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Dilemma - Don’t want to close my practice

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#1
tax_nyc  
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Tax pros-need some advice.

I’m a cpa and started my tax prep on the side about a few years ago and built up a very small client base. I just started a new job and without going into too much details I am not allowed to “sign off” on tax returns due to conflict of interest at work. They said I can prepare returns for free but cannot represent any tax payers. I love what I do and don’t want turn my clients away. At the same time I don’t want to lose my job.

If I outsource the returns to a friend CPA and they have their name as “paid preparer” but I still efile (since I have the EFIN) - would that be a work around? Trying to find out-As the “efiler” - would that make me the “signer”?

If there are other work around please share. Trying to figure out my options before talking to them. Thanks.
 

#2
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Were you planning on carrying professional liability insurance? Even if you did, would you be covered under the scenarios you are presenting?
 

#3
tax_nyc  
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keninmichigan wrote:Were you planning on carrying professional liability insurance? Even if you did, would you be covered under the scenarios you are presenting?


I am not sure. I haven’t purchased insurance and probably won’t take on anything complicated.
 

#4
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Options:

(1) Give notice to your side clients that you won't be able to handle their returns going forward. Assist them in finding new CPAs. Focus on advancing at your new firm.

(2) Give notice to your new firm. Focus on growing your side practice into something sustainable.

(3) Ask your current firm if you have the opportunity to bring your side clients into the firm. This might be the best solution if they're still profitable with the firm's overhead and if they wouldn't bear material price increases at the firm. Still...some of them may want to regardless depending on the relationship they have with you.
 

#5
tax_nyc  
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ManVsTax wrote:Options:

(1) Give notice to your side clients that you won't be able to handle their returns going forward. Assist them in finding new CPAs. Focus on advancing at your new firm.

(2) Give notice to your new firm. Focus on growing your side practice into something sustainable.

(3) Ask your current firm if you have the opportunity to bring your side clients into the firm. This might be the best solution if they're still profitable with the firm's overhead and if they wouldn't bear material price increases at the firm. Still...some of them may want to regardless depending on the relationship they have with you.


Thanks but need more options for a work around.
 

#6
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It seems like you're trying to have your cake and eat it too.

Your new firm has told you that if you want to be able to "sign off" on returns there (not sure what this means exactly), you can't work or have clients on the side for pay. You're also worried that your position at the new firm may be in jeopardy if you continue to work on the side for pay as you mentioned being fired. Correct?

It seems pretty clear to me what your options are...

Possibly a fourth option, based on what you laid out, is to keep your side clients and do all of their returns for free. This option would be the least appealing to me by far.
 

#7
makbo  
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tax_nyc wrote:Thanks but need more options for a work around.

There are no other options, other than lying to your employer, but if they are really concerned, they could find out how many returns were efiled under your EFIN (it's public information under FOIA). Your scheme to get another preparer to sign the return when you really prepared it would be dishonest and unethical both on your part and the other preparer.

H&R Block had a similar policy for employees, except it applied to any filed return -- free or not, was required to be filed via H&R system. The only exception was your own return, they could not require you to file that one using their system. Every year, the employment application asked if you had an EFIN, and as an EA, I did, but they never questioned it when I answered "yes".
 

#8
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Do not try to work the system, you will lose at some point and it will likely cost far more than what you are trying to earn from sideline taxes. The options presented to you in this thread by others are your valid options. The paid preparer signing the return should be the one that has final responsibility for it; I cannot imagine any CPA is going to put their name on a return they did not prepare, even if they review it, and have it filed under another entity's EFIN for which they are not an employee and thus have E&O coverage.
 

#9
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How did this come up?

Unless it is a GREAT job with big potential, you're going to give up side work?

I think that borders on an unreasonable request....
 

#10
HowardS  
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built up a very small client base

Cut them loose. You already made an employment decision.
I suffer from depreciation.
 

#11
ATSMAN  
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I cannot imagine any CPA is going to put their name on a return they did not prepare, even if they review it, and have it filed under another entity's EFIN for which they are not an employee and thus have E&O coverage.


I agree. What is the problem with the CPA or another preparer filing with their own EFIN as long as it is disclosed to the taxpayer?

I have prepared returns for another preparer who was on disability. Full disclosure was given to the taxpayer. I used my PTIN and EFIN. Billing was done by the other preparer. We shared in the revenue.
 

#12
tax_nyc  
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ATSMAN wrote:
I cannot imagine any CPA is going to put their name on a return they did not prepare, even if they review it, and have it filed under another entity's EFIN for which they are not an employee and thus have E&O coverage.


I agree. What is the problem with the CPA or another preparer filing with their own EFIN as long as it is disclosed to the taxpayer?

I have prepared returns for another preparer who was on disability. Full disclosure was given to the taxpayer. I used my PTIN and EFIN. Billing was done by the other preparer. We shared in the revenue.


Since this happened so quick the other CPA doesn’t have an efin set up which is why I would have to efile. Trying to explore all options and then have a talk with my employer.
 

#13
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Why doesn't he/she have an EFIN set up?

Is this "other CPA" an employee at another firm?
 

#14
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How much gross revenue are we talking about from these side clients?
 

#15
tax_nyc  
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ManVsTax wrote:Why doesn't he/she have an EFIN set up?

Is this "other CPA" an employee at another firm?


No he is just an employee (not at cpa firm) but he is an active CPA.
 

#16
tax_nyc  
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ATSMAN wrote:
I cannot imagine any CPA is going to put their name on a return they did not prepare, even if they review it, and have it filed under another entity's EFIN for which they are not an employee and thus have E&O coverage.


I agree. What is the problem with the CPA or another preparer filing with their own EFIN as long as it is disclosed to the taxpayer?

I have prepared returns for another preparer who was on disability. Full disclosure was given to the taxpayer. I used my PTIN and EFIN. Billing was done by the other preparer. We shared in the revenue.


This is a good idea
 

#17
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Again, how much revenue are we talking about?

If less than 5% of your new salary, you're overthinking this.
 

#18
tax_nyc  
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ManVsTax wrote:Again, how much revenue are we talking about?

If less than 5% of your new salary, you're overthinking this.


Its just a few thousand $ a season. I’m not doing for the money but I kind of am. Not sure if you know what I mean. I like doing this on the side but it wouldn’t make sense for me to do it for free. I like the interaction and being able to help others.
 

#19
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I understand what you mean.

I just don't think you're being practical.

Are you not able to interact with and help others at your new firm?
 

#20
tax_nyc  
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Decided to not charge my clients this year and will figure things out. Thanks.
 


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