Accountant refusing to release tax refund

[buzzlightyear]

I have a friend who is in dispute with their accountant. They really have stuffed her around for over 6 months, for what is a very simple and straightforward tax return (for 2 financial years). Misleading & sloppy information amongst just very very poor customer service. She is a basic PAYG earner plus 1 IP. They have charged her ~$1700, although she didn't help her cause, by handling over all her paperwork and got them to organise it. She was verbally told $200 per return.

Her refund was finally submitted 6 months after receiving the paperwork, and is ~$1200. At this stage, the accountant is not releasing her refund until they have received their payment. She didn't sign anything to state that the fees could be deducted from her return, as I know I have done.

Is this legal? Do tax agents have the ability to hold refunds until they receive payment?

I have advised her to get in contact with Consumer Action Law Centre, Consumer Affairs & ATO Tax Agents Complaints line so she can understand her legal situation.

Any info/insight would be greatly appreciated.

 

[Market follower]

I have a friend who is in dispute with their accountant. They really have stuffed her around for over 6 months, for what is a very simple and straightforward tax return (for 2 financial years). Misleading & sloppy information amongst just very very poor customer service. She is a basic PAYG earner plus 1 IP. They have charged her ~$1700, although she didn't help her cause, by handling over all her paperwork and got them to organise it. She was verbally told $200 per return.

Her refund was finally submitted 6 months after receiving the paperwork, and is ~$1200. At this stage, the accountant is not releasing her refund until they have received their payment. She didn't sign anything to state that the fees could be deducted from her return, as I know I have done.

Is this legal? Do tax agents have the ability to hold refunds until they receive payment?

I have advised her to get in contact with Consumer Action Law Centre, Consumer Affairs & ATO Tax Agents Complaints line so she can understand her legal situation.

Any info/insight would be greatly appreciated.

From the information you have given, it sounds like the returns were anything but very simple and straight forward. it sounds like a complete mess.

Many firms I know wouldn't even take that on, and I am quite sure that any reasonable firm would not be able to do that work correctly for $200 per return.

I would suggest that she attempts to settle the matter, before they start to sue her for as a bad debt wich will accept her credit rating

 

[nomadic]

they probably charged her $80 an hour to go through her shoebox full of receipts and enter it all. Sorting through 2 years worth of shoeboxes could be about 10 hours work -- that's $800 just there.

.... They have charged her ~$1700, although she didn't help her cause, by handling over all her paperwork and got them to organise it.

 

[evand]

$80 per hour is cheap for a half decent accountant. Mine charges $240 ph. Get her to ask them for an itemised account and she might see where her $1700 has gone.

they probably charged her $80 an hour to go through her shoebox full of receipts and enter it all. Sorting through 2 years worth of shoeboxes could be about 10 hours work -- that's $800 just there.

 

[BV]

Buzz

It sounds like the 2x SIMPLE tax returns were not that simple
but even if the accountant had to chase up statements and to sort out a couple of boxes of receipts I cannot see how they could charge $1700.

I think she should talk to the business management.

Cheers

 

[buzzlightyear]

Agree with the everyone's observations here. I still would have thought that even sifting through her paperwork (and I seen it) that $1700 for both tax returns is very very generous.

The problem is that they aren't returning any calls or emails (including their management), with the exception of saying that they look forward to the invoice being paid. No response about breakdown of hours.

Bit like a stand off at the moment. Add I still can't understand how they can legally hold onto the refund, that is addressed to her c/o her accountant.

What has made it more frustrating, is that she was originally told her return would be for both years around $10k, but ended up being just over $1.2k. Anyway, that is a separate subject that I am helping her through. Time for her learn Bookeeping 101..

 

[grossreal]

hi all
my accountant would do the same
not sure if legal or not but at the end of the day f a job has been done the the bill needs to be paid.
I have a few accounatnts that deal with me and most will say the same alot of people want an accountant to get them out of the poo and then when the cash comes in they are the last to get paid.
I am just as bad as I do the same.
my accountant and he has a few at the moment won't release any paperwork or cheques unless he gets paid.
for him this is normal practice right or wrong not sure but if you want him as your acccountant them you play by those rules.
so maybe these guys are the same.
and yes if she does not pay anything or they take her to court for unpaid bills it looks very bad on your cra as the last person you don't pay is the guy doing your books looks very funny.
So I would avoid that like the plague

 

[PrimeCommercial]

My accounatn charges around the $250 hr as well but charges his offsider out (senior accountant) out at about $150hr (probably pays her $50hr) and charges out the assistant at $50hr (probably pays her $20hr).

I dare say if I gave my accountant a shoe box full of receipts firstly he laugh at me and then hand it all to the assistant to sort out. Its not really something a senior accountant should be wasting their time with.

 

[softmonkey]

if the offsider and secretary are unavailable or away, the accountant will do it himself, and charge you his full rate.

happens sometimes - you just got unlucky.

the only way to avoid it is to do most of the legwork yourself. I never give my accountant receipts, I supply him with all the final figures with the exception of depreciation.

you may be able to argue for a discount to match prior years if there was a sudden jump and little change in circumstances.

 

[coastymike]

Good chance they will be in breach of the Professional and Ethical Standards. According to CPA Australia and the ICAA APS 10 Trust Accounts Part 2 says

"8. Money held or received by a Member payable to a Client, or at the direction of a Client to a third party (for example, tax refund proceeds received as tax agent), in respect of which the Member has no authority to transfer, convert or assign, must be dispatched or refunded immediately to the Client or third party as appropriate, or otherwise dealt with in accordance with the Client's instructions."

If this achieves no result then you can contact the Professional Conduct Officer of CPA Australia, ICAA or NIA regarding the matter.

 

[wylie]

Is your friend planning on paying the whole account? If she gets a breakdown of how the fee is made up, and it appears legitimate, will she pay the account?

I suppose that she can claim the tax return cost as an expense, and she will have learned a valuable lesson about preparing her things before handing over a "shoebox", but I just am curious about whether she is going to negotiate the fee down, and whether she has indicated that to the accountant.

 

[buzzlightyear]

Is your friend planning on paying the whole account? If she gets a breakdown of how the fee is made up, and it appears legitimate, will she pay the account?

I suppose that she can claim the tax return cost as an expense, and she will have learned a valuable lesson about preparing her things before handing over a "shoebox", but I just am curious about whether she is going to negotiate the fee down, and whether she has indicated that to the accountant.

She wanted to see the breakdown first before disputing it, even though on the surface it seems excessive (to me at least). I don't think she intends on walking away from the debt, but is miffed the way it has been handled.

She hasn't indicated anything to the accountant about negotiating down. My gut feeling is that the accountant will hold onto her cheque until she pays. Ideally she wants the money first, then will negotiate with them.

As for the lesson, she definitely has had a golden one to bank here.

 

[Boyler_Room]

Seems that the firm aren't willing to negotiate on any level, from what's been posted. They should at least provide an itemised account, particularly if the account is in dispute. There is no disputing an itemised account if it is all legit. The only reason they wouldn't be providing one would be because they can't legitimately account for the billing hours they've obviously decided to bill her for... at least that's how I would read the situation.

Naturally, I'd be a little miffed if I were in your friend's shoes, mostly because I would want to know what they're charging me for. I'd also be getting in touch with various industry bodies to discuss my legal position.

As has been said, at least it's a lesson learned about preparation prior to visiting the accountant come tax time.

Cheers
BR

 

[BV]

Buzz

I don't know if there is a VIC gov. dept they could go to
but it shouldn't be hard to take it to their professional body.

The major accounting professional bodies are -
the Institute of Chartered Accountants in Australia (the Institute or ICAA)
CPA Australia (the Society)
the National Institute of Accountants (the NIA).

Each professional body has procedures to discipline members who break its rules of ethical conduct, code of practice and / or accounting standards. To lodge a complaint, you'll need to know which body your accountant is a member of.

Here is a website with more details

http://www.complaintline.com.au/accountant.html

 

[Spectre]

I wish my returns would be so low....

If she didnt do anything to save herself the money - i.e. spreadsheets, adding the interest, and just left the reciepts to the accountant to prepare and sort through then .....

 

[Buddybee]

If your friend can't get the detail they wants from the Accountant, I'd be calling the Tax Department and explain that she's yet to see the cheque, and aks could they cancel it, reissue it and redirect all future corrospondance directly to their address and NOT the accountant. That way the accountant can take as long (or as little) time as they want to respond to your friends request.

Cheers
Buddybee

 

[buzzlightyear]

If your friend can't get the detail they wants from the Accountant, I'd be calling the Tax Department and explain that she's yet to see the cheque, and aks could they cancel it, reissue it and redirect all future corrospondance directly to their address and NOT the accountant. That way the accountant can take as long (or as little) time as they want to respond to your friends request.

Cheers
Buddybee

We talked about that opton last week and she is calling the ATO to ask that same question. Haven't heard of the outcome as yet.

EDIT: ATO is now depositing cheque proceeds directly to her nominated bank account. The amount being refunded is sigificantly different to what they had told her she would be receiving after submitting the tax return. Can't understand why they stuff their clients around like this. I know, after seeing this little experience, would never, ever use them

 

[crunchtime]

I'd get onto consumer affairs / ACCC

 

[Buddybee]

We talked about that opton last week and she is calling the ATO to ask that same question. Haven't heard of the outcome as yet.

EDIT: ATO is now depositing cheque proceeds directly to her nominated bank account. The amount being refunded is sigificantly different to what they had told her she would be receiving after submitting the tax return. Can't understand why they stuff their clients around like this. I know, after seeing this little experience, would never, ever use them

Excellent result - even nicer when the return is further than expected in her favour.

Cheers
Buddybee