Actually, you pay them if you decide to amend your return,
whether or not it saves you money.

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Bucky wrote:

- quote -

Not quite what you are asking for... HR Block advertises a
free review, and you pay them if they can save you money.

http://www.hrblock.com/presscenter/l...areyousure.jsp
is from their web site.

This discussion corresponds to what I saw on the TV ad:
http://ths.gardenweb.com/forums/load...050828799.html

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"D. Stussy" wrote:

- quote -

Under what specific IRC? I'm aware only of the injunctive
relief provided in section 7407. However, the statutory
language there does not seem to cover a situation where the
returns are accurate. Otherwise, IRS just drives the guy out
of business, unless he reforms, with audits and ruinous
penalties. No need to bother a District Court Judge with
7407 nonsense, meekly proposed by an agency with the
statutory powers of IRS.

Fred F.

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Bucky wrote:

- quote -

This may be equivalent to basing the fee on the amount of
the expected refund, which is illegal under the IRC.

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"Stuart A. Bronstein" <spamtrap[at]lexregia.com> wrote:
- quote -

Not really. Circular 230 allows professionals to charge
contingent fees on amended returns.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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Mark Rigotti, CPA wrote:

- quote -

I see, thanks. (And also to the 10 other posters who gave
the same reply). I guess it sounds good in an ideal world,
but it would lead to abuse/fraud.

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Harlan Lunsford wrote:
- quote -

Furthermore, since our own circular 230 says we can't charge
a contingent fee unless preparing an amendment, nothing I
know of like that applies to unenrolled practitioners, of
which there are many.

ChEAr$,
Harlan Lunsford, EA n LA
25 mar 2005

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- quote -

Circular 230 is a Pub; best to read the underlying Title 31
Regs. They do specifically prohibit any "practitioner" from
charging contingent fees to include on returns. However,
they do not provide for sanction against all such persons
doing that. The Director of Practice has jurisdiction over
CPAs, attorneys, and enrolled agents. Serious bad return
prep can suspend/bar a CPA from practice, but a CPA etc.
barred from practice may still prepare returns. The Regs
specifically state in an isolated subsection that "Any
individual may prepare a tax return...."

The IRS can ask a District Court to enjoin any person, CPA
etc. or not, from preparing even uncompensated returns. But
that's minimally possible only after repeated preparation of
returns with understatements after the first go around where
IRS audits your client file, and imposes preparer penalties
if you're compensated. The chances of that are remote, for
legal and practical reasons.

However, in the case of returns prepared on a contingent
fee, but the returns are found to be reasonably accurate,
there's little IRS can do. The injunction route should fail
on due process grounds, since IRS does not regulate
preparers, only "practice." This judicial remedy is also a
last resort, when all else has failed -- preparer penalties
and/or prosecution. Inapplicable to accurate returns. :-)

Fred F.

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"Thomas Healy" <tomhealycpa[at]earthlink.net> wrote

- quote -

Dude!!! If you can get me $5K back I would.... ;-))

--
Paul A. Thomas, CPA
Athens, Georgia
taxman at negia.net

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Thomas Healy <tomhealycpa[at]earthlink.net> wrote:

- quote -

Who said it would be a percentage of the refund? He said a
percentage of the savings, i.e. the difference in total tax
liability between the taxpayer's calculation and the
service's calculation.

I'm not commenting on the illegality -- several posters have
confirmed that this is not allowed by law. Just your
argument against the logic of it.

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA

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"Bucky" wrote:

- quote -

Very risky for the t/p! The t/p is always responsible for a
return's accuracy, and it is further signed by the t/p under
penalty of perjury. The preparer's signature is not "under
jurat," and separate civil and criminal statutes apply to
the preparer. Presume a preparer where such financial
incentive results in his taking positions on returns which
are wrong:

-- IRS may examine many returns prepared by this person to
test overall compliance, meaning audits they might not
otherwise do if a return "looks clean" using usual criteria.

-- If errors are found, even on items sanctioned by the
preparer, t/p faces a greater chance of paying the 20%
accuracy-related penalty, because here the t/p might not
have the defense where it's sufficient the t/p engaged a
preparer he/she could reasonably judge as trustworthy to
prepare an accurate return.

-- Nightmare scenario: IRS suspects the preparer's actions
are criminal, so IRS investigators interview you as a
potential cooperating witness. But they need not tell you
that and may judge it unwise to do so, but say only that you
are not a target of the investigation "at this time." So
you wisely hire an attorney to do the talking. Since this
might happen too often among the clients interviewed to be
productive, IRS can alternatively ask the U.S. Attorney to
convene a federal grand jury, before whom you will testify,
and without the benefit of counsel present. If everything
you say is not "exculpatory," the prosecutor can ask IRS to
consider adding you to the criminal investigation pot. Are
we having fun yet? :-)

Fred F.

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"Phil Marti" <prm20871[at]verizon.net> wrote:
- quote -

I've seen ads for what appears to be a fairly large firm,
that advertises that they'll review prior years returns for
nothing, and will do the returns if they can save you money.
It's not exactly the same, but it's close.

Stu

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Bucky wrote:

- quote -

Such contingent tax prep schemes are, in my opinion,
unethical. The AICPA, the ABA, the NAEA, and the IRS agree
with me.

Regards,
Bill

Moderator: And so does every knowledgeable person!

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"Bucky" <uw_badgers[at]email.com> wrote:

- quote -

tieing a direct financial interest in the preparation of a
tax return to the paid preparer may be in violation of
certain licensing and other rules...not so cool...

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- quote -

not sure where you're located, but in our state it's illegal
for accountants to charge contingent fees, so your idea
won't fly here in MN. Not to mention the fact that it may
create a whole slew of less than honest creative accountants
who can offer the moon, but be somehow unavailable when the
IRS man comes a'callin...

"I'll give you the best return the IRS has ever audited"

Norm Peterson

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Bucky wrote:

- quote -

Well, you can't charge a fee based solely as a percentage of
a refund, at least professional can't. However your
proposal doeso have some merits. and I know of nothing in
regulations that would preclude this arrangement. I'm
talking only about IRS regulations of course, and not about
any CPA ethics strictures.

ChEAr$,
Harlan Lunsford, EA n LA
24 Mar 2005

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"Bucky" <uw_badgers[at]email.com> wrote:

- quote -

We're not allowed to use the refund as a basis for a fee,
except when doing amended returns or in cases of going to
court. Also, how would you measure it anyway? Suppose I tell
you: don't claim any withholding allowances on your W-4 and
have them take out an additional $200 a pay check. Next year
when I do your taxes I get 50% of your refund (now perhaps
$5,000). Would you use my services? I hope not!

--
Tom Healy, CPA
Boulder, CO
Web: http://www.tomhealycpa.com

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Bucky wrote:

- quote -

Can't be done. It would be considered a "contingent fee"
and, as such, is prohibited by IRS rules as well as the
rules of most state boards applicable to CPAs. Contigent
fees are prohibited with respect to the preparation of
original returns.

Now, on the other hand, if you file your self-prepared
return and get audited, THEN a tax preparer (or attorney,
for that matter) could represent you with respect to that
audit on a contingent fee basis.

MTW

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"Bucky" <uw_badgers[at]email.com> wrote

- quote -

Which is against Circular 230 rules. Basically, against the law.

SEC. 10.27 Fees.
(a) Generally. A practitioner may not charge an
unconscionable fee for representing a client in a matter
before the Internal Revenue Service.
(b) Contingent fees. (1) For purposes of this section, a
contingent fee is any fee that is based, in whole or in
part, on whether or not a position taken on a tax return or
other filing avoids challenge by the Internal Revenue
Service or is sustained either by the Internal Revenue
Service or in litigation. A contingent fee includes any fee
arrangement in which the practitioner will reimburse the
client for all or a portion of the client's fee in the event
that a position taken on a tax return or other filing is
challenged by the Internal Revenue Service or is not
sustained, whether pursuant to an indemnity agreement, a
guarantee, rescission rights, or any other arrangement with
a similar effect.
(2) A practitioner may not charge a contingent fee for
preparing an original tax return or for any advice rendered
in connection with a position taken or to be taken on an
original tax return.
(3) A contingent fee may be charged for preparation of or
advice in connection with an amended tax return or a claim
for refund (other than a claim for refund made on an
original tax return), but only if the practitioner
reasonably anticipates at the time the fee arrangement is
entered into that the amended tax return or refund claim
will receive substantive review by the Internal Revenue
Service.

- quote -

For the practitioner, there is.

--
Paul A. Thomas, CPA
Athens, Georgia
taxman at negia.net

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"Bucky" <uw_badgers[at]email.com> wrote:

- quote -

Illegal. Unless you're under audit. Too much potential to
play audit roulette.

--
Regards,

Mark Rigotti

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