The annual question has come around again: How much should you charge clients for preparing and filing their returns?
“I raise prices every year,” said Enrolled Agent Terri Ryman of Southwest Tax & Accounting in Elkhart, Kansas. “My clients manage to get raises annually, so I do, too.”
“New forms and expanded forms will be priced based on additional work required, but I’m seeing [increases of] $25 to $50,” said Florida EA Steve Odem. “Billing based on time is going up $10 to $25 per hour.”
“Our base form charges will increase, as will our hourly bookkeeping fee. None of the per-schedule fees will increase,” said EA Laurie Ziegler at Sass Accounting, in Saukville, Wis. “The form increase is about 5 percent, the hourly increase is about 2.5 percent.”
“Because we provide year-round service, we need to be sure that our fees include cost increases that we incur for tax planning and resolution in our base package,” said Steven Weil, an EA at RMS Accounting, in Fort Lauderdale, Fla., who plans to increase fees 5 percent for next season. “This year, in addition to increases in the health insurance we provide for our employees, we are also seeing increases in wages and benefit costs. When you add to this the increases in utilities, property taxes and IT costs … a fee increase becomes necessary to stay even.”
“I’m actually lowering some rates next year but keeping my minimum fee to basically walk in the door at $300,” said EA John Dundon, of Taxpayer Advocacy Services in Englewood, Colo.
‘Across the board’
“We won’t be raising fees this year, as we did raise fees last year. Our last increase was 3 percent,” said EA Gene Bell at Gene Bell & Associates, in Bellingham, Wash.
EA Janet Sienicki, in Schererville, Ind., also has no plans to raise prep prices. “I will have increased billing for post-filing tax notices resulting from either client-missed information, misinformation or mishandling of return data by federal and state agencies,” she added.
“At the end of the third quarter every year, I review my expenses … to see if my prices need to increase for the next tax season,” said EA Jennifer Brown, of Implex Tax & Accounting in Clearfield, Utah. “I do intend to raise prices for this tax season 3 percent, which is nominal.”
EA Jaimee Hammer, in Cherry Hill, N.J., also raises prices at least 3 percent annually “across the board. I charge per form, and every form will be increased by the percentage and rounded to the nearest dollar,” Hammer said. “Small forms don’t change because the rounding lands them back at the same amount. When I feel the year included special circumstances, I may go higher. The biggest jump I ever made was 7 percent.
“I feel good about the [latest] increase,” Hammer added, “and it doesn’t seem to shock my clients.”
‘Police’ work, ‘sharp’ hikes
Practitioners reported raising prep services an average of some 7.5 percent season to season, according to a recent survey from the National Society of Accountants. Most preparers for this article plan to hike rates 5 percent to 10 percent.
Some preparers are thinking bigger. “We’ll be raising prices at least 25 percent next year and likely at least 10 percent the following year,” said Geoff Plourde, a CPA and EA in Woodland Hills, Calif. “Individual clients will see the largest increase due to increased compliance requirements resulting from the PATH Act and new IRS policies.”
“We do plan to raise prices this year and have probably failed to raise prices in only one or two years,” said Richard Ogg, an EA at The Master’s Tax & Financial Services, in Santa Rosa, Calif. “Generally the increase for a ‘typical’ return (which probably doesn’t exist) is around 2 percent. But we tend to review pricing more strategically. We charge by the form, and most increases come from increased complexity or even new forms.”
Thanks to the PATH Act, Ogg added, “people who qualify for that nice education credit will now be subjected to a lot more scrutiny than in the past. And we’re required to document a lot of things that were not previously required.”
Twila Midwood, an EA at Advanced Tax Centre, in Rockledge, Fla., cites the extension of the deadline for health insurance companies to issue 1095-Bs/1095-Cs to March as one cause of raised fees. “This now puts additional requirements on tax professionals,” Midwood said. “We haven’t completed our analysis as to how much our fees should be raised [but] it’s unfortunate that the taxpayers must suffer as a result of these and other strict requirements.”
Pricing out of a market
“With the new due diligence requirements concerning the EITC, Child Tax Credit, American Opportunity Credit and the Additional Child Tax credit, tax professionals will now be required to spend more time ensuring that they have the documentation to satisfy the requirements. The penalties to preparers for failure to satisfy and document eligibility for the credits are not worth the risk,” Midwood said. “Educating taxpayers of these new due diligence requirements and documentation may prove to be a challenge.”
This year Ryman will bump the price of all forms 3 percent; her hourly rate will rise to $175 and her EIC/Child Credit/Hope due diligence form will go up $25. “If the IRS insists on making us the EIC police, then I am going to charge accordingly,” she said. “In fact, I may increase it to $50. All of the additional questioning and documentation requirements take longer and longer each year. And the audit potential is great, so I make sure to have most of the documentation at the time I file the return.
“I am actually hoping that I will eventually just price myself out of the EIC market,” Ryman added.