Need advice from CPA/Lawyer About billable service

T

TexasHooch

100+ Posts
Here's the deal. The wife and I hired a CPA for the first time this year. She caries the status of Pastor and therefore is eligible for specific tax benefits which makes things tricky.

We used a qualified CPA recommended by someone at the Church. After a brief conversation with my wife he informed us the the approximate cost of his services would be between $300-$500.

Well we just got the bill for 753.00. The bill consists of two things:

Professional Services-
1. Tax Returns-$356.00
2. Social Security matter-$350.00

Cash Paid Expenses
1. $47.00

I don't know what the hell the cash expenses are for but my main problem is with the "Social Security Matter". The SS matter is simply a series of discussions we had about the option of opting out of SS. My wife had 3 conversations with CPA regarding this.

1. The first phone conversation before we hired him. He said that he was very familiar with the process and that we could talk about it in our sit down meeting if we hired him. This is when he first quoted $300-$500.

2.Wife met with him regarding our entire tax situation. They spent some time talking about SS. My wife stated she would talk to me about it before we decide. In my wife's case opting out would have been complicated. He said that there was case law on it and he could provide it to her. She said it wasn't necessary. She again asked him where we were at with the total cost of services and was told again $300-$500 but an additional one time fee of $500 should we decide to opt out.

3. My wife called CPA and told him we were leaning heavily towards opting out. He gave her some advise about what she needs to do before we file. she started to waiver and said she was still pretty sure but would call him back. He again offered to mail us the case law, this time she said "sure, fine". She again asked about the fee and was told the same thing as earlier.

Two days later she called him back and informed him we were not going to opt out.

That brings us to the bill which under Services Rendered he includes "Various Discussions about opting out of SS for Clergy; Review and copy current court cases and mail for review; and preparation of draft forms"

Here are my issues:

1.At no point did he inform us that anything he did involving discussions, research, or mailing case law would bring us over the $300-500 fee that he quoted throughout the process.

2.At no point did we authorize him to draft the forms he would have to send to the IRS. He did that after we told him probably (we never said go).

3.The bill isn't itemized. Doesn't he have to specific in his accounting of billable time and services?

What now? Should I call him/write a letter? What do I say/demand?

Sorry this is long but I'm way out of my element here.
 
Same here. Doesn't seem out of line. You will never get along with a CPA or attorney if you gripe about every $100. Wait until somebody sues you and these bills are 5 grand a month from the attorney. Or if you have an IRS audit and want his help. Say you gripe and gripe and he lowers the bill for you to $500 to please you. What do you think he will do when you ask for his help in an audit?. Yeah, he will do handstands to help the guy who wheddled down a $700 bill to $500.
 
that's a 40% overage on top of the top end of the range. It isn't that it is only a couple hundred dollars over, it is the person was ****** at estimating his/her fee range or was a bait and switch kinda guy/gal. I absolutely hate sucking people in with low quotes only to raise the hell out of it when you get the bill people.

Nothing out of the ordinary happened from the description. They checked multiple times during teh process and were given ZERO warning that the bill would escalate. I'd ask for an accounting of how the estimate changed at the 3 times the estimate was reiterated? Was he not being honest or did something change from the last time he mentioned it?

Instead of asking during the process maybe you should get it in writing. verbal accounting doesn't mean **** these days.

Lastly, maybe he/she meant 300-500 per issue?
 
Thank you Zork. It wasn't that the bill was higher than the quote, It's that there was no explanation and no warning. We purposely asked for a status update every time we talked to him to avoid this problem and it was incredibly frustrating that it didn't matter.

Anyway, the wife called him back and politely asked for an itemized bill. He asked why and she told him. He suggested that instead, he would just send a new bill for $500, which was at the top end of the range he quoted us throughout the process. We graciously accepted. It was a three minute conversation, very cordial. We made no threats or outrageous demands.

I think he took a shot in the dark to squeeze out 50% more than the quote. The second we called him on it he backed off. I don't even think he's upset about it, he knows he got caught.
 
Good lord, this is funny. Call, discuss, want advise, get it and don't want to pay?????

Why didn't you say -- Hey, we want you to consider something, work on it, get advise, have a lot of phone calls, and oh, we want it for free?

See what the answer would be.

Pay your bill and be happy it wasn't more.
 
I always enjoy the clients that constantly demand attention and then wonder why I charge them for it. Don't blow the guys phone up and your bill would have been smaller.
 
Tyler, clearly you're drawing your frustration from previous personal experiences because it's pretty obvious you didn't read my (admitedly long) OP closely. We didn't "blow his phone up". The first phone call and quote was before we even hired him so you can't count that.

So with that out of the way, here's how we "Blew up his phone":

One sit down which concluded with him reiterating his quote and instructing my wife to call him when we made a decision.

One phone call to ask for clarification after which he again reiterated his quote.

One voicemail to him informing him of our decision.

That's it. And to the argument that we wanted extra work for free... What extra work? He specifically told us that where we fell within the 300-500 range would depend on how much work he did on the SS opt out. Specifically, he stated that if we opted out it would be $500, less if we didn't.

He did for us exactly what he said he would before we hired him and at every point during Actually less because we didn't need him to file the Opt Out Paperwork (in the end we paid him as if he had as a show of good faith).

So how are those of you who are slamming me justify the "extra work" which neccessitated a 50% overage? Can you explain exactly what he did beyond what he told us he would do? I doubt it because HE couldn't. If he could have we would have paid it, he didn't even try.
 
You are really penny wise and pound foolish with this one.

From his point of view he worked that time and was unpaid. Think he will really want to do work for you in the future? Do you plan to go back to him next year? If he even takes you as a client, I bet his "estimate" is much higher next time. A long term relationship with an attorney or CPA is quite an asset. With your point of view on billing, it will be dificult to ever have such a long term relationship.
 
eff that. you guys are acting like NO ONE EVER has lowballed a quote and then tacked on extras in a bill. come ******* on.

hell, the mere fact that he questioned why you wanted an itemized bill and immediately lowers the bill tells me that he KNEW exactly what he was doing, and immediately backs off when caught.

Battleship - why would they even want to go back to this guy next time if he already dicked them over once? and yes, quoting 300-500 and then giving a bill that is 50% more than the TOP line is dicking someone over.

In reply to:
Click to expand...
 
The fact that a CPA (or any other professional, for that matter) lowers a bill when a client asks about it is not indicative that the person lowers its because he thinks he "got caught." Many good and legitimate professionals may actually want to keep clients happy and lowering a bill is one way to do that. I know many folks in my profession (attorneys) who, if a client ever questions a bill, will just tell the client to pay what they think is fair. I've done that a time or two and taken less than my actual time just to make sure the client is happy. I tend not to think that the CPA in this case is intentionally screwing smebody on such a small amount of money.
 
My wife is a CPA and is working on building a small practice that is supposed to fund her credit card and childcare. So far she is only about 10k underwater, but it is the thought that counts, right?

Anyway, she had a similar situation with a client recently. The guy is obviously trying to save money and his business operates on a shoestring budget (can't hide anything from the accountants). He asked her up front how much she thought it would cost to reconcile his books and create a few reports. She quoted him ~500. Turns out there are a few more questions, and when the guy calls he likes to make small talk, and the wife likes to bill for EVERYTHING.

When she was done with the project, the bill came to $800. Like the OP, the guy would ask if they were still on target for $500, and at the time, they were.

So my wife asks what to do? Send a bill for $800 which was considerably more than the initial estimate, but accurate for the time spent working on the job, or for $500 and write the difference off to good customer relationship. She ended up sending the $500 bill, but had she sent the higher bill and been questioned about the difference, she would have had no problem with the $500.

In summary, it is highly unlikely that the accountant set out to throw out the old bait and switch. It is not like you found an ad in the paper with a low-ball quote for taxes and social security for pastors -- you were referred by a trusted source. It is also likely that the time he spent researching your issues was billed according to his hourly rate. In the end, his estimate was off, but he discounted his fee for good customer service.
 
Depending on the questions asked and the issues that became apparent once the CPA received more information, it would not surprise me that the bill was higher than quoted. There are many times when I get into something, find out that the client did not tell me everyting, and I end up spending more time on it than I initially thought I would. Sometimes the missing information was not the client holding out on me, just not realizing that something apparently unimportant could affect the scope of the work.

Quoting the cost of work before seeing anyting and after a brief discussion is always tricky. I tell all of my clients that it could cost X but it could also cost Y and it depends on them, the others involved, and what facts we learn in the process.

If a client gripes about a bill, I almost always lower it as long as the basis is reasonable from their perspective. I want my clients to be happy. If I told them it would be $500 and they called because it was more, even if all of the work was legitimate, I would lower it too.

As for itemizing, I think most attorneys do, but I have seen some that do not. Some of my clients actually complain about me billing in tenths of an hour. They do not want all of that detail. I have no idea what is expected of CPAs.
 
You could ask me how much I had in any of my files right this very second, and I would not be able to tell you.
 
I assume you mean that you have no idea how much time you'd spent on any file, so any mid-stream quote would be off. That's fine, no one expects you to know off-hand.

However, if you've kept track, it should be pretty easy to take the 30 seconds and figure it out so that you don't mis-quote them, don't you think? And if someone asks in the middle of the process if you're still on track for your initial quote, it should perk your ears that they are cost-conscious and make you WANT to check your time so that you can give them a better idea of what things have actually cost so far.

Maybe it's just me but I'm of the opinion that you quote a number and you stick to it, or if you don't you have a damn good reason and spell it out. Especially when we're talking time here and not something like building materials. Billing someone 50% happens, but it should happen with an itemized explanation (at the very least), IMO, so they know they were not taken advantage of.
 
That's a neat little example and all, but entirely irrelevant.

The fact remains that AFTER the bulk majority of the work/consultation/calls were done, the OP asked if they were still on target for the initial estimate. The answer was affirmative. Then, after a mere phonecall of "we're not opting out", the CPA's bill jumped to 50% above the top range. Smell test = fail.

Now the CPA likely hadn't figured his time correctly and should never had said they were on target. The fact is that he didn't do that.

I'm not saying to vilify the guy, but the OPs initial question was basically "am I justified in wanting an explanation and/or reduction" and my answer is an emphatic YES.

Why you guys seem to think that a customer is not entitled to an explanation when costs are 50% above the top estimate is beyond me. I'd LOVE to be one of your vendors/service providers, simply because you'd never question a bill.

Here's a different angle: When SHOULD you question a bill?

If you are satisfied with the service, should you pay a bill no matter how much it is?

If a billed price comes in far above a quoted range, at what point SHOULD you contest it? Obviously 50% has not hit your threshold yet, so I'm curious what would.
 
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