Discussion:Unpaid tax fees what's our recourse

I would say over the years 99% of my fees have been paid in full.

About once every 2nd or 3rd year I get a client who doesn't pay.

what is our recourse, realisticlly?

I have a $400 fee from this year that I know I'm not going to get paid (because this was my only really nasty client and i've been dealing with this client for 5 years now and client got very disrespectful this year, so I told client to kindly find a new tax professioanl for next year).

Can I take this person to small claims court for the principal of it? usually i would let it go but this one in particular got under my skin good.

here's the kicker, this client is one of only two of my clients who refused to e-file so she had her return that i signed as preparer, darnit, lol :)

if she did e-file i could of said"i'm not e-filing your return, please find a new preparer) and i wouldn't even have cared about not getting paid for the work.

this is my only complaint this year, everything else was an enjoyable tax season.

thanks for listening !! :)

If you feel it's worth your time in small claims court to fight a rather small bill - go ahead.

At present I've got a client for whom I prepared his and his wife's return back in February - along with the return of one of the sons.

Client had an issue with his return where he disagreed with the result, and I knew from the beginning it was going to be sore point. But this client has been with me for about 12 years.

He picks up the returns - and says he'll get back to me. (I KNEW he was going to take my info and show another preparer - but I wasn't going to fight the guy right away).

Last week he calls me to request I e-file his son's returns - but leave his alone. Both have been on my queue for e-filing since February. I finally get the son's e-file authorization forms in time and transmit the returns.

I haven't been paid for either return yet. (I KNOW I definitely won't get paid for his/wife's return - or even part of it - that I'll just chalk up as a loss because I don't intend on seeing him again).

What I have done in prior years was to (if the client is local) actually file a small claims court action - where I did eventually get paid before the court date. Some other occasions I've sent a letter after repeated requests - notifying the client that I'm prepared to notify IRS to rescind my name as the preparer,as I haven't been paid. For a few years I did that and did get paid - but I've decided in recent years not to go that route because it really is an ineffective threat because what happens when I do get paid - renotify IRS to reactivate the paid preparer signature?

What's done is done. It seems to me--and I am not lawyer but may start a practice soon anyway 8-) --that failure to pay while turning in the work of a tax peparer with their name on it would be some sort of theft of services charge. If the client takes the return and re-types it into Turbotax or the like, not much you can do.

If you aren't a collect up front type of preparer, you could certainly demand payment before giving them the return.

Last resort, the IRS has an anonymous reporting line!  :D

Michael

If you think you are tired of client BS now, wait until you are dealing with client nonsense after being paid. Knowing their is not cheese at the end makes those late nights and repeat requests kind of frustrating!

Michael

If clients are out of the area and I email them their returns, I tell them to return the signed 8879s along with a check in the amount of xx, as soon as I receive both I will efile their return. For those clients that pick up their returns, they don't get their return until they pay. Did have a couple of paper prior year returns and they knew that their prep fee had to be paid and then they would get their returns. So far only two bounced checks one in February and she brought me cash. The other just happened and I know she'll make the check good. I charge $50 for bounced checks, my bank does not charge me but the $50 is for my time. They have to bring me cash or certified funds and once they bounce a check the same thing. I rather a client ask me to hold a check for a couple of days then bounce a check. This year I did have a handfull of clients ask me to hold checks and because they had been with me forever and this year they were a little short I did hold them. Did not do this for everyone, told them that payment was due at time of service.

The deposit amount is discussed in the engagement letter, which goes out with the tax organizer in late December. Many clients send in the deposit and engagement letter in advance of the organizer. Not only do I get paid faster, but I know who will be returning for that year.

Sad, sad, sad....

Usually, if they're a PITA client that you really hope never darkens your door again, an outstanding bill is a the best way to keep them from bothering you ever again!

Unless it is a really big bill, of course.

Wkstaxprep...send a demand letter for the work you did including that your only recourse will be civil action and don't file anything until you are paid. If you don't get paid by the deadline you set, follow through with a small claims notice.

If so enforce it, if not you are on shaky grounds to sue.

I also have had only one clients check bounce on me and they called me before I even found out and they made good on it the next week.

I have had clients stiff me, but never for more than $200. Part of doing business. Again, if you write it off and say oh well, the rewards of not stressing over it will repay you in less doctors co-pays over the years.

For those clients that stiffed me and pissed me off then I do send the remove my name from the return letter to the client. I have only mailed one into the IRS and NYS.

I meet personally with the client and I review each piece of documentation they have--sometimes more imporantly the items they DON'T have. I also walk them through the tax organizer. From there I assess their fee.

Most of my returns are limited by competition (lots of Accountants here). I generally charge around $200 for Fed and State with itemization. If it is heavy schedule D or something odd, I may add $100. For business returns on flow-through entities, I charge a minimum of $350. Anyone who brings me a shoebox, gets killed and I bury their body below my vegetable garden.

Michael

Do I still get burned? Well yeah, an on again off again client will probably burn me. She sent me part of her stuff, I started her return, then she said she needed to go on extension because her office was going to close. I had already determined that she owed $4000 and told her so in an email. I also told her that the extension was an extension to file and that she would have to pay. She never got back to me.