NYS CPA contingent fees

[schirallicpa]

I have recently read an ad from another CPA (non-NY) who charges contingency fees for contesting penalty and interest charges, and for filing returns based on taking a stance where there are open/ undecided cases in tax courts. I have read what I could find on line regarding NY rules, but I can't really find an answer in English! Does anyone know?

And can they explain in simple terms?

[jainen]

>>filing returns based on taking a stance where there are open/ undecided cases in tax courts<<

As I read Circular 230 at My link, contingency fees are never allowed for an original tax return, although contingency fees can be charged later for responding when the return is audited or penalties are assessed.

In my opinion, based on what you have said, the CPA is stretching this rule to include preparing a defense for positions that may be audited. In my further opinion, that attitude leads to further problems unless the uncertain positions are properly disclosed. The problems I refer to are more likely to come from the client blaming the CPA than from anything the IRS might stumble across.

Besides, on what contingency is the fee based? If it has anything to do with the refund amount (and what else is there at the filing stage?), it is clearly unethical under any state licensing authority and all the national professional associations.

[schirallicpa]

I guess I was thinking that you could ask for a % of contested penalties. You are saying no to that? (Sorry - I have read more conflicting info since my original post.....)

[jainen]

>>I have read more conflicting info<<

What information have you read? Did you follow my link to Circular 230? You have somehow come to exactly the opposite conclusion as to what I said, so I don't think I can tell you anything else.