Dennis Marks wrote:

- quote -

While I appreciate your arguments 100%, I can tell you that
the vast majority of taxpayers do not like to pay at end of
year, whether 999$ or less to Uncle Sam, or even 14$ to the
state. And although I can do it rather well and estimate
my own, many times I can't do that well for clients.

Hence my recommendation, depending on the client and his
attitudes to taxes, is usually to have about a 300$ cushion
on federal and less than 100$ on state taxes.

Remember, if you have a lowly bank savings paying .75%
interest, and even since that interest is taxable, what do
you really gain by keeping an extra 500 during the year?

Oh yes. I don't give out any scratch off cards to clients,
but my fees are among the lowest in the area. PLUS at the
end of our meeting, IF the client has been good and not
complained too much about taxes, he/she gets a wrapped soft
peppermint candy. As I explained to one lady "...and if
you've been a good girl and not complained....."..... and
she asked, "and if I've been bad?"

ChEAr$,
Harlan Lunsford, EA n LA
Thu 23 Feb 2006

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Dan Bock wrote:

- quote -

Good for you! One of my new clients said he had used his
refund for one of those HRB IRA's and every year he looks at
his statement, and the value dwindles each year. Naturally
I advised him to roll it over to at least a bank IRA, but he
was told by HRB that he couldn't roll it over.

ChEAr$,
Harlan Lunsford, EA n LA

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Did you know that the state of California has sued H&R Block
for RAL's? In a way I sort of feel like they were the fall
guys because HSBC is actually funding the program. If one
gets sued, the other CERTAINLY should too.
http://www.latimes.com/business/la-f...lines-business

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AmgregorM[at]gmail.com wrote:

- quote -

And more specifically in most cases less than a few weeks.
For example refunds for those returns I efile by tomorrow
before 11 a.m. are scheduled to be in bank by the following
Friday, IOW 8 days. Those after that cut off time take
till the following Friday, but still a respectable 15 days.

ChEAr$,
Harlan Lunsford, EA n LA

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The problem with RALs is that tax providers and the banks
that provide the high interest loans (often HSBC/Household)
are not really schooling the customers on what the RAL
actually is. Basically, considering the customer that would
likely get an RAL I think that they should be informed a bit
more on the fact that these are actually just high interest
loans and if they wait just a few weeks they can get their
money in full.

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JMc wrote:

- quote -

No need to say that. being conservative is not being
"cheap". After all, if your last name really IS Scottish,
what is there to justify after all?

Speaking of Scotch......

ChEAr$,
Harlan Lunsford, EA n LA
thu 9 Mar 2006 [at] hh

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Dan Bock wrote:

- quote -

On the other hand, if the saver's credit would outpace the
cost of the IRA fees (which, in my experience, it often
does), you were doing your client a disservice by not
offering them a IRA.

Sure, ideally, you'd get your client to go down the street
to a bank and open an IRA there with better interest rates
and lower fees, but let's face it: Most clients who go to
Block aren't going to say "sure, I'll go to the bank
tomorrow to open an IRA and then come back to finish my
return." They're going to say, "forget it. I'll do it next
year" -- and then not do it. They probably don't have the
cash to open an IRA at a bank, anyway.

Is the Block IRA a great deal for me or you or for most
regular posters at M.T.M? Of course it isn't. But, if you
have a client who is interested in actually saving some
money but is unsophisticated when it comes to investing,
isn't it better to help them save some money in a
not-so-great IRA than not to help them save that money?

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<fss[at]altavista.net> wrote:
- quote -

I see your point. If you want it bad enough, you'll pay for
it. That is why I will also wait the week for the package
than pay 1400% more. I guess I'm just the Cheapest Person
Alive.

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fss[at]altavista.net wrote:
- quote -

And your's is a completely valid analogy provided that you
disclose to the (sometimes unsuspecting) client the real and
true interest rate.

ChEAr$,
Harlan Lunsford, EA n LA

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fss[at]altavista.net wrote:
- quote -

There are no laws against charging a reasonable amount for a
service provided.

There are laws against usury. Whether a loan is large or
small the work involved is not significantly different. So
charging more based solely or primarily based on the amount
of money involved can be unreasonable.

When someone is basically charging interest in a rate far in
excess of what is reasonable, the law may step in.

Stu

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JMc wrote:

- quote -

It is service based. Sure, the IRS will send you your money
if 2-4 weeks. But if you want it NOW, you'll have to pay
extra. Here's the comparison I always draw when people
complain about Refund Anticipation Loans....

How much does it cost to send a letter from NY to CA? The
USPS will charge you $0.39 and it will take about a week.

For $5.50 FedEx will ship it overnight. That is a 1400%
increase __for the same service__. Yet no one complains
about "predatory lending practices" for FedEx, UPS, and the
like.

Just my $0.02

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I worked at H&R Block. Those IRAs were awful. The fees were
much more than any interest foregone by a taxpayer who has
too much withholding. To make matters worse, Block made it
very difficult to find out what the fees were, even for the
tax preparers, who were supposed to be selling the IRAs (and
making a commission - $5 per new IRA, I think). One slow
day, a colleague and I spent an hour reading through the
pages of fine print in the IRA agreement, looking for any
info on fees. Finally we found it: "Fees are charged
according to the current fee schedule." Good luck finding
that. (I did find the fee schedule one day - I don't
remember how - and the fees were ridiculous).

I never did sell one of those IRAs. I would never do
something so terrible to a customer.

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Anne Watson <anneb3[at]mindspring.com> wrote:

- quote -

And will go up after one month.

I'm planning on filing a Form 1500 against a bank that keeps
sending me that garbage. (Maybe they'll continue and
provide some _real_ help with my mortgage.)

Seth

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denmarks[at]yahoo.com (Dennis Marks) wrote:

- quote -

To me, your statement of goals is overly simplified. I tell
my clients that my purpose is to see that they pay the
"optimum" amount of tax. By this, I mean they should not
pay more tax than they are required to by law but they need
to be sure they pay all that they are supposed to. To do
otherwise exposes them to potential penalties and interest
at some time in the future.

Also, from time to time, I come across a situation where we
have a choice as to how a transaction should be handled. I
leave such choices to the client but point out that the one
producing the lowest current tax could result in a higher
tax in some future year. For example, choosing a 179
deduction could reduce current taxes but, if the client has
had a poor year, the depreciation could be worth more in the
future when he/she can be expected to be in a higher tax
bracket.

To me, this is still seeking to minimize taxes but over
time, not in just the current year. Seeing the difference,
and advising clients accordingly, is true professional
service.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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- quote -

I always hated to see people do that.... Pay 100%, 200%, or
300% (annualized, of course) just to get their refund 1 to 2
weeks earlier. You try and advise people to just wait two
weeks, but they just don't want to hear about it.

This is one of the reasons why I think there should be a
requirement for high school or even middle school children
to take a personal finance course in order to graduate.
While this most likely solve the problem, it may help.

Just think before you buy or charge or do whatever with your
money....

Just my $0.02.

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You're assuming that everyone knows how to manage money. For
some people, it is the only way they can ever put together
enough money for a significant purchase. Those who get the
advanced earned income credit (mandated by Congress to be
offered by employers) seldom use it to their advantage.

Unfortunately this year, many of the EIC folks I have seen
are just paying bills with their refund--the money is
already spoken for.

I'm all for certification of tax preparers and an end to
predatory lending--but when it comes to refunds, one size
doesn't fit all. A good preparer discusses the size of the
refund or balance due with every client.

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Actually, there are many instances where "paying the lowest
tax possible" isn't the best option. So that really isn't a
goal of "everyone." Let me give you some examples that I
often encounter.

Say you are in retirement (okay, so you are old as well).
You are set in your lifestyle and are quite fulfilled. Your
estate is right on the boarder of being taxable, so you have
more money that you reall can spend. Your children are all
grown and doing quite well on their own (or there are no
children at all). You have no grandchildren and there is
basically no way there ever will be any. You have no
charitable intentions. I (the advisor) tell the client of
ways to minimize taxes and client responds "I don't care
about minimizing taxes..." I encounter this type of client
a couple of times a year.

Second example. Client is well off. Has more money than 10
spendthrifts could blow. Client's political beleifs are
sharply to the left. I point out ways to minimize taxes,
client says "I don't care about minimizing taxes. I want to
pay my fair share. I don't think it is right that you help
people do this [basically: your fired]." I encouter this
type of client once or twice a year.

Third example. Client is well off, but suddenly finds
him/herself diagnosed with terminal illness (seems to always
be ALS). Client and I discuss estate planning and tax
minimization techniques. Client says "what the hell do I
care about taxes? I plan on spending more than I currently
have this year anyway, so I'll just have the government
collect from my bankrupt estate." I encounter this client
once ever year or two.

Last example: tax minimization requires that client give up
control over assets (such as a GRAT, CLAT, FLP, ILIT, IDGT,
etc., etc.), but client has a strong aversion to giving up
control (usually of a family business or of real estate).
Client says "I don't give a damn what tax savings results, I
am not letting junior run my business or give junior the
ability to decide how much I can spend....".

As far as companies that have those contests, they really
target the little guys. People who have little or no net
worth. People who could probably just fill out a 1040EZ or
use Turbotax and be just fine... You don't see the higher
end companies doing that kind of thing (accounting or law
firms).

Gary Brolis
http://www.MechanicsofMoney.com
http://www.MechanicsofMoney.com/blog.php

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Dennis Marks wrote:

- quote -

I appreciate your position, but you should be mad at America
NOT at the tax prep service. All the services do is market
to the public.

And I don't think its fair to consider those who want a big
refund stupid. While I would agree that there are more
productive ways to handle money, many people don't have the
discpline to save and invest like they should. And yet,
these undiscplined people do have the discpline to save via
overwithholding.

My only problem with overwithholding is that because the
government has to issue millions of dollars of refunds every
year, they also then to tweak the withholding tables to try
to eliminate the hugh refunds. So people who continue to
get hugh refunds tend to contribute to the skewing of the
withholding tables.

Lastly, while I would MUCH prefer to see my clients get the
money each week and invest it properly, I would rather them
get an overly big refund than to save nothing at all. More
than a few of my clients actually use those refunds to funds
their IRAs. These folks would never fund an IRA is they had
to come up with $75 every week.

Gene E. Utterback, EA, RFC

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I used to have a lot of clients who lived way under the
poverty line, who were getting multi-thousand-dollar refunds
due to the Earned Income Credit. I would tell each one of
them about Advance EIC, by which they could receive their
EIC througout the year, instead of waiting until tax time to
receive it all. Nobody was interested. Then they would
choose a refund anticipation loan, which allowed them
receive their refunds a few weeks earlier, in exchange for a
few hundred dollars.

My point is, don't blame H&R Block. They're just giving
stupid American consumers what they want.

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denmarks[at]yahoo.com (Dennis Marks) wrote:

- quote -

When I was still a preparer (at Block and elsewhere) I made
it a point to advise clients who had large refunds due them
to cut back on withholding and invest the difference. I even
told those who had credit union accounts to have the
difference automatically deposited to the accounts from
their paycheck. I don't know of a single client who took me
up on it. To a person they all wanted that large refund. You
can't force people to take good advice.

As a result, the commercial prep firms are just giving their
clients what they want when they advertise that they'll get
them the largest refund possible.

--
D.F. Manno
dfm2a3l0t2[at]spymac.com
The problem with being sure that God is on your side is that you can't
change your mind, because God sure isn't going to change His. (Roger Ebert)

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