Discussion:The Client that wouldn't go away !
From TaxAlmanac, A Free Online Resource
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Discussion Forum Index --> Tax Questions --> The Client that wouldn't go away !
| 12 September 2006 | |
| What would you do? I have a client that stiffed me to the tune of $3K --- we verbally agreed on the price of the work but lo and behold no written engagement letter -- NEVER again!! I terminated the client and he is now e-mailing me that he wants me to spend my valuable time & resources to contact the IRS on his behalf. Can I simply e-mail him back and remind him that I am no longer his CPA and that he needs to either call the IRS himself or find somebody else to call --- I've had it with this guy!! | |
| September 12, 2006 | |
| Tell him that you'll be responsive as soon as you see the first $500....start trading small amounts of time for big payments...and you might get some of it. | |
| 12 September 2006 | |
| I have a one page documents that outlines the specific services I would provide for a flat fee. The document also states that either party can terminate the agreement with a 90 day notice. It is unfortunate that small business do realize the importance of an accountant untill they are in a bind. | |
| 12 September 2006 | |
| Chase if you terminated him then your obligation to him ceases. I personally have found that life is too short for people like that. Specially when I have other good paying clients who need me.
I personally would respond by saying no to additional help under any circumstance and remind him that he still owes you 3k. I would write him a letter or email that said he has XXX# of days to clear bill up or any and all legal forms of collection will be pursued. I would even threaten to send him to collections if he doesn't. If he still doesn't respond then off to collections he goes. It is not a requirement that you have a engagement letter to collect a legal obligation to pay. If services were rendered then that is a verbal contract which has some validity. | |
| 12 September 2006 | |
| I like that advice! He's the type of client that is always telling me that I said things which I did not say.....just now tells me that he has a POA with me to talk to IRS (which he never gave me) ...... I do not want to work with this guy at all -- he gives me the creeps anyway. So, I'm following your advice - no more work under any circumstances and then small claims court we go. Yay!! | |
| 13 September 2006 | |
| Why not go to small claims court and get a judgment awarded for the bill not paid? Its should be a fairly simple process. You might not get paid, but the client sure isn't going to be buying anything of material value on credit with the judgment on record. And if he does acquire something by chance, there you are to collect. | |
BottomLine (talk|edits) said: | 13 September 2006 |
| Don't know what state you're in but judgement rules are different. In FL judgements expire after 7 years but can be renewed twice for a total for 20 years. After the first 7 years, people start accumulating assets again. That's when you can get him. Usually interest is included too. | |
| 13 September 2006 | |
| NC goes 10 and then renew for 10. Don't plan on getting actually paid though until the debtor wants to purchase something really badly and then finds you are standing in the way. The Sheriffs are mostly useless in enforcing these things or finding assets to sieze.
Meanwhile Interest adds up over 20 years. Just last month a long ago forgotten debtor who skipped to SC turned up as a Real Estate Flipper in Myrtle Beach. He's now refusing to close on the real estate because the closing attorney notified him that the judgment had to be paid out of the proceeds. Interest does in fact add up. Especially when the court set it at 8%, 16 years ago. But being the deadbeat he always was, he now is additionally getting sued by the property buyer for specific performance of the real estate sale. | |
BottomLine (talk|edits) said: | 13 September 2006 |
| Since you did work for him, you may remember what bank he uses. May be able to get that money. If you do the leg work and hand it to them on a silver platter, you may be able to get the Sheriff to help. Gosix - glad to hear there's still hope; that would be a nice offseason check! | |
| 13 September 2006 | |
| Tell him if not paid in a week, you will contact the IRS and let them know that you are not the "paid preparer" on the tax returns prepared. Tell him "if this creates an audit , I will be unable to help you". About 25% of the people will cough up the dough! | |
Death&Taxes (talk|edits) said: | 13 September 2006 |
| And if he is judgment proof, could you not consider sending him a 1099-C for forgivness of debt [that's a joke, folks!]? I had an email this year from a sportswriter in another city saying that so-and-so recommended me and would I do his taxes. His name rang a bell and I found he had never paid for 2000-2001, so I asked for a bank check or money order paying those bills, plus a retainer of half my fee for this year. Needless to say, I never heard again. | |
Chautauqua (talk|edits) said: | 13 September 2006 |
| I have used small claims court twice in CA. With the size of the fees, it was much cheaper than a collection agency or attorney, and in both cases the client paid before the court date. | |
| 13 September 2006 | |
| Thank goodness for a new day! This guy continued to e-mail me until 10 PM .. e-mail after e-mail insisting that since I worked on his return that I was responsible for any follow up with the IRS, etc. I prepared a letter, attached to his amended return, outlining the changes to his NOL for the years subsequent to the amended return. He insists that I am required to follow up with IRS to verify that they have accepted the changes to his NOLs in subsequent years. (IRS notified him that the amended return was accepted.) I reminded him that I have a pile of work in my office which is gathering dust and that he still owes me the $3K -- that none of the work I did will be released until I get payment. All in all, this client is trying to push me around. So, I'm going to figure out how to get to small claims court -- in California. Should be fairly straight forward. | |
| September 13, 2006 | |
| And in this case, I'd use DZ's advice, and in writing, explain to him that if this isn't settled quickly, not only will you not represent him, but you will also inform IRS that you are not the paid preparer, to remove your name immediately from all returns prepared...and explain to this dirtbag that he'll find himself on the other end of suit as well. I don't sue, ever. But I might make an exception for this special case! | |
| September 13, 2006 | |
| You might want to consider talking to an attorney before you take any legal action. I learned the hard way and lost $6,000. Also check your professional liability insurance policy if you have one. You might be required to report the case to them. It sounds like this client would be the kind who would file a counter-claim against you, even though you've done nothing wrong. Would it be worth your time and effort to go to small claims court and then have to spend time/resources fighting a counter-claim? | |
| September 13, 2006 | |
| Not required, but considered. An attorney who specializes in small businesses or bad debt collection in your area would be able to tell you first of all what your legal options are. (Have you exhausted your options for collection -- phone calls, letters, collection company, etc.?) Second, he or she should be able to give you an idea of your chances for collection. Would it really be worth the time and effort if your type of case only wins 10% of the time? And what are the chances of a counter-claim, e.g., "I didn't pay because he messed up my tax returns and I had to pay someone else to do the work"? If you know an acquaintance or friend who's an attorney, I'd highly recommend you at least bounce the idea off him or her before you go to small claims court. | |
Taxea@hawaii.rr.com (talk|edits) said: | 13 September 2006 |
| DZCPA...do you have a specific location at the IRS that you provide this info to? I am about to file a small claim against a client and would like to also make this notification to the IRS. Without a POA (current year return) I can't just send a POA advising the IRS that it is no longer valid. | |
| 14 September 2006 | |
| I do not know who to tell. I never contact the IRS. I only threaten it to delinquent clients to get payment. It works about 25% of the time. | |
| 14 September 2006 | |
| I prefer collection agents or legal stuff. Most agencies I have used the cost is like 30% of the collection. They collect 0 they get nothing. This way I feel it costs me little and if they do collect then I get more than I would have gotten otherwise and they do all the work. | |
| 14 September 2006 | |
| Yeah, the client that won't go away.... You have to love them. I had one that let his stuff get way behind. He had already stiffed other accountants in the area. Drifted in my office one day and ask if I would fix his mess. Of coarse and I did, but did not pay for nearly a year (next time he needed something). I told him no more work until bill was paid. He paid in full and I accepted the additional information. This time wasn't so bad but he never came after it. Three years later, he is in a bind again. Now he INSISTS that I have his current returns and he is demanding copies. The guy is delusional. Can't have current returns, haven't seen him for three years. I simply stop returning the calls and don't answer the email. What else can you do. Beyond that I just write off the bill. You will drive yourself nuts trying to collect. It isn't worth it. | |
| 14 September 2006 | |
| haha..you all, isn't this one of the main reasons most of you are your own boss? You're supposed to be free turn away/dump these kinds of clients (although it's good to have compassion for them too). A good engagement letter should clearly state that your tax return preparation does not include representation before the IRS, unless you expressly agree to this. And such service will be at additional cost based on your $150-$250/per hour billing rate. | |
Taxea@hawaii.rr.com (talk|edits) said: | 16 September 2006 |
| DZCPA I intent to contact the IRS and determine what the procedure is because I have been told by an IRS agent that this is the thing to do. If he can't tell me who to contact I will call the hotline and let you all know. taxeataxea 04:38, 16 September 2006 (CDT) | |
| 18 September 2006 | |
| We usually stop doing any work for any client that owes money for services over 60 days. After several invoices are send - 1, 2, and 3rd reminder we usually send a Generic Termination letter stating
Under Section 10.34 of United States Treasury Department Circular Number 230 - Title 31 Code of Federal Regulations, if any balance of the account is not paid in accordance with the terms on the billing statement, governmental agencies can be notified that the signature area of the return is inaccurate because Name of Tax Professional, who signed tax returns as a PAID PREPARER, has not received payment. There is more to it. So far we had no need to take anyone to court. Good luck Chase | |
Bottom Line (talk|edits) said: | 19 September 2006 |
| Mauro - I like that!! | |
Taxea@hawaii.rr.com (talk|edits) said: | 19 September 2006 |
| Mauro...could you be more specific with the location of this "cite". I looked all through the section you quoted and couldn't find your quote.
However I did find that Section 10.28 deals with return of client records and specifically states that the practitioner is allowed to maintain a copy of all documents provided by the client and that the documents that the client has a right to are any and all documents that existed before the client retained the practitioner and thus provided to the practitioner. i.e. none of the practitioner's work is required to be given to the client. | |
To join in on this discussion, you must first
log in.
