Rule 20-12-.05 - Contingent Fees(1) "Contingent fee" means a fee established for the performance of any public accountancy service pursuant to a written or oral agreement in which no fee will be charged unless a specified finding or result is attained, or in which the amount of the fee is otherwise dependent upon the finding or result of the service.(2) A licensee shall not accept or perform any public accountancy services for a contingent fee or receive a contingent fee from a client for whom the licensee or the licensee's firm performs: (c) A compilation of a financial statement when the licensee expects or reasonably might expect that a third party will use the financial statement and the licensee's report does not disclose a lack of independence; or(d) An examination of prospective financial information.(3) The prohibition of subsection (2) of this section applies during the period of time in which the licensee is engaged to perform those services and the period covered by any historical financial statements involved in those services.(4) A licensee in public practice shall not prepare for a contingent fee:(a) An original or amended tax return or claim for a tax refund. Preparation of an original or amended tax return or claim for tax refund includes giving advice on events which have occurred at the time the advice is given if such advice is directly relevant to determining the existence, character, or amount of a schedule, entry, or other portion of a return or claim for refund; or(b) An amended federal or state income tax return for a client claiming a refund of taxes because a deduction was inadvertently omitted from the return originally filed when there is no question as to the propriety of the deduction, rather the claim is filed to correct an omission.(5) The following are examples of circumstances where a contingent fee would be permitted regardless of whether the licensee or licensee's firm is performing the services specified in subsection (2) of this section: (a) Representing a client in an examination by a revenue agent of the client's federal or state income tax return;(b) Filing an amended federal or state income tax return claiming a tax refund based on a tax issue that is either the subject of a test case by a different taxpayer or with respect to which the taxing authority is developing a position;(c) Filing an amended federal or state income tax return or refund claim which claims a tax refund in an amount greater than the threshold for review by the Joint Committee on Internal Revenue Taxation or state taxing authority;(d) Requesting a refund of either overpayments of interest or penalties charged to a client's account or deposits of taxes improperly accounted for by the federal or state taxing authority in circumstances where the taxing authority has established procedures for the substantive review of such refund requests;(e) Requesting, by means of protest or similar document, consideration by the state or local taxing authority of a reduction in the assessed value of property under an established taxing authority review process for hearing all taxpayer arguments relating to assessed value; or(f) Representing a client to obtain a private letter ruling or influencing the drafting of a regulation or statute.(6) Fees shall not be considered as contingent:(a) If fixed by courts or other public authorities; or(b) In tax matters if determined based on the results of judicial proceedings or the findings of governmental agencies. A fee is considered determined based on the findings of governmental agencies, if the licensee can demonstrate a reasonable expectation at the time of the fee arrangement, of substantive consideration by an agency with respect to the licensee's client. The expectation is deemed not reasonable in the case of preparation of original tax returns.(7) Fees may vary depending on the complexity of services rendered.Ga. Comp. R. & Regs. R. 20-12-.05
O.C.G.A. Secs. 43-3-8, 43-3-21.
Original Rule entitled "Contingent Fees" was filed on February 9, 1978; effective March 1, 1978.Amended: F. Dec. 17, 1996; eff. Jan. 6, 1997.Amended: F. Feb. 4, 2015; eff. Feb. 24, 2015.