Discussion:Fees when you 'fire' a client
From TaxAlmanac
Discussion Forum Index --> Tax Questions --> Fees when you 'fire' a client
| 11 December 2007 | |
| I have a lot of clients and/or potential clients who simply 'drop in' and think it's okay to take my time and never pay for it. This can be email, phone or office visit. Most of the time if I can help and/or respond briefly, I'm glad to do so. However, there are those who take advantage. Specifically, I'm not sure what to do about this one. Prepared the return in prior year, client had unusual reporting issue (in another state) in subsequent year and had another preparer (in that state) do the return. Client was 'suspicious' of how the return was prepared, asked me to review and discuss how the next year was going to work. He called several times, dropped in to discuss, dropped off returns. I looked them over, found a blatantly wrong reporting error (>$100,000), described to client, conferred with his attorney and the return preparer and told him I could not perpetuate the same reporting error in 2007, knowing he wouldn't want me to prepare the return unless I would do so. I told him I couldn't do that, 'sent' him on his way and then had the audacity to bill for the hours of time I spent. He has not paid and probably will not. I know I'll probably end up writing this off, but was I wrong to bill? | |
| 11 December 2007 | |
You were wrong not to tell him upfront and before you started that what he was asking you to do would be billable work, and we've all done that. Chin up 
| |
| 11 December 2007 | |
| I disagree slightly with Beth, While it is advisable to remind the client up front that he/she will be charged for the work provided it is not in my opinion necessary. Who in there right mind goes to any professional and truly thinks that they will not be charged for the work that was provided them?
If I contact my attorney to ask a few questions I assume that I will be charged something for his time, If I go see a doctor I assume that he will charge me. Personally LJ I would resend the invoice sign receipt to his home address with a letter that states he has 30 days to either pay the bill or make arrangements with you if not his bill goes to the collection agents. It would also help if you had a signed engagement from this client. Good Luck! | |
| 11 December 2007 | |
| You provided a service to this client. Your history with the client is that of you rendering services and being compensated in return. Just because your service in this particular instance did not produce the outcome your client was seeking does not make it less valuable, in fact it could be considered more valuable due to the compliance advise you offered. I agree with Sea-tax. Letting this client off the hook will only perpetuate his accountant-hopping. How long has this client been with you? Do you know how many accountants he employed in the 2-3 year period before he came to you? | |
Taxalmancer (talk|edits) said: | 11 December 2007 |
| My take is a bit different. I agree that the client should expect to pay for time spent with their CPA. I also believe you were to correct to bill it. I would call the client and speak with them about it. That's as far as I would go.
Many people believe that you're inviting a lawsuit by suing for fees. I happen to be one who agrees with that perspective. If a client doesn't pay me I eat the invoice and consider it a cost of doing business. It stinks, but so does a lawsuit. | |
| 11 December 2007 | |
| Forgive me for being naive. But how could a request for fees turn around into a lawsuit against me?
If I take a client to small claims court or send a collection letter. I don't understand. thanks, | |
Taxalmancer (talk|edits) said: | 11 December 2007 |
| Unto itself it doesn't. What it can do is potentially incite the client to make claims of inadequate service and perhaps even to countersue as a defense. Then you have to put your malpractice carrier on notice they you are being sued.
To each his own but most seminars I go to advise never to sue for fees. | |
| 11 December 2007 | |
| You can always be sued, but it is hard to see how a countersuit could result if client disagreed with and never acted upon the tax professional's advice. Suing for fees after issuing a FS or a tax return is a different matter. But, having said that, many times your malpractice insurance will have an exclusion if you sue a client for fees. | |
