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....