discount for loyal clients, etc. Discounts can be for anything form "loyal client" all the way to "abbreviated work due to well-organized records", depending upon what applies.

The nice thing about doing it this way is you can reduce the discount less on selected clients in future years, thus raising their fees without another general fee increase. I think this is most useful with clients whose fees you are keeping low due to their current financial circumstances. Some of these people will bolt whenever you raise their fees because they will resent what they see as your taking advantage of their improved economic circumstances. (you just can't win with some people).

I've never had anyone complain when I reduced their discount, because they can look at at last year or the year before and see what their fee "would have been" in the past without the discount.

[Lion]

Form 8949

I'm going to cite new Form 8949 for my price increases. That also means I'm increasing prices the most for those with a lot of sales of investments in hopes that those are the ones that can withstand price increases. Case by case. Not across the board, unless about 3.6% inflation rate.

[ChEAr$]

For your general consideration:

Infation for last year was about 3.6%. Prior to that for about 3 years it was more or less flat.

Our customers, most call them clients, are price sensitive whether they show it or now.
Or we ourselves not also when we price gasoline? groceries? Christmas gifts?

Just because IRS complicated SOME things this year, remember other items are less so, e.g. no schedule L and M.

So about 5 - 10% should be about right for someone like me who did not increase fees last year in view of the economy.

And that's my 27 cents worth.

[oceanlovin'ea]

Sandy, I am with you on this. I did an analysis of my clients and what I charged them for the last couple of years. Some I raised last year a little and some i didn't. The ones I didn't last year I will raise this year.
I am just doing mine on a client by client basis. Some of them I know are still having a hard time and I am easier on them and others can handle a little more increase.
I realized that I have been doing quite a few returns a lot lower than I should be because they are like family to me. I will have to raise them this year too.

That is why I like being my own boss and making my own rules....I can charge whatever I want.

Linda, EA