Question

Give 3 examples of when a contingent fee would be permitted for accountants.

Answer 1

Contingent fees is computed on basis of outcome of transaction which is predetermined. The regulations state that firm should not enter in such arrangement. However, there are certain relaxations where it is allowed for accountants to receive contingent fees.

Three of the examples are as follows:

a. While representing client in examination by tax officials for federal or state income tax affairs, accountants can receive contingent fees.

b. The accountants can also receive contingent fees while representing client in order to obtain private ruling or in order to influence drafting of regulation.

c. The accountant can receive contingent fees when he files amended federal or state income tax return to claim tax refund as per review y joint committee on Internal revenue taxation