Spiralling Accounting Costs

Is my accountant taking advantage of me?

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Hello,

I am a freelance ex-pat living in the US, and as a result, I required some specific accounting services - someone with a knowledge of international tax law. So I was prepared to pay more than a normal fee. I found my accountant online, we had an initial consultation where he told me that his company runs a flat fee policy of $2,500 to handle my accounts and file my paperwork. This I agreed and signed a letter agreeing with the terms of this service.

Our relationship since then has been rather tumultuous, in short, he is a very difficult person to deal with, and the process (myself being new to US tax law) has been long and tense. At one point I asked to terminate the service, and he said that I was being foolish because we were almost done, and I was already bound to pay the fixed amount for the job. So I decided to hold my nose and just get the thing done.

Anyway, having provided all information requested, and thinking that this storm has passed, he last night sent me an email explaining that because the tax calculation was more complicated and took more time than he expected, he needs to charge me an additional $2,500 before he will file my return, despite agreeing to a fixed fee. These fees had not been discussed, or agreed upon in advance and come as a complete surprise. Is there anything I can do to reduce these costs or negotiate? Is it common practice to double your fees right at the end, dangling a complete (but unseen) tax return as a ransom for another payment?

Replies (10)

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By Matrix
02nd Dec 2019 06:16

This is a legal matter so check the terms of the contract. But additional fees are usually agreed in advance.

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By Tim Vane
02nd Dec 2019 09:01

You are being ripped off. Don’t pay any more. If you have already paid the initial fee then speak to a solicitor to see if you can get your money back (it will depend on the contract). If you have not yet already paid then do not pay. Either way get a new accountant and you should be paying less than that. You are dealing with a cowboy; there is no reason the process should have been at all stressful for you.

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Replying to Tim Vane:
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By Matrix
02nd Dec 2019 09:42

Very good response (were you visited by 3 ghosts in the night by any chance?).

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By DouglasN
02nd Dec 2019 09:37

As already stated, check the terms of the contract, if he has agreed to prepare and submit the tax return for a fixed fee then this is what he should do. Is there is a clause about being able to charge more when the work is more complex or time consuming than agreed? (even if there is a clause about this, it should be agreed in advance)

What qualification does he hold?

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By bernard michael
02nd Dec 2019 10:16

You state the agreed fee was $2500 (is that a typo and should be £2500 ?) and had an initial consultation ( by computer or face to face?)
Is the "villain" a US accountant or UK or neither ??

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By penelope pitstop
02nd Dec 2019 16:11

This is not common practice.

Can you give us more details about the sort of work involved.

Is it a UK, US or Irish accountant (or somewhere else).

Have you met this person or is he an online scammer.

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Replying to penelope pitstop:
paddle steamer
By DJKL
02nd Dec 2019 16:39

Where do the Irish enter into regarding all this, why them and not the French or Germans etc?

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By Reggyna560
02nd Dec 2019 16:58

Thanks all for the advice. The accountant is based in New York. It confuses me that I agreed to a fixed fee package, but I am now being asked to pay more, simply because it has taken him longer than anticipated.

Here are the pertinent aspects covered in the engagement letter.

The two things that bother me are:

1) "standard tax return" because - what is a standard tax return? does any deviation render the agreed flat fee null and void?

2) "You unconditionally agree to pay us any and all invoiced amounts."

With regards to fees, the letter of engagement states the following:

Fees, Retainers, Service fees and Collection- Our fee for professional services are based upon the amount of time required at a standard billing rates per hour or alternatively may include a flat fee range arrangement at our sole discretion for standard tax return compliance (preparation), plus additional out-of-pocket costs.

These flat fee ranges/ rates do not include out-of-pocket costs (standard courier and other delivery fees, postage, standard computer charges, extensions, travel expenses, collection costs, legal costs and other...as applicable) representing direct pass through costs which are always the sole responsibility of the client, all of which are subject to change without prior notification. We strongly advise you to ask us for a copy of our flat fee rates, which apply to all clients and override all verbal estimates in the event of a misunderstanding over fees.

Additionally, we may require a payment on account (retainer) prior to beginning our work or as work progresses or require invoicing on a C.O.D. basis depending on the amount of work involved and our prior professional relationship experience. You unconditionally agree to pay us any and all invoiced amounts .

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Replying to Reggyna560:
By ireallyshouldknowthisbut
02nd Dec 2019 17:36

I think you really need a US, not a UK site if asking about US taxes

Sounds like a mighty big fee however.

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By JDBENJAMIN
02nd Dec 2019 18:23

Nothing you have told us about the terms suggest he has any right to increase the fixed fee. As with any fixed price, if it takes longer than the contractor expected, tough luck for him.

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