CPAs & CPA clients: help me feel OK about my big CPA bill.

Tax, SDIRAs & Cost Segregation
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CPAs & CPA clients: help me feel OK about my big CPA bill.

Paul Winka
Rental Property Investor · St Louis, MO · Member since 2010 · 317 posts · 72 votes

So I am trying to get my "team" together as I develop my r/e career so I quit using a vanilla, nonspecialized tax preparer and hired a CPA and spent $500 for a few hours of her time for QB set up assistance. I keyed in a few hundred transactions, sent the CPA my QB files. I then got an estimate to prepare my return of $900 in February. Ok, fine. Tax season is over, Uncle Sam has been paid, but now I just got emailed a bill from my CPA for $1600. I have 2 rental properties, 1 earned income, a relatively simple return. 

I keyed all my stuff in QB and did it so well that the CPA said no changes were made. $2100 ($1600 + $500) seems like a lot considering I was paying $300 for tax prep before. Only thing that I could see raising the bill is that I am new client and some review of depreciation schedules for my properties would need to be validated in past years' returns. But that's it. 

Truth is, I will admit being ignorant about having a frame of reference for what CPA tax prep should cost like what gallon of gas or loaf of bread should cost, so I might be concerned over nothing. If this is just the cost of doing business, so be it, but I really don't know. Would appreciate others weighing in with their feedback. Thanks! 

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  • Brandon Hall
    CPA · Raleigh, NC · Member since 2013 · 1k+ posts · 2k+ votes
    9y

    @Paul Winka if tax prep is the only service that's really being rendered, it's definitely high for the position you are in. Especially if it wasn't communicated up front.

    Is your CPA billing hourly? If so, that's your first problem. 

    CPAs need to get rid of the surprise bills. 

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  • Andy D.
    Investor · Zürich, Zürich · Member since 2016 · 292 posts · 115 votes
    9y

    @Paul Winka The invoice you received should show what amount was billed for what work. While it's never nice to get billed more than what was quoted beforehand, this happens. Then again, it's - as always - a matter of communication which here, apparently, was bad. We cannot gauge the validity of the bill as we do not have all the relevant information. But it does seem high indeed. You should contact your CPA (obviously!) and inquire how that figure came about.

    Do not give up on CPAs, though. They will be of big help to you. If they know what they are doing. Many don't, especially in relation to real estate matters. There are good ones out there, depending on what exactly you are looking for. You may want to reach out to some of them to inquire about how they would serve you. There are some quite active here. ;-) Serving you as client is what they are supposed to do as service providers. For a fee. Good service justifies higher fees, but then again it's a matter of trust. Starting out a business relationship with little output, yet a high bill is not going to be a sustainable one as far as I am concerned...

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  • Lance LvovskyPro Member
    Accountant · Fort Lauderdale, FL · Member since 2013 · 1k+ posts · 753 votes
    9y
    I agree with Brandon. If you were only provided with tax prep and QB setup, those fees seem excessive. Perhaps you should reach out to a couple other CPA's. It is unfortunate your CPA did not communicate those charges to you in advance. I personally hate surprise bills, so I always communicate with clients when fees will be higher than estimated.
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  • Linda WeygantPro Member
    Investor and CPA · Arvada, CO · Member since 2015 · 2k+ posts · 3k+ votes
    9y

    Don't be afraid to question the CPAs bill.  I accidentally double-billed a client this tax season.  Luckily I caught it before he did, but it was still embarrassing...

    Podcast Guest on Show #244
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  • Dmitriy Fomichenko
    Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    9y

    It may not be a bad idea to get a second opinion. Some professionals offer free initial consultation and review of the past year tax return, why not take advantage of that. This will help you make sure that you are using the right guy. 

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  • Paul Winka
    OP
    Rental Property Investor · St Louis, MO · Member since 2010 · 317 posts · 72 votes
    9y

    @Linda Weygant @Brandon Hall @Lance Lvovsky @Andy D. @Dmitriy Fomichenko

    Wow, lots of replies. Andy, I'll try not to be down on CPAs, but I don't feel I got value out of this experience. I am paying top dollar for the same thing I was getting before with a journeyman tax preparer for my empire of 2 properties. I am disillusioned and disappointed. Forgot to mention above that my return didn't get done until 14 Apr after I had everything in to her by 14 Feb. In the past I'd had everything done by the first week of March. 

    I am leaning toward firing my CPA and going back to the firm I was at before. It's only been this one year I've used her. Of course, I need to negotiate this bill first and pay what is fair. 

    Should I just insist on paying $900 like was mentioned? Am I negotiating from a strong position in this situation or does she have the upper hand?  What is one thing I should do to have a positive outcome? Thanks for the tips. 

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  • Jim Walters
    Rental Property Investor · Conover, OH · Member since 2016 · 55 posts · 48 votes
    9y
    The amount you were charged is outrageous. I have worked for tax firms and CPA firms. In your current situation, I would ask for a itemized receipt. CPA's do charge $150 to $250 an hour. However, a lot of tax work done at a CPA office is done by a preparer, not a CPA, who makes a lot less, $15 to $40 per hour. With your taxes, if you went to a tax preparation firm, they charge by forms needed to file for taxes and not a hourly rate, your tax bill would be a lot cheaper.
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  • Andy D.
    Investor · Zürich, Zürich · Member since 2016 · 292 posts · 115 votes
    9y

    @Paul Winka As you basically already said and as Jim has said (and I before ;-) ): get the details of the billed items and make it clear that this is way beyond what was agreed upon. She is billing you. She needs to provide proof of what exactly she is billing you for.

    And yes, find a different CPA. Even if you get to common ground on the bill, the overall picture is wrong and the trust is gone.

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  • Bryan O.
    Specialist · Lakewood, CO · Member since 2014 · 1k+ posts · 1k+ votes
    9y

    @Paul Winka I would question your CPA. It sounds as if they did very little and then over-charged you. It may have been a clerical error. Check first, react once you have full information. If they think the charge was justified, boot them and pay the agreed upon rate. My 2 favorite CPAs are on this threat already: @Linda Weygant and @Brandon Hall. I would recommend you reach out to them.

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