While a recent survey found that tax preparers across the country intend to universally raise rates for this coming season, why they’re raising them -- and by how much -- varies widely depending on a range of factors.
The survey by the National Society of Accountants revealed that preparers plan to charge an average of $261 for an itemized Form 1040 with Schedule A and a state tax return, compared with the $246 reported in last year’s survey.
“I’ll be raising my prices 5 percent,” said Stephen DeFilippis, an Enrolled Agent with DeFilippis Financial Group in Wheaton, Ill. “Costs to operate my business have increased and I raise my prices to keep up.”
The fee for non-itemized return will also rise, to $152 for a Form 1040 and state return, against $143 last year, according to the survey of veteran owners, principals and partners of local tax-prep and accounting firms.
They also plan to charge $218 for a Schedule C, $590 for a 1065 (partnership) and $806 for a Form 1120 (corporation), among other fees reported.
Most preparers are considering at least a 5 percent hike some considerably more.
“We normally increase fees 3 percent to 5 percent each year,” said Brian Thompson, a CPA with Bailey & Thompson Tax & Accounting, in Little Rock, Ark. “This year we expect clients to [have] questions regarding health insurance and the Affordable Care Act. In light of the additional time it may take, we’re considering a 10 percent to 15 percent fee increase.”
Marion, Iowa-based EA Joel Grandon is considering an additional separate charge for any forms required by Obamacare, citing “increased responsibility placed on tax professionals by federal and state legislation” for what he predicts will be “a minimum” 15 percent price jump.
Preparers hike fees for many reasons beyond developments in Washington and the cost of living. Bruce McFarland, a senior tax specialist in Belton, Mo., contacted clients weeks before he raised prices in mid-October. “The reasons for the increase were explained in part as a cost-of-living adjustment. We don’t raise our prices every year -- I hold off as long as I can and our prices have been the same for the past three seasons.”
“The second part of the explanation for the new pricing schedule was explained as an effort to maintain consistency with other professionals in my area,” he added.
“We continue to raise our minimums as a way to weed out price shoppers and those that are not a good fit with our target market and services,” said preparer Kathryn Eaton in Knoxville, Tenn.
Other preparers have specific reasons for not raising fees. “Clients who are very organized and give me the information I need from the start won’t see any increases,” said Austin, Texas-based EA Mickey Mann. “Disorganized clients who waste a lot of my time by not reading my organizer and initial emails will pay more this year than last year, anywhere from an additional $50 to $100.”
T. R. Miller of TR’s Income Tax, Accounting & Payroll, in Rising Sun, Md., plans less of an increase this year due to Congress “screwing up” last season and his software provider “picking the wrong year to rewrite their program. I’ll include an explanation [to clients] of why the increase is less than normal,” Miller added, “in addition to normal explanation of why an increase is necessary at all.”
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