What is the typical pricing structure for tax planning services when the service results in a client saving $100,000 in taxes?

[PC2025]

 What is the typical pricing structure for tax planning services when the service results in a client saving $100,000 in taxes?

Is it usually a combination of a base service charge and a percentage of the tax savings, or solely a percentage of the tax savings?

[IRonMaN]

Have you checked out circular 230 regarding contingent fees?

[PC2025]

Tax  planning is different from tax filing. So tax planning is not under circular 230 contingent fee restriction. Is it right? 

[IRonMaN]

You said you saved a client $100,000.  How did you save them money if a return is never filed using that advice?  Tax advice and tax prep is intertwined, isn't it?

[TaxGuyBill]

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@IRonMaN wrote:

Have you checked out circular 230 regarding contingent fees?

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I hate to disagree with you, but despite what many people think, Circular 230 does not apply to tax preparation.

In 2013/2014, the Loving vs IRS court case ruled that Circular 230 does not apply to tax preparation (it applies to things like representation), which resulted in the IRS not being able to regulate all tax preparers.

https://law.justia.com/cases/federal/appellate-courts/cadc/13-5061/13-5061-2014-02-11.html

[IRonMaN]

"I hate to disagree with you"

Well, then don't 😁

[BobKamman]

The Loving v IRS case makes no mention of "enrolled agents."  The plaintiffs were not EA's.  You can prepare tax returns without being an EA (or CPA, or lawyer).  But if you choose to apply to IRS for EA status, are you agreeing to accept Circular 230 rules, including those that apply to return preparation?

Incidentally, the District Court judge in Loving, whose decision was upheld by the DC Circuit, was James Boasberg, who has been in the news recently.  

[johnsmith1]

For tax planning that results in significant savings, like $100,000, pricing structures vary. Many firms charge a flat base fee for the planning work and may add a success or savings-based bonus, though some charge solely a percentage of the tax savings. [Content Remove]  typically recommends discussing the structure upfront with clients to balance fairness and transparency, ensuring the fee reflects the complexity and value of the tax planning provided.

[BobKamman]

What is the usual pricing structure for surgical services if the patient lives another 10 years and earns $100K annually?  Here at Tumor Labs we charge three times what it's worth, and if the patient complains we cut the bill in half.  

[IRonMaN]

We here at Ted's Tires, Taxes, and Tumors throw in a free set of tires for every tumor removed plus this time of year patients also get a coupon for 9.87575618728117537% off on their next tax return.