Beware companies offering to help with claims!

[BuxomDiva]

A very important warning relating to the subject of those third party agencies which have been mentioned in a couple of threads.

http://www.thestar.com/news/article/916219–agency-charged-woman-10-000-for-tax-claim-she-could-have-filed-for-free

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[Anonymous]

I had looked at this sort of thing. I have only just filed my paperwork to be approved for the credit with the Gov’t. Although i don’t agree with the high percentage, they are up front with how much they will take. I will be filing my own or having my local (H&R Block type) tax refund business do it for me. I may not stand to get allot back but I’ll stand to loose allot less in fees.

This is something that if there were information that uses plain, non Gov’t English available it would be easier. Maybe a checklist or something.

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[BuxomDiva]

Don’t waste your money on H & R block. There are plenty of free software packages that let you file online. It’s free if you’re below a certain income level.

Many community agencies can help people with this kind of thing. They just don’t have the budgets to advertise all over the radio and Facebook!

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[turbo]

“A very important warning relating to the subject of those third party agencies which have been mentioned in a couple of threads.”

To play devil’s advocate here, distilling the article down to it’s most basic elements she paid $10,037 to get $38,237 (or $28,200 net) that she had no knowledge she was entitled to, with a program she didn’t even know existed. Most people would call that “found money” and move on.

I mean, if she had never seen that company’s ad — she would have $28,200 less in her bank account — is that somehow better for her?

My comments below are not related to, or an endorsement of, the specific company or transaction referred to in your article. For the record, I have no affiliation with them and have never even heard of them before.

As a tax accountant (who was formerly an auditor with Revenue Canada) I can tell you -especially with an issue like the disability tax credit- tax issues are often a case of getting one kick at the can. If you’re turned down, that is essentially it. You simply cannot un-do what has been submitted in writing. SO- when you retain a professional for something like this, in part what you are paying for is their EXPERIENCE and EXPERTISE to ensure your ONLY kick at the can is the best you can do.

A professional will ensure the position you are taking is defendable, and makes the best possible argument in support of your claim while being factually accurate. They will also champion your issue as an advocate, getting personally involved as required to make sure the process doesn’t get derailed.

I cannot speak for others, but I know what my expertise and experience has enabled me to achieve for my clients over the years. On audit and appeal files my understanding the system, knowing how to talk to Revenue’s personnel, and my ability to negotiate has saved clients hundreds and hundreds of thousands of dollars.

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[BuxomDiva]

I don’t know any reputable accountants who would require a percentage of subsequent tax refunds for a number of years, as these guys do!

I’ve never seen any evidence that the people working for this company have any greater expertise than those at H & R Block, who don’t charge that much either.

I’m not saying that having professional assistance is never warranted, but do your homework and be careful about with whom you do business.

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[Curlymoe115]

Any company that wants 25 or 30 percent of your money is just scamming you. I don’t care if they are “experts” in their field if they are trying to get you to pay over a quarter of the money for an hour or two of work then they are not legitimate. If they guaranteed the money would be X dollars and even if you were turned down they paid you then they have a vested stake in your claim. But that isn’t what is going on here. Yes she “found” 40 thousand dollars. They took 30 percent of that money and then tried to go after future money that she is getting back. So for at most 10 hours of work how many thousands of dollars does their contract stipulate they owe. If they got 2000 from the government and the company claimed 600 of that plus 100 per year for 10 years would the tax accountant still make the same claim. That it was more then worth it for a disabled individual who is now barely skimming the poverty line to fork over such a high percentage of their money to an individual who just help facilitate them to get money owed to them by the government. Did this company cover medical fees while they waited. They did nothing except give them expert advise on how to fill out paperwork to submit. Hardly worth 10 thousand dollars. They would have been better to go to an accountant and pay 100 dollars or even go to a lawyer and sit through a fee consultation and get his advice.

Reverse mortgages let you take some money from the equity in your home. You get to live on that money payment free until you sell your home. The first year the interest owing on that money is pretty negligible so if you sell after 1 year and you use that money to help you fix up your home and increase the value of your asset then you have found money. But you take the 25 percent value of your asset and blow it on a vacation and buy a car for your child and go to the casino and blow the money. 10 years later you sell your home. You pay them 25 percent of the value of the home plus the interest owing on the money they advanced you. They take 95 percent of the proceeds of your house. You are now going into a seniors home with 5 percent of the value of your asset with no place to live and your pension doesn’t keep up. So then you are left with the diminished asset but you did get that one time lump sum payment of “found” money. And if they had never seen the ad for the CHIP reverse mortgage they would have never had the one year of heaven. But it cost them a bundle to do it. Companies like this are not philanthropic. They only do this if they can make money.

If this company were to say if you have a $400,000 house and we lend you a hundred thousand dollars at the end of 10 years we will charge you $405000 on your asset that is now worth 450,000 how many people would be jumping up to claim this found money. Sure for your home you got a payment of 145000 and you made no payments on this for the entire 10 years. But if you had taken this asset and sold it for 400000 and rented the place back and you deposited 300 grand you would have a interest amount that would have paid you 30 thousand a year in a good equity plan. You took the 100 thousand and had a good year and paid 2000 a month to rent your home and therefore it cost you a net of -600 a year to stay in your home. At the end of the 10 years you still have 300 grand of the value of your home sitting in an account and when you go into a nursing home you have that money to help you to pay people to provide adequate care. That is the same fallacy as saying that the government owes you 40 grand that they haven’t previously paid. This company helped you claim the money that you knew you were owed by seeing a free advertisement and they helped you fill out the paperwork and coached you on what to say to the doctor. So therefore for this “advertised” advice you pay a hefty sum of over 30 percent and you continue to pay for a set number of years. And if they got you nothing you pay 30 percent of nothing. This money from the government is also now counted as income and any other government money is clawed back by the full amount and they don’t take into account how much you paid for the advice. So you get a CPP payment of 1200 a month this stops until they account for the full 40 grand. Because the government always has a clawback penalty for any other payments they give you.

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[turbo]

Buxmon said: “I’ve never seen any evidence that the people working for this company have any greater expertise than those at H & R Block, who don’t charge that much either.”

The bulk of the tax preparers working for the large tax prep chains are temp workers have all of 1 month of training prior to being let loose on tax returns. I can’t imagine them having any expertise in this area at all. I understand your frustration with the numbers, but you’re talking to someone with 20 years experience in this industry, including almost 5 years inside the hallowed halls of Revenue Canada. Believe me: expertise and experience matter a LOT in situations like this.

Curly said: “So for at most 10 hours of work how many thousands of dollars does their contract stipulate they owe.”

Do you realize that 10 hours of an accountant’s time will cost you between anywhere from $2,000 to $4,000 these days? Most people aren’t exactly excited about the prospect of shelling out $2-4,000 and possbily getting NOTHING back in return. The woman retained this company on a contingency basis. If she ended up receiving $0 in the end, she would have owed this company nothing EVEN THOUGH someone still spent those 10 hours.

Your suggestion of talking to a lawyer can be even worse. A good tax lawyer starts at $400 an hour, with great ones charging far, far more than that — all with no guarantees. By the way, when lawyers work on a contingency basis in lawsuits their fees start at 30% and work upwards from there. In the U.S. you’d be hard pressed to find a legal contingency agreement under 50%, and I’ve even heard of some as high as 75%.

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[BuxomDiva]

actually I suggested consulting a community legal CLINIC – us poor folks can’t pay “market” rates for lawyers OR accountants – and I know how ill trained the H & R Block people are, which is why I was appalled when my mother actually used one of them over my sister’s ex who is a fully qualified consultant with one of the big financial firms here

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