Wells Fargo in the news again

Most of the nonprofit businesses that I work for in the Philadelphia area use Wells Fargo as their primary bank. I’m not quite sure how that happened; it was not a deliberate choice on my part of saying to these boards “hey guys: let’s all use the same bank so that it will make my job as accountant easier”. But that’s the way it turned out and it does make my work easier. My collective knowledge of the bank’s operations and my personal relationship with the bank’s key personnel is actually an asset to these business clients.

Wells Fargo has provided excellent customer service and has offered top-notch products and services to me and my clients over the years. But the company has been in the news for bad management practices that led to over-aggressive sales practices and the opening of up to 3.5 million fake or unwanted customer accounts.

Now a new scandal has emerged. Yesterday a new lawsuit filed titled ‘City of Philadelphia v Wells Fargo & Co et al, U.S. District Court, Eastern District of Pennsylvania, No. 17-02203′ alleges massive predatory lending practices. I’m not familiar with the action and am not commenting on the merits of the case. There are aspects in the first news coverage that raise the question about whether this was an opportunistic action motivated primarily by plaintiff attorneys and not a cry for help by victims or city leadership. I haven’t read any coverage from a victims’ perspective. In any event. this is one more public relations black eye for Wells Fargo.

Bad banking practices certainly are not unique to any one bank. In fact, I’ve blacklisted two other banks in the Philadelphia area and refuse to work with them on any new client accounts. One bank was actually mishandling client funds. When I turned over evidence to the Pennsylvania Department of Banking a few years ago they responded by saying that they don’t have the resources to investigate. The other had such a poor relationship between the bank staff and the third-party online banking technical services provider that it hurt customers.

It makes sense for the boards of these nonprofit businesses to ask whether their bank is a good social/political fit for their business. The choice of bank is a significant factor to the long-term success of a nonprofit business. It is possible that some board members are already soured by the news they’ve already heard and ready to leave Wells Fargo. It is also possible that Wells Fargo may take some remediation steps to repair its tarnished reputation that could actually benefit these nonprofit clients in the long-term.

At this point I do not know and so I have no recommendation. But I will watch the situation as it unfolds in coming months.

Philly: “This is not a normal election”

This post is not meant to express an opinion on any of the local issues here in Philadelphia or express support or criticism any candidate. The fact is that I don’t know much about criminal justice and I don’t know any of the candidates in the DA race. This writing simply expresses my fear of the possible effects of next week’s election in Philadelphia that is dramatically different from any election I can remember.

Six months ago we concluded a national election where most would agree was not a normal election. We are still trying to figure out what happened and may not know the truth for months to come.

Meanwhile here in Philly we see big outside political money, questionable tactics by the party and increased political activism by lawyers, all add up to risks of instability to our system of government.  Our basic approach to criminal law is apparently at stake.

I strongly recommend viewing Laura Galante’s TED talk “How to exploit democracy” and reading the profile article about George Lakoff for insight into what’s happening. It might be too late to change the outcome of Philadelphia’s DA election but it is important to recognize the radicalized election strategies that will resurface in 2018 and beyond.

 

Philly wage tax drops

City of Philadelphia wage tax rates drop slightly after June 30.

For most people, residents and non-residents, the small increase in net pay will be automatically made. If not, call me because you need a better payroll service. There are too many excellent dirt-cheap payroll companies now to put up with one that is not flawless. (I’d be happy to refer an excellent and flawless provider after learning about your specific payroll requirements).

CPA Tax Rates for 2015

Until now, I have used negotiated flat fees for all accounting services – including tax services – under an approach commonly called “value pricing”. These fees should have some reasonable basis and market rate or competitive pricing may be one input into this basis of pricing. We presume that there is social value in having consumers well-informed about market prices in any purchase situation. Yet pricing of  services in the tax preparation industry has been far less than transparent. In addition, a range of new issues for 2015 make market pricing information even more uncertain. In fact, if you are reading this blog post based on an internet search or you clicked through to this page from another link, there is a good chance that your curiosity is driven by the lack of readily available and reliable published information on this topic.

This tax service pricing chart is not finalized for 2015 but represents my current thinking on the blended base rate for professional tax preparers – including both CPA and non-CPA, virtual and in-person – in our local Philadelphia, Pennsylvania region. The inputs include the historical published rates from the National Association of Accountants and more recent information compiled mostly through social media and personal communications. My own pricing strategy is not very sophisticated: the goal is simply to avoid being the least expensive and avoid being the most expensive. The rest is negotiated based on individual circumstances that are more important that the industry “averages”. But just to be redundant and perfectly clear: these rates listed below are not the same as my fees but rather may be the basis of my fees for this coming tax season. See www.tonynovak.com/taxes.html for the actual final/published rates.

New Issues for 2015

2015 is likely to bring most disruptive changes to tax preparation services we have seen in our lifetime. IRS warns that service will be shockingly poor, refunds will be delayed and little is known about the potentially severe consequences of Affordable Care Act enforcement. Most smaller tax preparation firms are likely not operating profitably at their current pricing levels and so there is considerable pressure to raise fees for new clients (who require more work), Earned Income Credit clients (due to tough new interview and documentation requirements) and Affordable Care Act compliance. See my article “Tax preparers should be scared“.

Price Comparison

When my rates below are compared to the rates reportedly charged by big tax preparers (H&R Block) it seems likely that the 1040 rate is less but that my listed rate for some business returns might be higher. Limited information is available on competitive rate rates but CPA tax preparers, including myself, typically attempt to avoid charging less than the  largest non-CPA tax preparers to avoid adverse selection of price-conscious customers. In other words, if a CPA practitioner learns that his rate is less than H&R Block then the typical reaction is to raise the rate. I presume that smaller CPA firms and those operating in a virtual environment charge lower fees than larger firms with substantial infrastructure. The tax services of larger CPA firms may include multiple levels of review not included or considered in my pricing below.

Assumptions

These rates presume a tax service operated in a virtual service environment rather than a paper and face-to-face environment: documents are transported and stored electronically, return are filed electronically, interviews are done online or by telephone and signatures are collected electronically. This is not because the “old-fashioned” service is not available or desirable but rather simply because it is easier to forecast operating costs in a virtual environment.

These rates include fees for electronic filing and audit protection (see details elsewhere) but do not include the fees for accounting services and optional bank products. The rates assume that required documentation is available in electronic format (scanned PDF or cell phone photo) and that the customer is able to answer the questions on the verbal, written or electronic tax service preparation interview.

Tax Service Fees for 2015 – GUIDELINES NOT FINAL RATES

Individual Tax Returns

Form 1040 with standard deductions, ACA compliant, and state return   $195

Form 1040 with Schedule A (itemized deductions), ACA compliant, and a state tax return   $300

Schedule EIC (Earned Income Credit)  $150  *

Form _ (not ACA compliant with exemption or with individual mandate penalty calculation)  $80

Business Tax Returns

Schedule C (business)    $300

Form 1065 (partnership)    $700

Form 1120 (corporation)   $1000

Form 1120S (S corporation)     $1000

Form 1041 (fiduciary)   $600

Form 990 (tax exempt)    $800

Form _ (ACA excise tax penalty for businesses) $200

Form 940 (Federal unemployment)    $80

Schedule D (investment gains and losses)     $200

Schedule E (rental property)   $200  *

Schedule F (farm)   $200

Self-filed Returns

Self-Filed returns through 1040.com (electronic filing of federal and state) $30

Review of self-filed return $100

As always, I welcome comment and feedback.