Draggin Extensions

[Snaggletooth]

It's starting to happen with Corporations and Partnerships:

CLIENT: "I'm not going to have anything ready by March 15th. Do a quick extension for me."

The impression is that this is a 5-minute job, possibly online.

It's STILL about the money, however, and the extension is the last chance to pay in. Usually absolutely nothing is available to estimate this year's taxes, so you have to figure last years' liability. Then there's the State, maybe more than one. And client has to mail in money, so there has to be PAPER instead of electronic medium.

Just finished doing one and it took over an hour-and-a-half, counting the time to fix all the mailing remittances, etc.

Is it just me, or is this typical for ALL of you? Seems like in the past it never took this long, and nothing has really changed in a long time.

[taxea]

I am sure that you explained the need for them to pay by the due date if they are anticipating owing. If they haven't made any estimated payments during the year my suggestion would be that they figure their net income for the feds and make a payment based on that.

You are so right in saying that without the figures you cannot know how much they owe this year. The bookkeeper should be able to give them a net for the year to start with. Income in business can fluctuate so much that I don't like doing estimates based on last years taxes. I have my client figure the net income per quarter for figuring extimates.

Lastly if you file an extension for them send a bill for the extension right away.

[JohnH]

Estimate on the high side

I usually estimate on the high side, especially with corp extensions. If they insist that they don't have any numbers for me to use in preparing the estimate, I'll reach back to the prior year and tell them they need to pay at least as much as they did last year. If the prior year is a low-profit year or a loss, I might reach back to the second or third prior year. I try to find a reason to kepe the estimate on the high side - most any reason will do as far as I'm concerned.

The objective is to give them an estimate that requires a substantial payment. Then if they owe less on the return, they have the option to apply the overpayment to next year. If they object to the amount I tell them they owe, I ask them tell me what they think the estimate should be. In the final analysis, they make the decision.

Besides, when they are facing the prospect of making a large payment with the extension, it's often surprising how quickly they can come up with some round numbers...

[geekgirldany]

I've got one or two that always owe the State around $500. The majority owe $10. If they can't get their stuff to me then let them pay the penalty. All but two are one shareholder S-Corps. So I like to do their personal before finishing the S-Corp. They always wait until the last minute to bring the personal. If they do it this year they will be getting an extension for it. I am not messing around with people bringing their stuff in late this year.

I had a referral call me the other day about doing an S-Corp Return. He asked me my charge. I told him around $500 if there is no other bookkeeping that has to be done. He then told me he would just get his wife to prepare the corporate return. She can buy Turbo Tax Business for $185. I told him good luck.

[Jiggers]

I had a referral call me the other day about doing an S-Corp Return. He asked me my charge. I told him around $500 if there is no other bookkeeping that has to be done. He then told me he would just get his wife to prepare the corporate return. She can buy Turbo Tax Business for $185. I told him good luck.

.....and that your representation fee to fix the mess was $1,000?

[geekgirldany]

Well I was thinking that in the back of my mind

I don't want a client anymore that is going only on price because I am more than reasonable. Becoming more selective in new clients.

[JohnH]

...buying quality service is like buying oats.
For a fair price I can get you good quality oats.

But if price is the only thing you're interested in,
then you'll need to go somewhere else.

You'll pay less money but you'll have to settle for
oats that have already been though the horse.

[taxea]

I usually estimate on the high side, especially with corp extensions. If they insist that they don't have any numbers for me to use in preparing the estimate, I'll reach back to the prior year and tell them they need to pay at least as much as they did last year. If the prior year is a low-profit year or a loss, I might reach back to the second or third prior year. I try to find a reason to kepe the estimate on the high side - most any reason will do as far as I'm concerned.

The objective is to give them an estimate that requires a substantial payment. Then if they owe less on the return, they have the option to apply the overpayment to next year. If they object to the amount I tell them they owe, I ask them tell me what they think the estimate should be. In the final analysis, they make the decision.

Besides, when they are facing the prospect of making a large payment with the extension, it's often surprising how quickly they can come up with some round numbers...

In that case I would start with the gross income for the year to see how it compares with past years.