You give love a bad name (actually tax preparation)

[ILLMAS]

A client of mine referred one of his sub-contractor so that I can review his tax return prepared by someone else and they did a crappy job on it. I am guessing this tax preparer does not want to have anything to do with the EIC due diligence (asking questions) and decided to put 1099 "non employee compensation" line 7 of the 1099 on box 21 as other income, resulting in no EIC and child tax credit. The worst part of it, I think is that the TP took his 2011, 2010 and 2009 to the new preparer and handed him copies of the prior years to get a idea of his situation, the tax preparer didn't give two cents about it because it was not reflected on the tax return, even worst he was charged for 192 minutes resulting in a $300 invoice which he paid.

After I interviewed the TP everything pointed he is self-employed and is subject to SE tax, he qualified for the child tax credit and EIC, I requested various documents to claim the EIC he brought everything I requested, now my moral issue is, if I should request for him to get a refund from the other preparer the return?

[MsTabbyKats]

No....because:

1. The original preparer isn't going to give a refund and

2. At best, the original preparer will say "Opps...sorry.....I'll give you a discount for 2013" and you'll lose the client.

I don't know what you're charging...but, assuming the return isn't "too complicated" I'd give him a low fee for this year...and tell him that you feel bad because he already spent so much $$$.

[Guest Taxed]

I agree with MsTabbykats. I think you have secured a client who respects your knowledge and will stay with you if you can keep them happy.

[Cathy]

Mas,

Personally, after seeing this type of return at least a couple of times each year, I would suggest (not request) that he might want to ask for a refund.

My fee would be $75 for the 1040X, then my normal fee to file the return as if I had been the original preparer. I would not worry about discounting my fee as it was his decision to have his return prepared by someone else.

I wouldn't worry about him going back to the same preparer as I feel he learned his return wasn't prepared correctly. And if he does go back to the same preparer if your fee is higher, so be it! It seems the same rule applies in just about every business. The one who you help the most is the first to do the wrong thing to you, the person who bent over backwards to help him/her.

Just my 2 cents worth!

[Guest Taxed]

Another opportunity for MAS is to get this client to refer his friends that also went to the other preparer.

I have noticed that when I get one client who was impressed that I caught an error of another preparer, they will tell their friends who also go to that preparer and usually you end up getting a few more the following years.

All the more reason that we double check our work because we could be that losing preparer!

[taxxcpa]

I would charge him my normal fee--no more, no less, and I would refrain from advising him to request a refund from the other tax preparer.

[jshtax]

I agree taxxcpa

[jshtax]

Also do you really want to be bogged down doing EIC returns? I will do them but in no way will I try to solicit them or bend over backwards......unless I see potential in this person becoming a more profitable client and is just having a down year.

[ILLMAS]

I appreciated everyone's input, unfortunately this client will have to pay twice for services rendered. I guess like everyone, I had to increase my fees for the additional EIC work and not all of the returns I work have EIC credit, I feel comfortable saying I maybe do 13% to 15% of returns that have EIC credit.

[Guest Taxed]

I don't know how many of us here actively solicit EIC returns but if your client happens to qualify for EIC then we can't ignore that fact. I stopped walk in clients because i did not want to compete with the Liberty and Taxlands in my region.

[JohnH]

i think you have the right attitude about EIC returns.

About 3-4 years ago, I told the few that I prepared that they needed to start going to HRB, Liberty, or someone else with deeper pockets than I have. I explained the preparer penalties and told them that even though I don't doubt their veracity, I'm still not wiling to take the chance with the bureaucrats.

[Guest Taxed]

I am not sure what I am going to charge this coming season for EIC returns. Last season I saw considerable time spent on the EIC checklist and the additional questions on the documentation. What ended up happening frequently is that they had to go back and get me the documentation, so that was waste of time.

I am not at a point in my business where I can say to a client of 2-3 years to go to Liberty or Taxland because word spreads like wild fire and I get all my business through referrals.

So I have to figure out a rate that works for me and at the same time not get bogged down doing too many EIC returns.