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    Fees again

    I just got notice from the IRS that a correspondence audit I took on in August of 07 has been wrapped up the way I argued that it should be. Yes the original return for a year in which the spouse began to draw SSI reported only the Social Security for that year and not the SSI for the previous three years. However, the original preparer reported a Rollover as a taxable pension and did not claim Medicare Part B as Medical Insurance or claim any part of the legal fees to collect the SSI on Sch A. (I pro rated the fees according to the ratio of taxable and non taxable SSI.)

    The reason that I was not able to send with my second reply everything that eventually won the day for me was that the client's records were an absolute mess. It also hurt that they didn't bring me in until they had received several notices and faxed back two responses. They had the return but not the records behind it. I had to get them to ask the Doctors and pharmacies for copies of their expenses. All of the other expenses I know about were documented on the SSA 1099. I eventually had to ask the IRS for copies of all the notices sent to these people. They had some pages from each notice but no complete notices and the pages were mixed up. Once I had the records and the notices I sent in what I thought was a good reply but as the IRS pointed out I had not begun my thinking from the numbers in the proper notice even though I had that notice. It turned out that the correct figures were worse for the IRS than the figures I used. All in all I wrote I think six multiple page mailings or faxings with the IRS, though one was necessary only due to my error. I also spent at least four hours on the phone talking to or waiting to talk to persons from the IRS.

    Now my total charge for this audit was $240. I took 220 at our first meeting and they kept putting gas money in my briefcase on subsequent trips. (I don't have an office clients come to. I go to them with laptop printer and and a few other supplies in a small cart.) They also became tax prep clients and I charged them $220 for 1 W2, a pension, SSI, and Sch A with Medical, Charitable, and Mortgage and of course NC. What should I have charged them for the work I did?
    Last edited by erchess; 06-24-2008, 01:26 AM.

    #2
    Fees

    What is the total time that you put in on the audit?

    I would bill my total hours by my hourly billing rate, plus copies, long distance, FAX, postage, mileage.

    My required deposit for a 1040 Audit is $1,500.00.

    I think you did not bill enough.
    Last edited by Jiggers; 06-24-2008, 05:47 AM.
    Jiggers, EA

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      #3
      SSI is nontaxable

      SSI, Supplemental Security Income, is always nontaxable. I don't think you were referring to "SSI" in the earlier posting. I think you were saying that taxable Soc. Security benefits for some prior years, a lump sum, should have been included on the originally filed return for the year that payment was paid to the taxpayer. Publ. 915 explains how tax on such lump sums can be computed.

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        #4
        TY Otis

        I thought that SSI was Social Security paid because of disability.

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          #5
          Only if you did not pay enough into the system. SSI is a form of welfare. SSDI is SS disabiltiy you receive because you have enough credits paid in.

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            #6
            Were you happy with the amount charged? Is it worth it considering you acquired a new client? That's all that matters in the long haul.

            Personally, I would have charged in the $1,200 range I'm guessing. You did a lot of work for the client.

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              #7
              too low

              erchess- you charge too little. I charge 120 for tax work, and minimum 150 for audit work, per hour here in WI. Home office situation. -Bob

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