11/02/2026
๐จ TAX PREPARERS & EFIN OWNERS โ LET'S TALK ABOUT SOMETHING IMPORTANT! ๐จ
๐ฐ Are you paying your preparers a percentage of the client's REFUND or a percentage of your TAX PREPARATION FEE?
Because those are TWO very different things! ๐
As we prepare for the upcoming tax season, understanding how you charge clients and compensate your team is essential.
โ PERCENTAGE OF THE REFUND
Example: Your client receives a $10,000 refund, and you charge 10% of that refund.
That's $1,000 in preparation fees based solely on the refund amount.
โ ๏ธ The IRS warns taxpayers against refund-percentage pricing. These arrangements can also raise contingent-fee concerns under applicable professional conduct rules.
โ
PERCENTAGE OF THE PREPARATION FEE
Example: Your tax office charges $425 for preparing a return.
Under a 70/30 commission agreement:
๐ต Preparer receives: $297.50
๐ต Tax office receives: $127.50
This is a commission based on the SERVICE FEE, not the taxpayer's refund.
A commission structure like this is not automatically prohibited by the IRS. However, proper worker classification, documentation, and compliance still matter.
๐ WHAT DOES THE IRS SAY?
๐ Publication 3112: Explains EFIN responsibilities, authorized e-file participation, suitability requirements, and potential sanctions for violations.
๐ Publication 1345: Covers ERO responsibilities, taxpayer authorization, refund-related products, record-keeping, and e-file procedures.
๐ Circular 230, Section 10.27: Addresses contingent fees and professional conduct requirements for practitioners subject to these rules.
๐จ EFIN OWNERS, REMEMBER:
Having an EFIN is a responsibility, not just a privilege. Your business needs proper procedures, oversight, and compliance controls.
And remember, allowing unauthorized businesses to use your EFIN is NOT the same as having preparers legitimately working under your authorized tax office.
๐ก MY ADVICE?
Before tax season begins, review your pricing structure, preparer agreements, commission arrangements, and e-file procedures.
Because building a successful tax business isn't just about how many returns you prepare. It's about protecting the business you're building! ๐ผ
EDUCATION + COMPLIANCE + INTEGRITY = LONG-TERM SUCCESS.
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๐ฌ TAX BUSINESS OWNERS: Are your preparers compensated per return, through commission splits, or hourly?
