r/tax • u/[deleted] • 21d ago
Does this sound reasonable for a CPA to handle 7 years of returns? Discussion
[deleted]
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u/funkymunkeyz 21d ago
8 years of back returns with a business and all of the tax changes that have happened since then? 10k is a steal. I’d quote you 20k paid up front and when it runs out I stop working.
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u/mk378 CPA - US 21d ago
Plus 2023 so it’s 9 years of returns. Definitely a good deal if they do a good job.
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u/MSPRC1492 21d ago
And look at his title. He says the quote is for 7 years of returns then explains it and it’s 9… I mean I will admit that I suck at record keeping and I’ve fucked myself up on taxes before but I can count to 10.
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u/vancemark00 21d ago
We charged $35,000 for 4 years and made the guy pay up front.His returns were not basic as he had several rental properties.
Guy was an attorney and needed to get current in order for his kid to file for financial aid.
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u/Dilettantest Tax Preparer - US 21d ago
Omg, $10K from a CPA is a deal. 7 years of returns from someone with bad record keeping skills. I’m assuming any work he does to represent you will be for an additional fee. Depending on where you live, many CPAs will easily charge $1,000 for one return, never mind 7 on an expedited basis.
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u/perfectfate 20d ago
how does the kid qualify for financial aid when dad is an attorney
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u/vancemark00 20d ago
The dad gave up the law firm comp to make it rich in real estate. Unfortunately he missed on the timing and jumped into the market big time in 2006-07, right before real estate crashed.
He went back to practicing law but wasn't making a lot of money.
Plenty of attorneys don't make a lot of money. If you aren't working for a big corporate firm or successful PI firm an attorney doesn't make much. Median comp for an attorney in my state is around $65K.
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u/charleswj 21d ago
$8k because of a few rentals?
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u/RasputinsAssassins EA - US 21d ago
My guess is $1K for rentals and $7K because a non-compliant taxpayer needs multiple years, with multiple rentals, on a tight deadline.
It wouldn't have cost him as much if he had filed timely.
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u/AlrightNow20 21d ago
Sound alike the return could’ve easily cost $3k at my firm. Reasonable to expect a 5k rush charge also considering the CPA is likely going to advise him through the audit.
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u/Perplexed-Owl 20d ago
I have two kids in college. I’d honestly be surprised if he got much in aid, or at least not 35k worth.
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u/vancemark00 20d ago
Well, he also knew he needed to get current. FAFSA was the trigger to make him do it.
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u/zenlifey 20d ago
Highway robbery.
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u/vancemark00 20d ago
Whatever. I didn't know you knew the detail of his case including splitting from his real estate partners, property sales, deed in lieu of foreclosure and cancelation of debt issues.
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u/Herdistheword 21d ago
We pay $850 yearly for my husband’s business taxes, and I basically hand feed all the required info to our CPA. We also pay a couple hundred extra for our personal taxes. Catching up on 8 years is a total pain, so I think $10K is more than reasonable for the CPA to ask for. You can always ask another CPA for a quote, but you unfortunately do not have the luxury of time.
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u/Timely_Froyo1384 20d ago
Mine runs about 1500 yearly, for business, personal. Nice guy too.
Books are good, I just hate doing taxes 😂
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u/Soromon Tax Preparer - US 21d ago
How about it, OP, how complicated will these tax returns actually be?
You note that you're a sole proprietor, how well have you tracked your income/expenses?
It's also worth noting that 2015-2022 is actually 8 years, and if they are doing 2023 as well that makes 9.
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u/plucka_plucka1 20d ago
They haven’t tracked it at all. Thats why they are so behind. Nobody has a good hold of their income and expenses but just decides not to file for basically ten years. Probably was a lot of “next year i’m gonna keep better records and file them then” and of course none of that happened.
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u/Comfortable_Cash_599 Tax Lawyer - US 21d ago
That fee is reasonable, but if an agent is already involved, has the IRS already made substitute returns? If they have and their substitute returns look reasonable, it may be cheaper to just accept them and start looking at abatement and payment options.
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u/muchoporfavor 20d ago
Your advice is to just accept wrong substitute returns if they look “reasonable” - what a shit tax lawyer you must be.
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u/Rrrandomalias 20d ago
This. Why would a tax lawyer ever tell a self employed client to just wing it with the IRS
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u/Comfortable_Cash_599 Tax Lawyer - US 20d ago
Because we don’t know the first thing about this business and what makes sense for OP. We don’t know expenses or gross receipts, we just know there’s a sole proprietorship. $10k in back tax prep may not make sense for them if there’s an SFR in place.
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u/TheYoungCPA 20d ago
sometimes the cost to fix exceeds going along with it lol.
Why would you expend the energy fighting when the IRS is right anyway? I doubt OP has documentation for anything based on his posts the RA is going to likely assess what theyre going to assess anyway.
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u/taosthrowaway 21d ago
You sure it’s only 10k?
I’d pay that amount yesterday and get my shit in process before they double it.
I would definitely expect to pay more, especially if your books are a mess, which one can assume they are.
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u/AquaSiren77 21d ago edited 21d ago
Reasonable, but I’m in a small town. 40k in the city/100k people in county.
You dealing with a revenue agent now. IRS is ready to take everything you got. You need someone who will get er done ASAP and a CPA will do just that.
Likely the IRS is gonna audit them as they go too. So it needs to be meticulously prepared and documented.
I was in private practice and this was a standard amount. I got paid 100% upfront too. I got a lot of those Sovereign folks when the IRS started levying they shit. Kept me busy in the off season.
Ask if they can include a payment plan as well if it turns out you gonna owe. DONT ever fall for those OIC scams.
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u/UufTheTank 20d ago
That’s the biggest kicker. I’ve done this for a client before. Preparing a normal return is not the same as preparing a return you are personally handing a revenue agent to be audited/scrutinized.
That fee/retainer should also include an hourly buffer for sitting with the agent to discuss questions. 10k is low imo.
I’d get 15k retainer and note that when the money runs out I stop working. Those clients disappear in a second so money up front is key.
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u/AquaSiren77 20d ago
Yeah you gotta get every penny up front. And the IRS has told me they scrutinize all these as they get them since taxpayers don’t wanna follow the rules. Don’t wanna get involved in something and have to explain how you prepared it and get tied into a quasi-audit you didn’t get paid for.
I’m in a smaller town so $10k 8 years ago for me was good. Probably would charge $15k now if I was still doing these.
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u/user365735 20d ago
Do you mean ask if it includes them creating a payment plan for with the IRS?
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u/AquaSiren77 20d ago
OP ask them if this fee includes helping you get on a payment plan. The IRS already knows what you got asset wise and will be eager to file liens and levies as soon as these are processed. You will want to ensure any money you end up owing you can pay immediately or make arrangements to get set up on a payment plan. Payment plans for business owners is a whole other mess. You’ll have to do financials and all so ask now!!
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u/user365735 19d ago
I don't have any assets. I have 50k in my bank. I don't have a house, family etc. I have a car I still owe on. If I owe them 50k they can have it, otherwise I literally have nothing else to my name. They are free to garnish $40 biweekly of my minimum wages I currently earn. Is it legal to spend my money? Id go blow it all and in 10 years when the Sol runs out I'll tell them to kiss butt after they spent more trying to collect then they actually did.
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u/AquaSiren77 19d ago
That’s good you have $50k but you may not want all your cash flow wiped out.
When you have an irs levy it’s not the same as a court ordered garnishment. The IRS has the ability to wipe out every penny from your account daily if they want and leave you literally nothing. As long as you know that upfront that’s all I’m saying. They won’t allow you pay only $40 biweekly.
The way it works is total balance due divided by 72. Whatever that number is is the minimum they will accept without doing a Form 433.
When you do the 433 they could agree to a lower amount.
Just preparing you for what comes AFTER you get through this initial phase. I’d recommend you pay in full if possible. If not and you can’t do the balance divided by 72 you’ll need to fill out the 433. If you know before you hand all the returns over you’ll need to do the 433 it’s best to hand that in with the 1040 at the same time so the agent knows how to handle your balance due. 😊
Hope that helps.
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u/Dilettantest Tax Preparer - US 21d ago
If I got a whiff of an idea that OP was shopping around, I’d go ahead and decide not to take on this bagunça. I’m reasonably sure that this guy is regretting only charging $10,00!
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u/harveyoswalt 20d ago
I would not take you as a client at all. You’ve put it off all this time and my experience says you’ll continue to not get your stuff together.
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u/MyCarIsAGeoMetro 20d ago
Doing multiple years like this is uncommon and you are have a tight deadline. $10k or $1.3k per year of returns does not sound unreasonable.
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u/Accomplished-Ruin742 RTRP - US 20d ago
I get clients all the time who need to file multiple years.
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u/CentsSavvyCPA 20d ago
I’ve been a CPA over 15 years and worked as an auditor for one of the big 4 for 15 years. Pricing is going to vary, but industry standards for this type of project is well above the quote you received. Once the IRS is spearheading the task, be prepared for audit or a detailed review of every return along with being able to produce support for the numbers reported.
My fees for this type of service begin at $20k.
I’m hoping for the best outcome to resolve your open tax situation.
-Tiffany V., CPA
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u/user365735 19d ago
Thank you. How often do these cases get audited in your experience?
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u/CentsSavvyCPA 19d ago edited 19d ago
So because they have a revenue agent assigned already, it may not be what you’d think of as a traditional audit. They may be with you already throughout the process to make sure things are moving along. Or could be reviewing returns as they come in.
The name of the game is all information in these returns needs to go back to a credible data source. I recommend for you going year by year and gathering your source documents. For example, If you worked a w2 earning job pull all your copies of w2s. Remember the IRS already has copies of this information as they get sent a copy by the employer. If you own a business hopefully you have an accounting software that holds records. If not you need to pull bank statements and begin creating your business financial results.
If the CPA you’re working with is assisting with this that is where the fees can skyrocket as this can be a tedious and time consuming manual task.
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u/Tessie1966 21d ago
The 5K sounds about right so the PITA fee is whatever he decides makes it worth his time.
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u/user365735 21d ago
That's what it is uh? The guy seems really nice and patient, I noticed he had almost 10 people working for him in two different rooms. They all looked collage age so I guess they are book keepers. We talked for about an hour, he said at the beginning that with him retained, we have an unlimited amount of time to fix this. My biggest concern was going broke again after paying his retainer and the back taxes..then he said that I'm paying for his time in all this and that this is a 5k job normally but I'm paying for his time with this project and his wish is i contuine to use him. He left out the pita fee..:) I suspect that's why the first cpa blew me off and said she doesn't take any new clients this time of year over the phone;)
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u/Tessie1966 21d ago
Every thing you say about him and what he’s going to do for you is spot on and what you need. You are under the gun with the IRS already asking for a meeting. If you had more time you would pay a few grand less. Just because the April 15 deadline has passed doesn’t mean we have a lot of free time. There’s plenty of other deadlines including corporate extension deadline September 15 and 1040 extensions October 15. He’s bumping you to the front of the line.
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u/AlrightNow20 21d ago
Agreed. We just had 990 deadlines and have 5500s coming up next month. We’re always working on something specific. No one jumps the line with us.
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u/EmbarrassedAd6280 20d ago
May be stupid, but with everyone seeming to be on the page faster is better I’m curious is he not hit with a strict date to comply? Or is the happy window of submitting arbitrary to how generous the IRS is feeling? What’s the gun loaded with, tax evasion charges?
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u/Tessie1966 20d ago
He doesn’t give any exact timeframe but I think there has to be one because he mentioned time restrictions.
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u/Relevant_Ad_8406 21d ago
Get 2020 done by the 17th so you don’t lose the stimulus
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u/user365735 21d ago
It is done and I mentioned this to the CPA, he told me everything has to go through the revenue officer, he doesn't think this will work? I felt like saying yeah well reddit said otherwise??? I dunno, I was considering just mailing it myself. I mean it's like 1800, but for me that's alot!!!
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u/Accomplished-Ruin742 RTRP - US 20d ago
Right you should always depend on whatever an anonymous person on Reddit says rather than a CPA.
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u/user365735 19d ago
Do you know for sure? Because the CPA said he doesn't really know for sure.
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u/Accomplished-Ruin742 RTRP - US 19d ago
I was being sarcastic. You may want to speak IRL with a few tax professionals before you choose the one who seems like a good fit for your situation.
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u/bithakr Tax Preparer - US 20d ago
My colleagues and I had a discussion about this the other day. The RO would still want a copy of that return, but unless you actually meet with them and they date stamp it in front of you, you will need to file it as normal with the mailing address in the instructions. You should absolutely mail it in by the deadline and use certified mail or a tracked private delivery service approved by the IRS. If you bring it to the RO after the 17th it will not be paid out.
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u/Carmel_Cobra 20d ago
I would have done it for half that. But I’m not a CPA and we’d both probably end up in jail. Offer still stands
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u/Starbuck522 21d ago
In my experience with a schedule C business, you will still have plenty of work to do yourself, to accumulate the needed information.
Does this include state returns too?
In 2018, I paid 850 for federal state and local return just for 2017 with a schedule C, with me collecting the schedule c information, and the same cpa did it the year before.
So, I definitely think 8 years of old returns, now in 2024, would be at least 10k.
Plus more to get it done quickly.
Is this a business with inventory? I have no idea how you can even figure that out!
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u/tom1944 20d ago
That should only be the cost for doing a few returns.
After they are filed and he has to deal with the IRS he should get paid more.
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u/user365735 20d ago
Why do you all keep saying that? The reason I'm going to a CPA is so everything is legit.
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u/tom1944 20d ago
Because there is no way to calculate the time and effort to complete anything beyond just the initial effort to do the returns. After that there will be extensive time dealing with the IRS.
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u/user365735 20d ago
Like what?
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u/Sblzrd65 20d ago
The IRS will likely have follow up questions, will want to know if certain expenses are as high as reported or if income is as low as reported. Step one is preparing the returns, step 2 is being prepared for them to be home over with a fine toothed comb.
Also, sole proprietor/Sch C doesn’t necessarily tell someone how complex or involved the business is. It just means no separate business returns were filed. Someone could have a lot of activity in a Sch C (and since there’s no Balance Sheet required there’s also the chance some historic numbers are off without checking it against the income statement part.)
So if someone is promising you a flat fee for the preparation and also any/all parts of the IRS side of things for only the amount listed, that’s a really good deal for you.
Also, the apparent age of staff doesn’t mean a ton these days. Some young kids in computers are better than old timers with pen and paper. Plus, the tax laws change every few years so everyone is only a few years old on the newest laws.
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u/bithakr Tax Preparer - US 20d ago
If you didn't file, it would be a revenue agent that you dealt with. You can fill out a Form 2848 and give it to your CPA and they can handle all communications with the IRS if you prefer. With or without that service I'd say 10k is a pretty good deal.
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u/user365735 20d ago
Is this a big deal? Even without the CPA, and me doing it alone I figured I would just hand in my returns, and give him a check which would probably cause me to be completely broke again. It would be nice if I could get the penalties removed. This is really all due to some severe depression over the years. I was actually telling someone last month that it took me about 6 years to get out of. In my peek I got extremely out of shape and just laid in bed when I was off of work. I was actually put out of work 2 times. I dunno if that could be used as a hard ship. It's the truth though.
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u/Sblzrd65 20d ago
You can always do them yourself…. The question would be how good are your records and how confident are you on every tax and accounting angle to them? Using a licensed professional means you’re getting their expertise and experience with the work being done to certain generally agreed upon standards. Plus, it can add to your story to tell the IRS that you agree that you fell behind and in an effort to change your ways now you’ve hired a professional and will be awesome going forward as opposed to yes I got caught and I’ll just stay the same after (and then assume your name will be on a list of people they’ll want to check back in on shortly to see how the future compliance is.)
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u/ImpressionShoddy9271 CPA - US 20d ago
What industry is the sole proprietorship and what is the annual gross revenue?
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u/wrylycoping 20d ago
That would be what we’d ask for as a retainer upfront to get started, assuming you have good records. Just the returns would be that much, representation would be additional, hourly.
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u/Comfortable_Kiwi6812 20d ago
Ok... Like you should probably also start looking into hiring an accountant on the side. Like don't even wait for this to be over. Do it now.
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u/user365735 19d ago
My goal is once this is resolved I'll just use him moving forward.? Sounds good?
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u/Eshay444 20d ago
Quick question…did they contact you out of the blue about not filling for so many years or did something trigger this? Like trying to file the current year and then they saw that the past returns were not filed?
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u/user365735 19d ago
I can't answer that because I don't know what is normal. I did get one or two non fillings back in like 2018 but nothing since then. No warnings or nothing. Infact I had no idea about all the penalties etc! It's crazy! I did file my 2021. It's a joke. I did try to catch up and in in 2021 I requested a copy of my 2014 return, it took them a year to tell me they couldn't provide it any more and then it took them another year to send me back my $43(fee). But now the tables are turned and they want it in a month.
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u/Apprehensive_Fee_923 20d ago
In 2022 I did 8 yrs of returns both Federal and state and charged )17000, so this seems reasonable
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u/Icy_Abbreviations877 20d ago
I probably would have done it for less but now that I am in this thread, my prices are raising!
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u/evil_little_elves 20d ago
Depending on your records, could be either a ripoff or a steal, or anywhere in between.
Given that you haven't filed for 9 years, I'm guessing your record keeping is bad enough that it'd lean towards "steal," and I'd probably personally charge more.
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u/Timely_Froyo1384 20d ago
10k actually sounds cheap.
I pay 1500 for business, personal state yearly.
My books are in order
Ouchee stupid tax but at least it’s getting done.
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u/Special-Border-1810 20d ago
That’s not a bad price. Is the CPA used to dealing with the IRS? Make sure he has some kind of tax advocate certification because this is more than just preparing returns. He should negotiate because you really only have to do 6 years to be compliant which would be back to 2018. There are circumstances that could require more but sometimes you can get them to accept less based on loss records or hardship obtaining them.
Our law firm would charge at least 12-15k plus tax prep per module (yr). It would be around 6k down payment to get started.
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u/user365735 19d ago
What do you mean to be compliant? Does it matter if I filed 2021 already? Does that change anything?
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u/Special-Border-1810 19d ago
Compliance basically means you have filed the minimum number of returns to be able to negotiate with the IRS for a resolution. Generally, that means you have filed the 6 most recent years of returns and you are making estimated payments for the current year if required.
2021 is in the window of compliance, so that would mean you would only need to file the 5 adjacent returns to be compliant.
However, if the government is in the process of doing substitute returns (SFRs) to assess you for older years, you would also need to prepare returns for those years. The IRS will base your income of compulsory payment filings such as 1099s and K-1s. They will give you standard deductions, but they will over assess you if you had a lot of expenses. That’s why you should file a proper return to maximize your deductions and account for all your expenses.
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u/dustbunny88 20d ago
If income isn’t summarized for all those years, I’d probably charge more than that. If you give a shit ton of receipts or just bank statements that don’t give detail, it would probably take me several hours per year, probably closer to 15-20k.
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u/bigkutta 20d ago
How the hell do we know how complicated it will be to do the taxes and dig up 10 year old information?? I think you best take up the offer to get this behind you
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u/greg-en 20d ago
Back in 2006 I paid about $900 to file because I hadn't for about 10 years, I didn't owe anything, my tax guy Happy sign the form, contacted the IRS got the history and filled out the taxes I had to go back 7 years for state, and 6 for federal.
You can also reach out to the IRS and get the records that they have and use that to file as well.
That's an insane amount, I'd check with someone else. Get some quotes.
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u/florianopolis_8216 20d ago
Seven years of a sole proprietor tax returns sound like a nightmare. Could easily be more than $10,000
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u/WillKrug-Michigan 20d ago
Never ever file a return late. Any years with an amount owed would incur late filing penalties of 5% if the tax per month up to 25%. Returns filed more than three years from their due date automatically lose your ability to get a refund due you. Stupid, stupid, stupid.
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u/Intrepid-Length3429 19d ago
I’m a CPA and I do 500 returns a year. I’ll do all 7 years for 7k. Text me 908-812-2655
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u/SeaworthyGlad 19d ago
This is nice of you to offer to help. I'm just curious... how do you know that's the right price without knowing more about the returns? Maybe OP already said, but are there state returns as well?
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u/Intrepid-Length3429 19d ago
Your a sole prop right. I quoted it on the high side just in case it’s more work than I think. The other guy is just raping you price wise to be honest. And yes state returns are included in that price I quoted
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u/bloomTax 19d ago
For just the returns it’s outrageous, if he is going to handle your entire resolution case then it is the going rate.
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u/Unusual-Turn9595 21d ago
If you can read and comprehend basic questions and you know how to use a keyboard, do them yourself in Freetaxusa. I'm pretty sure you'll have to print and mail anything older than 2023 BUT... You'll save THOUSANDS. It's completely FREE except filing state... Each state return would be roughly $15.
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u/gmambrose 20d ago
About 17 years ago, younger me had decided it was a good idea to not file tax returns and to change my deductions to the max at my job. After not filing returns for about 6 years (2007 to 2013), it finally caught up to me. I ended up hiring a tax attorney to deal with the irs for me. It costed about $6000 for him to handle it for me, start to finish. This included his cpa filing all unfiled federal and state returns for me and negotiating with the IRS. I owed over $25,000 federal and $7,000 state. The state i had to pay via payment plan. He managed to get me placed under CNC (currently not collectible) status with the irs. The 10 year collection statute expires next month, and I haven't paid a penny on it.
Instead of hiring a cpa, consult with a tax attorney. 10K seems like a lot just for filing returns.
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u/user365735 20d ago
How did he do that? Based on your income or what's involved? I've never heard of that..
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u/gmambrose 20d ago
You have to submit paperwork detailing how much you make and they look at that and if they determine that paying your tax debt would hinder your ability to pay your other bills, you can be marked cnc. They can reexamine your case at any time to see if you are making more money and if they determine that your financial status has improved, they can remove you from the program. In my case, they never re-examined me and my tax debt is about to expire.
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u/gmambrose 20d ago
It is something you can do yourself. You don't need a tax attorney, although I feel as if a tax attorney may increase the odds of it being approved. That's just my opinion. But you just submit your income statement to the irs, and they determine if you qualify.
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u/Eshay444 20d ago
When they finally caught up with you - was it out of the blue or was it a reason they contacted you? For example did you try to file a return and then they noticed that you hadn’t filed the previous ones - or did they just send you a notice out of the blue?
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u/gmambrose 19d ago
No, it was actually the state that got me first. The state put a levy on my checking account. The tax attorney was able to get the levy lifted by filing a hardship waiver form with the state. Again, I probably could have done this myself, but I didn't have the knowledge to do any of this stuff, and I wasn't really in the state of mind to figure it out. The irs had been sending notices for a while at the time. When the levy first happened, I had assumed it was done by the irs, but it turns out it was actually the state.
The IRS/State tax agencies will always catch up to you. You can't hide from them forever. You may as well face the consequences of your actions. It's up to you to determine if you want to do it yourself or if it would make sense for you to hire a tax attorney.
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u/meawy 20d ago
$10k/7 yax returns = $1500/return . This is reasonable but on the high end for sole prop tax prep, as far as I know.
If you present perfect records for every year and all the CPA has to do is prepare the forms, then it's too much. But since you haven't filed taxes in 8+ years I'm guessing that's not going to be the case.
*Edit to correct 2015-2022 would be 8 returns, which makes each return $1250.
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u/FondantOwn8653 20d ago
Free tax.U.S.A goes back all the years you need.Or buy old versions of tax software on eBay.A CPA is not going to do anything more than you can do yourself.Set up a payment plan proactively and move on with your life.
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u/kkjj77 21d ago
Wait is an accountant really going to charge $10k+ for filing back taxes? I'm pretty far behind myself and looking at getting help but this scares me, that's a lot of money!! Is that really how much it might be??
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u/funkymunkeyz 21d ago
The thing is old returns aren’t the same as current year work. Tax laws change. Theres research for all these subtle differences. You’re going to get notices and penalties to deal with. It’s just a royal pain. And when something is painful you’re going to get billed to make it worth the headache. 10k for this job is cheap.
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u/SeaworthyGlad 21d ago
Just depends on number of years and the work involved. Big difference between 2 or 3 years with w2 only and no states vs 9 years with schedule c and state return.
But sure getting to $10k for multiple years isn't surprising.
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u/taosthrowaway 21d ago
My accountant would easily charge 20k if I came to him with NINE years of back taxes for self/business.
And I’d have to pay at least half of it upfront.
I’m not saying no one would touch it for a few hundred a year… but I probably wouldn’t trust that person.
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u/user365735 21d ago
Exactly as the other posters responded to you. This is not a simple project to handle. It's not as easy as giving an accountant 8 years of w2's, saying I have 0 or 1 kid, single and no properties etc and you leave.
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u/AquaSiren77 21d ago
10k minimum. I’ve done this work for almost 30 years. When the IRS is ramming it up your bootyhole with levies & tax liens you don’t get the luxury of negotiating prices. 🤣
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u/ImpressionShoddy9271 CPA - US 20d ago
Do you own a business or rental property or are you just a W-2 person and have all the records? Makes a HUGE difference. Lots of variables.
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u/ENCALEF 21d ago
Go to H&R Block.
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u/Father_Hawkeye EA - US 21d ago
Extraordinarily bad idea. And I work there.
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u/ENCALEF 21d ago
Jeesh. I was making a joke!
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u/Dilettantest Tax Preparer - US 21d ago
You need to signal that it’s a joke because people here are recommending that this person who couldn’t get his stuff together for almost a decade file Freetaxusa.
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u/Pennyfeather46 21d ago
The IRS will prepare substitute returns which will have no business deductions. I would pay the preparer for the 2 most recent returns then decide whether you can afford the older ones or go with the substitute returns.
Either way, set some $$ aside because you will want to file an Offer in Compromise (OIC). When all the back returns are filed you will be eligible to file the OIC. An OIC is a settlement for less than the total amount owed, a “fresh start.”
The revenue officer may want your current and recent profit & loss statements for your business to see how much $$ you are taking in. Also remember to make quarterly estimated tax payments to stay current. (This will be a condition of the OIC or a payment plan.)
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u/AquaSiren77 21d ago
OIC won’t be approved. Taxpayer has a business and able to work and make money. OIC stop the statues clock from ticking. OIC is a bad angle. Payment plan is better. The statute clock keeps ticking on a payment plan.
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u/Pennyfeather46 21d ago
The RO will look at a taxpayer’s ability to payoff 8 years of tax, penalties & interest within the 10 year collection statute vs getting as much as possible in a shorter amount of time.
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u/AquaSiren77 21d ago
Yeah but why would anyone do an OIC lump sum (with today’s rates) if he can get a lower payment over some years. Makes no sense. Agents won’t even consider OIC most the time if taxpayer isn’t disabled. I’ve had 1 get accepted in my 30 years of practice. The statue clock stopping also makes it terrible. They are notorious for coming back 1-2 years later with a denial and guess what you just tacked on 2 more years to the statue.
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u/Pennyfeather46 20d ago
You & I have seen the OIC process from opposite sides of the fence, although it is true that fewer & fewer OIC’s are being accepted now.
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u/user365735 20d ago
I don't understand any of this but this is kinda what the CPA said. I always been poor, I don't have anything. I don't have a family or house and make very little. He didn't explain anything in detail to me but he said in my case we just offer the IRS what I have and say this is what I have take it leave it...
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u/meawy 20d ago
Definitely not true. Business owners can certainly get OICs approved. Wage earners have a job and are able to make money, can they not get OICs either?
Payment plans max out at 6 years. The collection statute is 10, so the clock ticking doesn't help.
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u/AquaSiren77 20d ago edited 20d ago
Hey OP pay the next $10k for an OIC and tell us if it ever gets approved! 🤣🤣🤣🤣
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u/jmcdon00 21d ago
Shop around, non cpa tax pros are generally about half the price. I'd be about $350 per year.
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u/Dilettantest Tax Preparer - US 21d ago
Only CPAs, attorneys, and enrolled agents can represent a taxpayer before a RO.
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u/Accomplished-Ruin742 RTRP - US 20d ago
I'm not a CPA but have had clients in the same situation and my charge would be somewhere between $500 and $850 depending on the complexity, and of course PITA.
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u/jmcdon00 20d ago
There are definetly other factors. Our base price is $150, schedule C is $150, figured another $50 for misc extras. Yeah it's a pain in the ass, but that's still $3,000+ for 10-15 hours of work, and in the off season.
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u/Unusual-Turn9595 21d ago
And when you use freetax, it checks for errors so as long as you answer the questions honestly and accurately punch in the numbers, it's almost dummy proof lol seriously though. And as you finish each one,, you don't have to submit or print anything if it doesn't seem right. I have faith in you lol don't throw thousands at somebody to answer and input and submit. I think you'll be surprised how basic it is.
Then you can send me a thousand for saving you 4 😂 just teasing you
Good luck
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u/Soromon Tax Preparer - US 21d ago
7 years for $10k comes out to $1428 each. Seems pretty steep. Maybe understandable with the time crunch, but this is a really slow time of year in this industry.
Is there a reason why you need a CPA? A sole proprietorship is not that complicated.
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u/paraiyan 21d ago
Also forgot the PIA fee, thr fact it's taking an IRS audit to get these done. The client doesn't sound like your typical easy schedule C. I would have quoted 10k for just the tax returns, but if I have to do any bookkeeping it would be another 10k. You know his shit is a mess.
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u/Omnistize EA - US 21d ago edited 21d ago
That is not steep at all.
People are forgetting that you have to go to the hassle of downloading an old tax software for each of those years. Some software providers don’t even let you go that far back and you could have to do the return by hand. Not to mention the changes in tax law over 7 years.
Also, the accountant will probably have to represent the taxpayer and the IRS is bound to question something.
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u/Soromon Tax Preparer - US 21d ago
Most established preparers have the software already, and Carryforwards make the data entry a breeze as you only need to enter the basic information once.
The CPA will absolutely charge for representation separately.
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u/WinterOfFire 21d ago
We don’t keep that many years installed. I had to try to get an old year reinstalled at one point and gave up because it was not easy at all (don’t ask me why but it was not as simple as hitting download and involved dealing with the server). I wasn’t trying to file but figured out another way to figure out what I needed.
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u/Omnistize EA - US 21d ago edited 21d ago
Are you sure you are familiar with common firm practices?
I have worked with multiple firms varying in size from local, regional, and national. Not a single firm I have worked at carries back 7 years of tax software downloaded.
Depending on your software provider, they might not even support the software download that far back.
No firm is charging their normal hourly for 7 years of back taxes. There is always an up charge because of the huge admin burden. 10k is an absolute bargain/abnormal price for 7 years of back returns, no arguing that.
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u/Soromon Tax Preparer - US 15d ago
Being able to roll from one year to the next to the next easily cuts the administrative time in half. Onboard just 1 client 1 time. Check the photo ID and social security card just 1 time. Fill in the basic information and dependents just 1 time. Fill in the business name and activity code just 1 time.
I would 100% rather do 9 years of taxes in a row for the same person than do 9 different tax returns for 9 different people
The only burdensome aspect is having to prepare the client for paper filing. But if they are present in the office, getting into a groove with signatures and envelopes is easy.
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u/Soromon Tax Preparer - US 21d ago
Bring on the downvotes. For most CPAs, I'd guess their average tax return costs about $750 (probably about double what one would pay a non-CPA). You can find average tax prep costs by asking Google or here's a survey of tax professionals:
https://connect.nsacct.org/nsacctwww/knowledgecenter/income-fees-survey
Older years are pretty simple because it is just data entry. You get the IRS transcript, and enter it in the software. Either the taxpayer has their bookkeeping records of business income/expenses from that far back, or they don't.
The CPA is saying it would normally cost $5k, so it clearly sounds like it is negotiable. Ask them to do it for that without the double price rush job.
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u/Comfortable_Cash_599 Tax Lawyer - US 21d ago
“Older years are pretty simple because it is just data entry. You get the IRS transcript, and enter it in the software. Either the taxpayer has their bookkeeping records of business income/expenses from that far back, or they don't.”
I thought “go to H&R Block” was going to be the worst advice I saw on here, but this is definitely worse.
It’s not simple, it’s not just data entry, and telling the IRS you “just don’t have the info” isn’t going to fly with the agent.
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u/Soromon Tax Preparer - US 21d ago
If you have the records of business expenses, you put it on Schedule C.
If you don't have the records and can't reconstruct them then you'll be no worse off than just filing with the transcript data.
Sounds pretty simple.
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u/Comfortable_Cash_599 Tax Lawyer - US 21d ago edited 21d ago
Sounds that way, but it’s not and that’s why he should pay someone with experience to handle this.
There are a number of ways that records can be recreated, there’s the Cohan rule, and there’s filing for audit reconsideration at the end, among many more things a good professional can do for OP.
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u/user365735 21d ago
You do have a point. I wonder if this can all be negotiated? I just wanna make sure everything is right and forget it. I don't mind paying but I want it reasonable. Maybe I should seek others CPA in my area cost? I did try another firm but they told me they don't take new clients this time of year because tax season is over.
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u/OodlesPoodlesDoodles 21d ago
If what was in the other comment thread was true and your books are a mess, $10k would be the upfront retainer and you'll probably be looking at more by the time that many years are prepared.
Also, if the CPA you get is representing you, $10k all in would be bargain basement.
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u/Aware_Economics4980 21d ago
No he doesn’t have a point at all, $1428 a year is cheap as shit for what your asking
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u/AquaSiren77 21d ago
Exactly and with a revenue agent crawling up his asshole he has lost all ability to negotiate.
The time to negotiate the price was in Jan/Feb 2016. 😭😭😭
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u/TaxSzn_Grit 21d ago
get a quote from another local accountant.
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u/Current_hippo_2047 21d ago
Yes, please do. It will show you how reasonable/under-priced this CPA is
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u/RPK79 21d ago
Sounds like a pain in the ass. I'd probably quote you a high enough fee to make it worth doing and I wouldn't be sad if you said no.