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    taxnspend's Avatar
    taxnspend Posts: 3, Reputation: 1
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    #1

    Oct 9, 2007, 07:06 PM
    What is a reasonable fee for Tax Work?
    What would be a reasonable fee to pay a consultant (CPA) whose work resulted in saving an organization (501c7) approximately 1 million dollars in tax liability based on his negotiating with the IRS? Should it be a commission based on the amount saved or a set fee? Also what if that consultant is also the president of the organization? What are the industry norms in this kind of situation? Thanks for taking the time to answer. I'm new to this forum.
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Oct 9, 2007, 07:52 PM
    I have moved your question to the TAX forum so you may get better results.

    Was the compensation agreement not worked out before he saved you the money though?
    taxnspend's Avatar
    taxnspend Posts: 3, Reputation: 1
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    #3

    Oct 10, 2007, 05:15 AM
    I'm not sure if the fee was worked out prior to the work. Thanks!
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,301, Reputation: 7692
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    #4

    Oct 10, 2007, 05:24 AM
    It should have been worked out before hand, if you are not sure, talk to the people who made the agreement. If you did not agree before hand, they can change what ever fee they normally change.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #5

    Oct 12, 2007, 09:39 AM
    Commission-base fees based on the taxes saved are both unethical and illegal.

    Further, since the CPA is also president of the non-profit organization, the negotiation would fall under his normal duties as the chief executive of the non-profit organization, so, In my opinion, no fee would be due.

    That said, if the board of directors feels that additional compensation is justified, the amount paid should be based on the number of hours it took for him to prepare and work this problem and on his normal hourly rate as a CPA.
    taxnspend's Avatar
    taxnspend Posts: 3, Reputation: 1
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    #6

    Oct 16, 2007, 06:12 AM
    Thank you so much! I asked my tax accountat too and she said the same thing. It was illegal.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #7

    Oct 16, 2007, 08:27 AM
    Glad to help!
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