Pricing tax representation is tough—and with today’s chaotic and understaffed IRS, it’s even harder. Eric Green and CPA/CTRC Patrick Wanzer of Breakthrough Tax Resolution reveal real-world strategies for setting fees, managing scope creep, and protecting profitability when IRS delays double or triple your workload, cases bounce between agents, and clients push for “free advice.” They share how shifting from flat fees to hourly billing, using larger retainers, and setting clear engagement boundaries can help tax professionals stay profitable and sane while navigating the turbulent tax resolution landscape.
—
Watch the episode here
Listen to the podcast here
Pricing IRS Rep Work With A Chaotic IRS With Patrick Wanzer
The IRS Chaos: Headaches For Tax Professionals And Clients
I am joined by Patrick Wanzer. Patrick is a CPA and CTRC. He is in Indianapolis. I’ve known Patrick for over a decade now, and is one of our trainers at Tax Rep network. It’s so funny, this topic, you and I were just having this conversation and we were like, “We really should do an episode on this.” Up until now, for the folks reading, I’ve been promoting the idea that especially once you understand how offers work and the rest, and you’ve done your upfront analysis, you can make a lot of money doing this on a flat fee. You get so much money front. We know that we don’t do anything until we get all the documents from the client.
We had a formula we’re going to spend $1,500 to $2,000 a billable time, but we’re charging $3,500, so we have profit there. On the backside, the work’s basically been done. The other $3,000, come time we have a new administration, DOGE, and we don’t have to rehash this, the chaos at the IRS, 25% staffing reduction, they got rid of the people that answer the phones. On the one hand, and Patrick, you and I both, we’re very busy. The chaos of the government, people can’t get through. Are you finding what I’m finding, which is trying to get anything done with the government has become challenging?
Absolutely. It’s become challenging. The delay in response for anything filed with the IRS is doubled or tripled in time. If it’s a cap appeal or even just a response to a CP2000 or any type of notice, the amount of time it takes to hear anything. We do follow up calls to the IRS say, “Where are you on this? Did you receive this?” The number of 60- and 90-day letters the IRS is sending out. Over and over again, “We need 60 days.” Something that seems pretty simple for them to resolve and get it off their plate. We are absolutely seeing that.
It’s increasing the amount of work that we’re having to do and the amount of time we have to spend on these issues that at first we think are pretty simple to resolve. Why is it taking this long? To rethink, are we losing money because we build it on a flat fee, thinking this is the amount of time it’s going to take. The IRS is taking so much longer because of all the chaos that is going on with the IRS.
We were rethinking our entire approach. When this first happened, and DOGE gave everyone their walking papers, you can leave and get your buyout, we had cases pending. We had one case. We were going back and forth and back and forth. They had the taxpayer owing $850,000. We thought the real number was about $380,000. They were in it like $425,000. We’re just going back and forth with this appeals officer. This was on Tuesday. He said, “I’m leaving Friday at 3:00. I’d like to resolve this. Make me an offer.” I was like, “We’re at $380,000. I have to ask the client, but $385,000?” He said, “Sold to the highest bidder.” Now part of me thought, “Is he drunk?”
We got the acceptance letter on Friday morning, faxed over to us for $385,000. I said, “I hope this continues. This is great.” They wanted off their plate. What happened is you reached that tipping point. Now they’re like, “No, your case is going back in inventory.” Now these clients who have been waiting a year, a year and a half, finally have our appeals hearing to find out the person left or has been laid off or whatever else, and now they’re back in inventory. Clients don’t like that.
No, they don’t. It prolongs things, especially if they’re in some litigation from a divorce. I work with a lot of family law attorneys and I do a lot of tax training with them. I have a client who we filed an appeal on a lien discharge petition because the IRS says, “Our taxes were assessed before the state taxes were.” Okay, but the state taxes were assessed beforehand, and they can’t sell the house unless the state taxes get paid. Indiana is weird. Those state taxes should be paid before the IRS gets some of the money, which allows the sale to go through.
We appealed that about thirteen months ago and still are waiting to hear back from somebody from the appeals office going, “Where do we stand on this to get the lien discharge?” It’s just so he can sell the house to get the government money. We want to give the government money. They’re still taking their time to move on it. I wonder if it’s just being passed on from person to person. I’m sure you’ve seen this. You’re dealing with an appeals officer who all of a sudden is no longer there and the case has to go back to the beginning and you’re starting all over again.
Shift To Hourly Billing: Why Tax Pros Are Moving Away
We had a case where we had submitted all the documents to the revenue officer. Revenue officer calls in April. We’re deeming the person uncollectible. In July, we get a letter from a new revenue officer asking for everything all over again to this taxpayer. By the way, this is why you always respond in writing. Instead of calling, I faxed and said, “We just dealt with this, this is the revenue officer’s name, the ID number here. We submitted all this. They told us they were redeeming and uncollectible in April. I don’t know why you would pick the same case up. I think there’s a disconnect. Can you call me to discuss it?”
I don’t hear anything. Two weeks later, they levy the taxpayer everything. Wages, bank account, the whole thing. I contact now the director of collections. “Hank, can you get me in touch with the supervisor because this revenue officer’s not responding to me.” I told him the story. They said, “We’re looking into it.” Two days later, I send another message to him. I email him and said, “Hank, can I just get in touch with the supervisor?”
IRS delays are increasing the work and time we have to spend on these issues. Share on XOne of his assistants emailed me and said, “Eric, nobody knows who the supervisor is. There’s been so much turnover.” This is the director of collections. They don’t know who the supervisor is for this collection group. That day, they faxed over all the releases and they sent us a letter. They closed it as uncollectible, and we got it all straightened out. That’s what you’re dealing with over at the government.
It raises this issue about Tax Pro. What are we doing about this? My staff came to me and said, “Do we charge more? Do we get rid of these flat fees?” There’s more follow up. There are more emails. Let’s be honest, as business owners, that’s cutting into the profit margin that we originally had. To the point where we have now made a shift here that we’re more and more just taking a larger retainer and billing hourly because Gotcha. We’re telling clients that we don’t know how long this is going to take. Sure. I have some that get very angry. I’m hiring you. I said, listen to me. You don’t understand something. This is what you voted for. Maybe not you personally. This is what America wanted.
They voted for this. When he said, “He is going to get rid of the IRS,” what did you think he meant? I said, “I happen to have a client who is very close to the president, was on his transition committee and we’re trying to resolve something for him.” When he got all pissed off, I said, “This is what people voted for. What did you think when he said, ‘I am going to get rid of the IRS?’ he’s going to get rid of everyone except your appeals officer?”
This is what it is. We’re making more money because we have to do more. I can’t guarantee you I can get to a human being and get this sorted out and. If you want us to stay on it, if you want us to send letters, pay for it. This is what happens when you become middle aged and cranky. It’s America. Still a free country. You do it. You pick up the phone. You call them. What’s wrong with you? Do it, but then you pay me for it. To sum this up, what we’re doing is we’ve really moved more to $7,500 retainer build hourly. It does a couple things. We were also about this. It definitely weeds out the tire kickers.
The tire kickers will always be there. It’s a small issue or they want the free advice as to weed them out and the pricing is the number one way to get rid of them and still maintain a professional demeanor. It’s like, “Yeah. That’s their cost. Sorry,” and they will move on. If they are the tire kickers, they’ll come back. I know you’ve told stories. You had clients, they come, they meet with you. Two years later, they’re coming back to you, finally ready to work or act on their issue.
With Ignition, what I find interesting is it alerts us when someone signs the agreement and pays. I’ve had stuff and a month, month and a half later, I get an alert and we’re so busy. I’m like, “Who is this?” Maggie says, “Remember so and so? They had reached out to us. This is what’s going on.” I’m glad her brain works better than mine. “Okay, good. I don’t remember.”
With the automated enforcement, it’s funny. I had somebody who I’d met with years ago, and at the time, we took $2,500 upfront for the analysis. All of a sudden, one day we get an envelope with that letters from like three years ago, signed with a check. I had to have Maggie reach back out to him and say, “Actually, we’re $3,500 now.” That was three years ago. They sent in the other $1,000.
Sent a new letter. They signed the new letter, sent the other $1,000. It’s one of those things that people call and, “I just want to run something by you.” As you start to do a lot of this, I think what professionals will realize, if you’re going to, at some point you start to get known for this, because now people start referring and all the rest.
There’s like a tipping point. I’m not sure when that is, but at some point, it tip. Whether you’re marketing or not, you’re still going to keep getting, because now, the word is out. People know who you are, all the rest. If you’re going to do free consultations, you’ll get to the point where all you’re going to end up doing all day long is free consultations for people that may or may not use you.
Value Of Consultations: Charging For Initial Analysis
We have an issue, like we charge for the consultation, but then if they retain, we apply it to the fees going forward. It makes it free. It’s a free consultation for them on the back end. It’ll end up being free. We have to explain it to them. Sometimes people get a little cranky about that, but we don’t lose the hour ahead of time before and we sit there and have that discussion with them.
Also, we charge just $750 of just for an account analysis before we do anything just to pull their transcripts and do the power of attorney and that sort of thing. That’s not dealing with anybody at the IRS. We can definitely still work on a flat fee on that. That’s $750. If it’s a business and a personal account, it’s $1,500, $750 for each. That’s just to get a baseline of where they stand, because I’m sure you have found out clients aren’t always the most truthful or knowledgeable about the tax situation. They’ll say one thing, and you’ll look at it going, “No, that’s not even remotely close to what’s going on here.” Before we do anything, we charge that fee just to get an idea of where we stand.
Clients aren't always truthful about their tax situation; they'll say one thing, and you look at it going, 'That's not even remotely close to what's going on here.' Share on XSame thing. It’s hard to explain to people because they just want an answer. The truth is, we need to do that because without that, we’re flying blind. All these returns time filed timely, how much time remains on the statute? It doesn’t happen often, but every now and then, we will get somebody that said, “I just need to.” I said, “You owe a $100,000. If you filed these two years on time, this is should be roughly the time spent and on a payment plan, this is what they would want.” They’ll say, “You’re sure of that?” I said, “No. That’s my best guess because you don’t want me to do the work.”
“If you file them on time, if they were late, then you have more time, and you might be able to get a lower payment. You may be not eligible for that offer. I don’t know.” Usually, that’s enough to get them to want to pay. Usually, that comes from the accountants. The accountants who are refer to us, I’ll do a free call with them just because of the relationship. When they get into, “Here’s the situation,” I’ll say, “We would have to do this, X, Y, Z.” “The client’s not going to want to do all that.” “All right. What do you want me to tell you?”
Handling Back Tax Returns: Challenges with Flat Fees
Are you efficient for a discount on something where that just isn’t going to happen? Being a CPA, of course, I’m in the unique position. I prepare the back tax returns as well. I don’t believe green squatters does the tax return preparation. We can then charge on that end. We do the back tax return, but we’re even moving away from either a flat fee on tax return preparation or increasing the price because if it’s an S-corp return, it’s neat if it’s all done.
However, if it’s not done, you have to do the bookkeeping or you have to pull the bank statements to recreate the P&L because they had terrible books. Now we’re looking at how do you know how much that’s going to take? You have to do that on an hourly basis, or you’re most likely going to be losing money on something like that.
Unless the person shows up with a bookkeeper. You can say, “As long as you provide me these documents, we’re not auditing them, we’re not reviewing them. We’re going to take it. Just get the return done. That’s your fee. If you then need us to review or do the bookkeeping, that’s a literally a whole separate engagement,” if you will.
I had a client. We filed the offer and compromised, but I had it finished and I’m looking at the return, and he had just started pulling Social Security the year before. He didn’t tell me he was pulling Social Security. I’m like, “There’s $45,000 in income we didn’t include.” That bumped him out of being an offer candidate, but it wasn’t included on his personal return. That money also wasn’t on there. I said, “You need to go back to your CPA, prepare the return and tell them this $45,000 was not included on your return.”
They also did an S-corp return. They came back with an amended S-corp return that reduced the income from the S-corp by about $45,000. The income for the Social Security was about $45,000. I’m like, “They’re an EA. They’re licensed. I’m not going to audit the return, although I have questions on it, but okay. I’m not doing that. It’s not on mine.”
We’re going to go with that return. It’s not an unenrolled prepared, it’s a licensed EA who does this. You’re right. I’m not going to question the professional and call them and go, “Where did you get this? How’d you do this?” I’m like, “This is interesting. Why did you forget the social security income in the first place? How did you find all this extra?” They filed an extra 1099 to get $12,000 more in expense. They actually filed the 1099. I’m like, “We have to file 1099 here now.” We went with the return, but I’m not 100% sure how accurate that is.
I think the lesson here for Tax Pro is to really make sure that you can still get everything done with the government, all of that. It may just take more because of the chaos, because they don’t know who the group manager is, whatever, to try to get this stuff done. To factor that into your pricing, if you are going to do flat fee, I would just increase the price.
There are benefits to flat fee, but one of the drawbacks is scope creep. The flat fee, you have to be very specific on what you’re doing for them. I’m doing just a penalty abatement. I’m not including tax returns and things like that. People started throwing in little bit at a time. With hourly, you accommodate that scope creep, but then, how do you tell people upfront what the cost is going to be?
You estimate, and I can’t possibly know how many hours this is going to take without looking at any information at all. They want you to tell them upfront a flat fee amount, “Even if it’s hourly, tell me the total amount’s going to be.” It depends. I don’t know. I think that’s an answer people hate the most, but it’s the most important answer to have is it depends. We have to look at it and do the evaluation.
I’ve actually had that, and actually once had a client pay it. It was an offer. This is many years ago. They want a flat fee. I didn’t do flat fees. I’m like, “I don’t know. We go into appeals.” They said, “I need one fee.” At the time, I said $10,000. They paid it. I submitted the offer, back and forth with the offer specialist. It got accepted.
We never ended up having to go to appeals. Back then, they probably would’ve gotten away with $4,500. The flip side is, had it been rejected, had I taken it to appeals and all the rest, it would’ve been around $8,000 or whatever it was. The point being is that if you really need a number, I can give you a number, but it’s going to be high because I’ve got to factor in the work.
The Art Of Pricing: Learning To Price Flat Fees Correctly
My very first case I ever did was an innocent spouse case, and I had no idea what I was doing. I literally have never done a tax resolution case. She comes in, she sits down, she asks me, “Do you do this stuff?” “Absolutely. I do them all the time.” “Have you done innocent spouse?” “Many. Of course I’ve done them.” I remember walking out going, “I guess I’m going to learn how to do an innocent spouse.”
I actually called you and you actually walked me through, “Here’s the things we need on innocent spouse.” This is back in 2015 or ‘16. I only charged like $3,000 for it. I was going to do everything if I went to audit or appeals and everything. Learning that, “If you’re going to do flat fee, you need to learn to price it correctly.” I ended up not having to go to appeals.
We won it on the first filing and all that stuff. That’s great. Even then, I don’t think I charged enough. That was the learning curve for me. Flat fee is great, but you’d have to really build through your experience what it all is going to entail. Specifically carve out, “This does not include any appeal work. That is a separate engagement if we have to go to appeals.”
Our engagement letters and our members area, we normally state, “This is to prepare and submit whatever. In the event it’s denied, we determine that we need to go to appeals. That is a separate engagement and will require a separate retainer.”
They’ll get upset and cranky about it. If it’s the IRS that is incorrect in their assessment and you have to go to appeals, it’s like, “We didn’t do that.” I tell myself, “These aren’t my facts. I didn’t do this. You’re the one that got yourself into trouble. We can get you out of it, resolve the situation, but these aren’t my facts, so we’re just going to go the path we need to go to get to resolve this for you, but it is on you.”
My former partner, Bob Percy, who’s now deceased, told me that. He said, “Eric, always remember we didn’t create this disaster. We’re just here to help clean up the mess.” That’s the way to approach it.
I learned that from family law attorneys because people ask them, “How do you deal with all the emotional baggage of being a family law attorney in custody and all that stuff?” One of them told me, “They’re not my facts. I’m hired to step in, do a job and present the best result possible, and then I step out.” That’s what we do, to learn not to get emotionally involved with your client because then that can really create some issues. They’re not our facts to step in. That’s how I handle it.
I didn’t tell them to not report something. I didn’t tell them to not file. They did this long before they showed up in my office. Now I’m being paid. Same thing. I’m being paid to step in, do a job, and then leave.
When Flat Fees Still Work: Identifying Cases
Just like if my air conditioning goes out, I’m going to pay some guy to step in, repair the air conditioner and step out. It’s the same thing. Let me ask you this. Do you still do flat fees on certain things, though, that is not going to expand because of the IRS? As I said, our account analysis is on our end. It’s a flat fee because I’m not dealing with the IRS. I can pull the transcripts regardless of who is at the IRS.
We will. The upfront facts, and sometimes things will come in. They rent an apartment, W-2 employee, was self-employed. Now they’re not. Whatever. I can look at this and say, “Even if it is a follow up, whatever, there’s not much to fight about here.” We’ll still do flat fees, especially if it’s something we got to get on right away.
I tend to go with the bigger retainer, hourly, because we’re now under the gun. I’ve got to jump on this now. It might take phone calls daily to try to get to somebody. Whereas before, I could count on pretty much one phone call, wait, get through to somebody. I knew we could get this sorted out 90% of the time. Now that’s dropped to maybe 50% of the time. We still do flat fees, but I think the lesson here is just to be careful about it. Make sure you’re picking the right cases to do flat fee and there’s nothing wrong with it, but if it’s one of these where you can see, you can always go up.
If you do a flat fee, learn from each experience, because I’ve done a flat fee you do with this client, but then this one, it expands a lot more than you really expected. The sign engagement, that amount, take that experience into the next time you have a client that comes with a similarity going, either hourly retainer or increase your flat fee by $1,000 to cover it, or something to that effect. All these cases are unpredictable at certain levels. You may think it’s a slam dunk, and then you get an appeals officer who’s a knucklehead and a jerk and is going in a direction. You’re like, “How the hell they decide to do that?” You have to then fight them on front you didn’t expect.
It’s interesting times.
Navigating Unpredictable Cases: Flat Fee Vs. Hourly
With retainer pricing though, do you still do your assessment as a separate billing and then the offer as a separate billing or if it’s just going to be hourly, you just quote it and then you just do all of it? I’ll do my analysis as a flat fee separate, and then if they qualify for an offer, we then assess the fee for the offer as a separate fee going forward, or an installment agreement or something to that effect.
If it’s a straight up analysis, we’ll still do it flat fee. The problem we’re getting is we’re seeing a lot of folks coming in, “The government says I owe this. I don’t know why.” Now, am I doing a FOIA? We have to get wage and income reports. The transcripts, was there an adjustment? We might spend $3,000, $4,000 just investigating what happened.
I got another one. Same thing. “They’re saying we owe $245,000, and we don’t know why.” I said, “Were you audited? Do you have a tax prepare?” Now we’re already starting in the investigation part. What I would do there is we’ve quoted them a retainer, we’re going to go through all of that. If we determine that they owe it, then the analysis from that point forward, I would do that as a flat fee and go from there.
I have people that say, “I owe $117,000. They’ve been leaving me alone for these following years. What can I do?” We’ll just do a flat fee. It’s an analysis. We will pull transcripts just again for CSED and all that, but I’ll do it a flat fee. We’re seeing less of that and more of the, “I don’t know what’s going on.” We’ve had people call and say, “I think I owe around $400,000. I don’t know, though.” I said, “Did you get something?” “Yeah, but I lost it.” “We need a bigger retainer and we’re going to bill hourly and we sort this out with you.”
I even had a client who was one the tire kickers call, and they asked me what my fees were and I told them the fees. They’re like, “It’s high. I can do it myself, and you can just walk me through how to do it.” I’m like, “No, because that’s basically me doing it and I’m not putting my license on something like that. No, that’s not going to happen.”
You’ve got to watch out for that stuff. When it comes to penalty abatements, we charge it. That’s one of the areas you can charge a contingency. Is that something that falls into the realm of, “Do you do fluffy contingencies?” Does that change, dealing with the penalty abatement? First time abatement may be different than reasonable cause as well.
For that, if it’s a really big penalty, we might consider a contingent fee because now I’m willing to gamble. The other thing is also getting paid. It’s one thing if we’re getting a refund, it’s another thing if we’re just trying to get it abated. How is this person going to pay me? We have done hybrid agreements where we take $5,000 upfront, and what we get is we get 30% minus the $5,000. We have something in the kitty to cover the time.
I never thought of that. That’s actually an excellent point.
With penalty abatement, it’s always a wild card. That is one I don’t tend to do flat fee. The other thing is sometimes it’s pulling teeth to get documentation out of people. The other thing too is sometimes I put it on them. We had one where it was a clearly documented medical issue. Get me the medical documentation.
It's like pulling teeth to get documentation out of people. Share on XThey sent us a memory stick, and I’m not kidding, 218,000 pages. Surgeries, all kinds of other stuff. I told them, “Do you know this timeline you had sent me in an email? I just want those documents. I needed to charge you $10,000 if you want me to go through this entire memory stick. I can’t do this. You know what we’re looking for. You go find it and send it to me,” and they did.
That’s still funny, though. They just expect you to work magic. They just give it to you and then you’re just going to work magic. The amount of time it takes, we’ll charge you for it and do it even though we really don’t want to, not something like that. That’s where you can charge a usury rate, but a high rate enough to get them to go, “All right, we’ll do it ourselves. We’ll get you what you need ourselves.”
I’ve had clients who do one of these. “I’m hiring. I only want you. I don’t want any of your people. I don’t want anyone else touching this. It’s got to be you.” My response is, “That retainer, that $5,000 that we asked for sure, I’ve got to make it $15,000. Let me send you a new letter.” Let’s say it’s an audit. I have a controller who’s a certified bookkeeper who will do it for half the price hourly and do it faster. I have folks that fill in the forms, use the software. They’re better at it than I am. Generally, the reason we can keep it at $5,000 or $7,500 or whatever is because of that. I’ll do it if you really want, but understand, I’m probably going to be a little bit slower and at my hourly rate.
That usually is enough to get them to be like, “Your people are trained, so okay, I’ll go with your people.” I’ve thought about this with surgery. I could see saying, “I’ve come to Yale because I want the guy that wrote the book doing my surgery.” I might tell him, “I want you, doc, I don’t want an intern. No offense to them. I know they need to get trained. They can sit and watch. I want you because my life is on the line. On the other hand, I wouldn’t tell them, “I need you. I want you to meet me at the curb, bring me in. You’re going to do the prep, put the booty socks on me, whatever it is they do.”
You’d be like yeah, “No, we’re not doing that. There are nurses and medical staff that do that, obviously.” I’ve had that a couple times, “I want you to do it.” I’m like, “To do the rep, yes. To do all this other stuff, no. That’s what I get the staff for if you want to pay for it. The truth is, I’m going to have them do it anyway and I’ll just review it, but if that’s what you want, sure.”
Controlling Client Communication: Managing Email Overload
It’s interesting that that’s how you really can kind get them in line. I don’t know if your firm does it, if you charge a $0.10 for every email that a client sends. Family law attorneys will charge a $0.10 every time a client sends an email and then they send 57,000 emails in a day, and then they get this huge bill. It’s like, that’s one way you can control the communication so you’re not getting inundated. A flat fee, they think they have complete access to you at all times and you can’t assess anything else and control the client that way. Sometimes, a billable rate allows you to do that to get them to chill out, calm down, stop emailing me 50 times a day.
You hit them in the pocketbook and that usually it’s enough to sharpen their focus a little bit, that they know that they can’t just randomly email you whenever time of day or night. I do have one client who we do planning for some other stuff. If she’s not a billionaire, she’s really close and she’s the one person that will tell me, “I’m going to drive up. I want to sit with you.”
She’ll say point blank, “Bill me for whatever you want to bill me, but I want to sit with you and go through this.” I’m like, “It doesn’t matter if we’re in Zoom, really. I’ll bill whatever I bill.” She’s the one person that’s like, “I’m not going to scan and send you stuff. I’m going to bring it. Charge me whatever you want to charge me.” “Okay. Absolutely. I have to sit at the copier and charge their time to scan your documents.”
You’re upfront and they know about it. They’re not getting a bill on the back end going, “What the heck was this for? I could have just mailed it to you if you told me that.” They know ahead of time. They know upfront. That’s importance of being upfront with the pricing. It’s so clients are not getting surprised with bills at on the end.
That’s one thing with hourly rate. It is to manage the expectation of the client on billing and to explain why you’ve billed. Obviously, I don’t know how you do your billing, but it’s a client communication on what you’ve done on their file. I spent three hours why we did this, this, and this. Versus a flat fee, you just charge the fee and you just get the job done. That’s those things you take into account on which side, which way you’re going to go.
I think this is great. I hope people have learned a little bit of what they should be thinking about in terms of pricing. It’s interesting times. A great time to be doing this.
It sure is. It’s an outstanding time. Different markets are going to assess different fees. If you’re a CPA in Helena, Montana, the fee is probably not going to be as much as New York City. It’s just markets are going to determine that. You take what suggestions on pricing, understand your own market as well. These are suggestions that people have on what to charge.
It’s funny, I got brought into a case by a partner at a firm in Manhattan, and he’s on with the client. He calls me on his cell phone, and he says, “Eric, what’s your hourly rate?” At the time, I would say $475 or whatever. There’s a pause, and then I hear him on the phone saying, his rate is $700. A little cheaper than mine. He hangs up because I said $475. They’re going to think of the paralegal. I can’t charge them $475. I’m like, “Apparently I’m $700 now.”
Okay, fine. Twist my arm to more money. Absolutely.
I have a friend who’s a tax attorney in Mobile, Alabama, and their senior partners are all billing $350. We’re billing $650. It is more expensive to be here than in Mobile, Alabama.
Also, your experience dictates what the hourly rate is. If you’re if you’re an entry level, it’s $200, $250 an hour, but you being a partner, your fee’s going to be a heck of a lot more than $250 an hour. You take into all the experience of all those years doing it justifies that amount. People see the tip of the iceberg. They don’t see the entire iceberg of all the work that went in to get to that point.
Your experience dictates what the hourly rate is. Share on XThe truth is, again, because I’m not doing everything on the case, you get a blended rate. Our legal assistants, at $75 an hour, are doing a lot of the input, all that stuff. Amanda, who’s an EA who’s at $350 an hour is reviewing the 433 and all that so that by the time Eric’s involved, Eric’s involved for maybe 2 hours of the 20 that went into this. You’re not paying $650 an hour times all these hours. It’s really a blended rate because of that.
It’s an interesting time, I think, with all the chaos. Who knows in three years how that’s going to change, where the IRS will go, but it’s an interesting decision to make between the two. Both have their pluses and minuses and they really have to weigh them for yourself, which one works best. You’re right. At $3,000 for a filing, you’re going to lose money on it. Now you go to a retainer at an hourly base, or you increase that flat fee if you want to stay there.
Learning From Mistakes: Adjusting Pricing
Patrick, thanks for taking the time to do this.
Absolutely. Thank you.
Thank you for reading this episode. We’ll see you next time. Keep an eye on the fees. A lot of money, a lot of work. Make sure you keep your eyes on the fees. Here’s the other thing, my last thought on this. If you do misquote, it’s not the end of the world. If we misquoted $5,000 and we spent $7,000, yeah, it sucks, but we learned. Next time, we’ll just adjust. You can always adjust as you go. If the worst thing is you got slightly underpaid on a case, what you don’t want to be doing is doing that on every case.
That’s where the experience comes in doing it. It’s a great area to be in, and you’ll have stops and starts and fits and all that, but it’ll all come out slowly as you learn and get better. It’ll all work out in the end.
Thanks for reading. Patrick, thank you for doing this, and see you next time.
Okay. Thank you.
Important Links
About Patrick Wanzer
Co-Founder | CPA | CTRC
Patrick is a Co-Founder of Breakthrough Tax Resolution Services and has been a CPA for over 20 years. He has spent the last 9 years helping clients stand up to the IRS. Patrick focuses his practice exclusively on IRS Tax Resolution and helping his clients find ways to effectively and efficiently resolve their tax issues. Whether it is through an Offer-in-Compromise, Installment Agreement, Innocent Spouse Filing, Currently-Not-Collectible Status, or some other option, Patrick has helped many clients put their problems with the IRS behind them for good.
Along with being a CPA, Patrick is also a CTRC (Certified Tax Representation Consultant), a National Trainer with Tax Rep LLC, an Author, and Speaker. Patrick has written numerous webinars on IRS Tax Resolution and has presented on the topic at variety of conferences including the Midwest Tax Representation Conference, The National Tax Representation Summit, and the Indiana State Bar Association Solo and Small Firm Conference.
Through his experience helping clients get past their tax issues, Patrick has the knowledge and demeanor to guide you through this process. Clients come to Patrick seeking a way out of what feels like an insurmountable problem and Patrick puts them at ease by explaining that the problem can be solved.
Patrick is a native of Indianapolis, IN and currently resides in the Eastside Indianapolis Neighborhood of Irvington with his wife Kimberly and their dog Lucy.
