Fees

Question 1

When can a MIPP not receive contingent fees?

Answer 1

1) For attest services:
- An audit or review of F/S
- Compilation of a F/S where the member reasonably expects a third party will use it and the compilation report does not disclose a lack of independence
- An examination of prospective financial information

2) Prepare a tax return or file a claim for a tax refund for a contingent fee. Don’t pay the tax return lottery

Question 2

What is a contingent fee?

Answer 2

The fee you get in the end depends on the result that you get in the end. Fee for performance of any service in which no fee will be charges unless a specified finding or result.

Question 3

When are you permitted contingent fees in the Tax Area?

Answer 3

Representing a client in a revenue agents examination of a clients return

Filing an amended return claiming a tax refund based on a tax issue that is subject of a test case involving a different taxpayer or with respect to which the tax authority is developing position (you know it’s going to be looked at by a judge).

Filing an amended return claiming a tax refund in an amount greater than the threshold for review by a Joint Committee on taxation of the state taxing authority (you know it’s going to be looked at)

Representing a client in connection with obtaining a private letter ruling or influencing the drafting of a regulation or statute (you know it’s going to be looked at)

Question 4

What is a commission or referral fee? Are they prohibited?

Answer 4

Referral: Give someone/client money for referring someone to your business

Commission: You recommend to a client a software and you client buys the software from ABC company and you get a commission.

Attest Client:  Prohibited 
Nonattest Client (tax or consulting):  Not prohibited but must be disclosed.  If you are selling it from your own shelf, you do not need to disclose.