PRACTICE CORNER FROM THE
7 Reasons to Increase Your Fees
I usually don’t write about the “tax preparation space,” but with everything I have witnessed over the last 24 months, I felt compelled to address fee increases this month in my column, as so many of you have a traditional tax and accounting practice in addition to your tax resolution business. Reason No. 1: Changing Legislation There have been four (yes, four!) major tax bills signed into law in the last two years. This is unprecedented. Accountants had to deal with the CARES Act, the PPP Program, The American Jobs Act, and the American Families Plan. All of this means it’s taking you at least 30% longer to prepare 1040s now than it did in 2019. Reason No. 2: Responding to Notices, Notices, and More Notices The IRS issued 14 million “math error” notices in 2021 (compare that to just 629,000 in 2019). The IRS is on schedule to issue another 20 million more in 2022. These are being generated regarding stimulus check payments and the advance child tax credit payments issued to taxpayers. The vast majority of these are incorrect that you need to respond to on behalf of your client. This will take 30% or more additional time than it did in 2019. Are you sensing there is a theme here? (Those of you smart enough to implement my Client Care Package System & Toolkit this year are at least getting paid separately for all of this work!) Reason #3: The IRS In 2019, the IRS received about 100 million telephone calls from taxpayers. Last year, with all the new tax law changes, that jumped to 286 million phone calls. Only 11% (that’s right — only 11%) of those received an answer. Have you seen the wait and hold times increase trying to get a PPS or ACS agent on the phone lately? The time spent trying to get a hold of the IRS needs to be factored into your fees as well. Reason No. 4: Many Older Accountants Many smaller tax prep owners have simply “walked away” due to the craziness of the last two tax seasons. This means there is more demand (people getting their returns prepared) than supply. It’s macroeconomics 101.
Reason No. 5: Continuing Professional Education (CPE) Investment In order to keep up and grow your knowledge with all the new tax law changes, most accountants are having to spend more of their money and time learning about all the new tax changes to accurately prepare returns this season. Reason No. 6: COLA The inflation rate is pushing 7% in just one year. Have you noticed that everything is more expensive now? Your clients have. As an example, used car prices are up over 30% higher this year compared to last. Reason No. 7: Processing and Refund Delays If you prepare a return this tax season and you don’t accurately report what your client received in 2021 regarding stimulus check payments and/or child tax credit payments, the IRS will issue a “math error” notice. This will delay the processing of that return and any associated refunds by 240–270 days. Who do you think is going to be tasked to bird-dog this until the return is processed? That’s right, you. For all for the reasons mentioned here, it’s going to take you much longer (upward of 30%–50% longer) to prepare tax returns this season than it ever did before. Are you still charging the same fees you did in 2019? In 2020? Have you only increased fees by 5% or 10%? If you haven’t included this new reality into pricing out your tax preparation fees, you’re operating in the stone age. Don’t undervalue or underestimate your worth. It’s time to raise your fees.
–Michael Rozbruch
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