Tax con­sul­tant costs: How much does a tax con­sul­tant cost?

US tax law is com­pli­cat­ed, and many employees and self-employed in­di­vid­u­als find them­selves feeling uneasy and panicked when their annual tax returns are due. In many cases, filing tax returns is an op­por­tu­ni­ty to save money on your taxes by deducting certain expenses from the tax due on earnings – however, all too often there is un­cer­tain­ty about what expenses are actually eligible and to what extent they can actually be deducted. In par­tic­u­lar, in­di­vid­u­als who try their hand at filing a tax return for the first time usually have more questions than answers: What, for example, falls into the category of income-related expenses? What private costs count as expenses? What documents need to be kept and for how long?

A simple way to avoid the tax return dilemma is to seek the as­sis­tance of a tax con­sul­tant familiar with the ins and outs of tax law. Your tax con­sul­tant will help you to correctly prepare a complete tax return and with any other tax related matters like an audit – although one should not forget that a tax con­sul­tant’s as­sis­tance comes at a price. To ensure that good advice is not too expensive in the end, you should take a closer look at tax con­sul­tan­cy fees in advance, before the fee and pro­cess­ing costs end up ul­ti­mate­ly exceeding the possible tax savings.

How much your tax con­sul­tant’s fees will cost depends on what kind of tax con­sul­tant you use. A tax con­sul­tant can range from paid software to help you file taxes, a certified public ac­coun­tant (CPA), or even a tax attorney, if you have more complex legal tax issues. In many instances, tax con­sul­tants will be self-employed, but there are also large and small audit and ac­count­ing companies that offer their services. The basic criteria for the cost of a tax con­sul­tant is their expertise and the rep­u­ta­tion they have built up over the years.

Tax con­sul­tants may charge ad­di­tion­al costs for certain expenses incurred in the course of their ac­tiv­i­ties, like travel and sub­sis­tence expenses.

One category of tax con­sul­tan­cy costs may cover sales tax and the re­im­burse­ment of expenses, and it lists the following specific cost items:

• Sales tax: This tax may be ap­plic­a­ble to goods and services depending on the state you run your business in
• Charges for postal and telecom­mu­ni­ca­tions services
• Document lump sum: Lump sum for pho­to­copies or the provision of elec­tron­ic documents
• Business trips: Travel expenses, overnight expenses, daily allowance, and absence allowance

This general heading covers as­sis­tance in all matters con­cern­ing the tax return – this incurs the most costs from a tax con­sul­tant. Tax con­sul­tant costs for this might include:

• Advice, in­for­ma­tion, initial advice: Oral or written advice that is not related to other fee-based ac­tiv­i­ties may be charged with a tenth of a fee according to Table A. If it is a first meeting and the person seeking advice is a consumer, the tax adviser may charge a flat fee for initial con­sul­tan­cy.
• Expert opinions: Prepa­ra­tion of a written expert opinion eval­u­a­tion with detailed research and ex­pla­na­tions.
• Other in­di­vid­ual ac­tiv­i­ties: For example, if the tax con­sul­tant prepares an ap­pli­ca­tion for deferment of tax liability, ad­just­ment of advance payments, or can­ce­la­tion or amendment of a tax as­sess­ment notice.
• Tax returns: Prepa­ra­tion of income tax, cor­po­ra­tion tax, wealth tax returns, sales tax advance returns, etc.
• Statement of retained earnings
• Surplus cal­cu­la­tion for income from em­ploy­ment, capital assets, renting, and leasing: Prepa­ra­tion of doc­u­men­ta­tion and sup­port­ing evidence for these cir­cum­stances.
• Ex­am­i­na­tion of tax as­sess­ments and par­tic­i­pa­tion in external or customs audits: The tax con­sul­tant may charge a time fee.
• Other meetings/cor­re­spon­dence: The tax con­sul­tant may charge ad­di­tion­al fees for meetings with au­thor­i­ties or third parties in tax matters.

Tax con­sul­tant costs resulting from ac­count­ing support include, but aren’t limited to:

• Es­tab­lish­ing an ac­count­ing system (time fee)
• General ac­count­ing (monthly standing fee)
• Payroll ac­count­ing (various fees depending on the activity, e.g. setting up and main­tain­ing payroll accounts, carrying out payroll ac­count­ing)
• Prepa­ra­tion of financial state­ments (balance sheet and profit and loss account, notes, opening balance sheet, com­mer­cial balance sheet)

The tax con­sult­ing costs for payroll ac­count­ing depend in par­tic­u­lar on the expense of the tax con­sul­tant and/or the prepara­to­ry work of the client.

If you find yourself in a position where you need legal rep­re­sen­ta­tion for an issue con­cern­ing your tax returns or ac­count­ing, you will need to consult a tax attorney for rep­re­sen­ta­tion in appeal pro­ceed­ings before ad­min­is­tra­tive au­thor­i­ties, in ad­min­is­tra­tive en­force­ment pro­ceed­ings, and in court. While costs will naturally vary, it is standard for a lump sum to be paid for judicial as­sis­tance and as­sis­tance in ad­min­is­tra­tive en­force­ment pro­ceed­ings.

Yes, the Treasury De­part­ment does ban certain pricing models: Anything deemed to be an “un­con­scionable fee” for providing tax con­sult­ing services is illegal, although the vague nature of this law can sometimes make it difficult to prove in court. It is also illegal for tax con­sul­tants to set a fee price based on in­for­ma­tion you provided in your return. Con­tin­gent fees (i.e. fees based on a per­cent­age of your tax refund amount) are illegal in almost all cir­cum­stances.

The IRS release detailed filing sta­tis­tics, and trends generally seem to show that most years, both in­di­vid­ual and self-employed tax returns usually result in a re­im­burse­ment. According to the CPA Practice Advisor, the average cost for a full tax return is $273, including both state and federal filing fees. Given that in recent years, tax returns have averaged out at over $2,000 it may well be that the fee is worth it. However, in 2019 tax returns are down by $6 billion, which means that many people who would pre­vi­ous­ly have received a re­im­burse­ment may now be handed an ad­di­tion­al bill. It is up to you to evaluate your financial situation, as well as the recent trends in IRS re­im­burse­ment to decide whether it is worth paying tax con­sul­tan­cy filing fees.

Companies and small busi­ness­es will pay a higher fee for their tax return, par­tic­u­lar­ly if their tax con­sul­tant also helps regularly with ac­count­ing pro­ce­dures. However, as long as the business is prof­itable you can save effort and taxes in most cases with the help of a tax con­sul­tant.

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