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I think a new client wants their stuff back, what would you do


mrichman333

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OK, I had a couple who's 90 something year old father had been doing their returns for years.  Well he's to old anymore so they came to me.  Well dad MADE STUFF UP to get them a refund, like $11,000 in medical.  I didn't see anything about medical bills in their file so I called and pointed out they had very high med. bills last year and the husband said t,hat was creativity on part of his father in law.   The woman also had a $10,000 pension with code 2 in box 7 (yearly withdrawal exemption) but he showed it exempt period.   Net effect $11,000 less deductions plus $10,000 more income is $21,000 more in taxable income hence a tax bill.

Wife calls and ask how they can owe money, I explained the above, she says she has medical bills, I tell her to add them up and let me know what they are, she says ok.  A week does buy and nothing, so I call and leave a voice mail asking if they added up the medical expenses.

A few days later I get a voice mail asking if they cane come by tomorrow.  HUM, no mention of expenses.  So I'm thinking they just want their stuff back and are going to go back to dad, after all he get's them  a refund.

QUESTION.  I finished their return, I did the work.  Would you still bill them.?

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If the client picks up my work, they pay me before they leave the office.

If the client picks up their paperwork to have it done someplace else, they don't pay me, but they also don't leave with one syllable of my work.

It's not worth the hassle to try to collect. If they want to go elsewhere, be done and carry on. You don't want that client, and you don't want ill will.

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You do not want ANYTHING connecting these fraudsters to you.  Hand them back their papers and don't even let them take your business card let alone any of your work.  Tell them that when (not if; when) the IRS audits them they are NOT to come to you as you now know they are willing to ignore the rules.  

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It doesn't hurt to try and bill them, I had a client get upset once because they owed money, they thought by going somewhere else they were not going to owe, I asked to be paid and still gave the opportunity to come back and let me finish and submit return or when they return back they would have a credit with him.

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I sympathize with the "make 'em pay" viewpoint, but I respectfully disagree.  We all have a right to be paid for our work, but accepting payment for anything carries with it an implied  acceptance of some responsibility.  We all know that isn't the case, but most clients don't.  So when this scheme blows up and they get audited 2 or 3 years from now, and dad is dead or incapacitated, they are likely to come back to you since they paid you for "some kind of help" in the past.  It isn't right, but that's how things often work. Who needs the hassle?

If I'm in this situation, I'm giving them back their original documents with no charge, and wishing them well.  That way if they ever return for any reason, I'm free to say "I couldn't help you then and I can't help you now."  Oh, and one more thing.  As Catherine rightly said, "Before you go, I'd like to have my business card back.  "

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John, you are right. That's the high road. But keeping good notes in the file is also important in these situations, and I would not be worried about returning papers and invoicing when the client asks for their paperwork back after having us prepare a return. I would not give them any of our work papers or draft copies of the returns. Nothing except their original papers. We do not and should not work for free, unless it is our choice, not manipulation by a client using us. If concerned, write a notation on the invoice that includes a disclaimer. I'm back to "make em pay" and sticking to it! :P

 

 

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I only have last years copy of their prior returns and last year dad made it so they paid $0 income tax and I suspect it's been that way for years.

It just makes me so mad that I did the work, pointed out what dad did and asked if there was information I did not have. 

They'll get their papers back BUT NOT over the weekend and NOT before 9am or after 6pm:D

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6 hours ago, mrichman333 said:

I only have last years copy of their prior returns and last year dad made it so they paid $0 income tax and I suspect it's been that way for years.

It just makes me so mad that I did the work, pointed out what dad did and asked if there was information I did not have. 

They'll get their papers back BUT NOT over the weekend and NOT before 9am or after 6pm:D

Make sure the papers are in the same disarray as when you received them.  I totally agree with your course of action.  Tell them you do NOT want your name mentioned in any manner regarding their income tax returns.

You do NOT need fraudsters like them.

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First of all, you are jumping to conclusions.  'Coming by" might mean they want to talk.  Rather than losing sleep over it, call them and tell them that you are extremely busy, but you will be glad to talk to them if they make an appointment. That is when they will tell you - "Oh, we just want to pick up our papers"; or. "we want to talk about the return".  

Once you can engage them in conversation, you can turn the situation around, but that's another subject.

 

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22 minutes ago, Jack from Ohio said:

I will bet you a Banana Split...

I'll  bet you one also.  If they had medical expenses or any other expenses to add they'd do it over the phone.  After years of paying $0 in income taxes any tax bill is going to be hard for them to swallow.

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Yeh! I'd say there is a 95% chance they will ask for their papers back. But 95% is not 100%.  If you guys want to bet, you have to give me 20:1 odds.  20 banana splits for one.  

If if they ask for the papers back, you have a chance to turn the situation around.  How? Put the fear of an IRS audit of three years returns, additional tax, penalties and interest, possible fraud penalties, etc.  Believe me it works.  

 

 

 

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18 hours ago, JohnH said:

I sympathize with the "make 'em pay" viewpoint, but I respectfully disagree.  We all have a right to be paid for our work, but accepting payment for anything carries with it an implied  acceptance of some responsibility.  We all know that isn't the case, but most clients don't.  So when this scheme blows up and they get audited 2 or 3 years from now, and dad is dead or incapacitated, they are likely to come back to you since they paid you for "some kind of help" in the past.  It isn't right, but that's how things often work. Who needs the hassle?

If I'm in this situation, I'm giving them back their original documents with no charge, and wishing them well.  That way if they ever return for any reason, I'm free to say "I couldn't help you then and I can't help you now."  Oh, and one more thing.  As Catherine rightly said, "Before you go, I'd like to have my business card back.  "

I'm going with John on this one as well. I have done this exact same thing in the past with a clear conscience. This year, I completed a return a client wanted a second opinion on. They paid me, I gave them their return and offered a full refund if someone else found any error, omission or incorrect calculation using the same documents that were presented to me. It was also understood that I had the right to review the findings prior to issuing the refund. Still got a client at the end.

I think Max W is right as well. You don't know what they want at this time so try and find out. But...I'll be that banana split as well.

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21 hours ago, SFA said:

Make em pay. Make em pay a lot--for the expertise and time that you have already spent reviewing their taxes. They get nothing except their original papers. And you get the satisfaction of getting rid of them.

Of course, you all know that I did bill my recalcitrant client with the attitude.  Did I get paid?  No.  Do I care?  No.  She is never welcome here again.

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Ask if they got their medical expenses added up.  Make an appointment.  When they come in, do the rest face to face.  Either you'll convert them or return their paperwork.  You can include an invoice if you want.  But, good riddance to them if they are not honest.

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6 hours ago, Lion EA said:

Ask if they got their medical expenses added up.  Make an appointment.  When they come in, do the rest face to face.  Either you'll convert them or return their paperwork.  You can include an invoice if you want.  But, good riddance to them if they are not honest.

They have already proven they are not honest.  Good Riddance is the correct response.  Like trying to juggle cactus leaves.

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Yeah, I agree with Jack.  It's April and I don't need new clients and I don't even have any time to talk with them to see if they might want to file correctly.  Don't throw good time after bad.  If they came to my office.  Good Riddance.  (I might try to be polite if they were referrals.)

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Do you really think that a person who has filed that type of returns for 5 or more years and never audited are afraid of the IRS? The IRS needs to put some tax payers in jail and advertise it so tax payers start getting afraid of the IRS again.. When I hear Ted say "I will abolish the IRS", depending on my mood, I laugh or get pissed. How can people be afraid of the IRS when politician talk bad about it? As a developed society, you need the IRS and the tax code will always be huge.

Going back to the thread at hand, I have noticed that many preparers, not the ones on this forum, as soon as they have a return in their hands that was prepared by someone else, start pointing out mistakes on the return. We forgot that people don't hire us to check the return that was already filed but rather the current return. Remember that we have an obligation to tell our clients of the consequences of omission or lies on the return people have hired us to prepare. We have not obligation under circular 30 to audit someone else's work. Especially a return that was already processed by the IRS. Also remember that as an EA, I decide what returns I work on and which ones I don't touch.

This is what I do:

I tell my clients, why are you here today? 100% answer, I want you to prepare my taxes for this past year or I want you to do my taxes. I tell them "it is not required by the IRS rules that you show me your previous year's return, but sometimes is good to know if you itemized deductions (if you got a refund from the state) or if you are depreciating any items". I continue on and say "Do you happen to have the last return you filed?". If they say yes, I ask for it and I take a look. As a preparer I know when a return has been properly filed within a short period of time. Then I ask a few general questions, "I see you reported payments of $$$ to daycare on this return. Did you also pay last year?". Then I point some other deductions and depending on their answers, I don't say anything about the previous preparer, but if I see the preparer was taking deductions without regards to the rules, I tell them. "There are items on your return that I won't be able to incorporate on the return I am going to prepare and therefore, your refund will be smaller or your amount due will be higher." Do you want me to start with the return you want me to prepare for you? If they say yes, I make the interview and start preparing their return. A few times, I have volunteer to amend returns when a child is born during the tax year and the preparer told them that they couldn't claim the child that year.

Some of them just say, let me go back to my previous preparer and I say, "sure, here are your documents". If you ever want to do your taxes correctly, please come back. Some people do come back.

Every year I prepare about 5 returns that people change their mind. I don't charge them anything and I gladly return their documents. Do you remember when the stores asked you "why are you returning this item?" You couldn't say, "I don't like it anymore or I changed my mind". You had to come back with something like "it seems to be defective". I remember a few years ago a lady was wearing a vest and she asked me to make sure she wasn't showing any tags on her back. I said "no you are not" and then I said "why the question?" She said because I will use this vest for this happy hour (2 hours) and tomorrow I will return it. This is my philosophy, if big stores are still making money with "don't ask why people changed their mind" policy, why not us? It is inconvenient but times have changed and we need to adjust.

Of course business returns are another story. If I prepare them, I charge them but for personal returns, it doesn't matter if they don't pay. I don't mind wasting 30-45 minutes on a new client and then hand their documents back. I will recover that lose with other clients who appreciate me and it is a pleasure working with them.

 

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9 minutes ago, Pacun said:

This is my philosophy, if big stores are still making money with "don't ask why people changed their mind" policy, why not us? It is inconvenient but times have changed and we need to adjust.

DISAGREE!

Ethics and morals do NOT change with time.  In my opinion, adopting this philosophies of "...everybody else is doing it, so it must be ok..." "...do whatever you need to do to make the extra dollar..."  are a major reason for the decline of respect, morals, ethics and self-reliance in our society to the point that those traits are rapidly becoming extinct. 

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Pacun. I will not charge them, I want nothing to do with their return.  What makes me mad is to many people want their tax prepare to "Use the numbers from last year".  Well I'm not putting down $11,000 in med expenses unless they tell me they actually had $11,000 in medical expenses.  They want us to not only make things up for them but they want us to do it for less money then anyone else.  I SICK OF PEOPLE, that's all

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I think we all have the same type of customers. When I ask "how business miles did you ran your car last year"?, they say "same as last year".

Without mentioning the previous preparer, if I see 11,000 in medical expenses (especially now that everybody should have MEC), I would tell them up front, "I doubt you had all these expenses last year but I am not auditing your previous return... so, I need all you medical receipts before I start working on your return". 

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