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New Client Payment Hassle


Crank

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Had a new client referred to me by a long time client.  Single mother/grandmother with AGI ~38K.  Completed the return and was scheduling a pick-up when she balked at the fee ($150) saying "dont you take it out of the refund?" and the client that referred her told her that I do take it out of the refund.  Said she would have to talk to the referrer and ask why she told her that.  Im wonder what she would have done if she owed instead.

It's a first for me and Im assuming that she will want her documents back to go somewhere else.  Not sure how to handle this.  I have to give her the documents back but I should receive some compensation for the time I put into preparing the return.  Anyone else have to deal with something like this?  Suggestions appreciated.  Thanks

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Offer to let her pay you in installments or else when she gets her refund.  What do you have to lose?   Your time is already invested. Set aside ego & emotion and focus on the business aspect.  It's a one-off event, do the only thing left to try and  turn it into a profitable one. 

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I agree with JohhH (as usual).   I would do as he suggests first.  If she doesn't want to do that, you could ask her to pay what she considers a fair price and wish her well, with the understanding that it won't happen like this next year.  I don't know why she wouldn't go for that.  If she somehow still does not want the return you prepared, I would return her documents and wish her well.  The end.  You do not need the bad publicity all over town that you "charged her for nothing."

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1 hour ago, Gail in Virginia said:

If you decide to let her pay you when she gets her refund, I would ask for a post-dated check. 

This is what I do for a number of clients, or if they don't  write checks, I ask that they leave me a copy of their debit or credit card with approval to charge it on a certain day.  We write out an agreement and they sign it.  I have never had an issue and have been doing it this way for 20 years, but if you let them leave without some sort of payment, I chase them all year long and usually do not have them return until they think I have forgotten about it which of course never happens.  When they do finally return I remind them of the past due and require payment in full for the past due and current due before I even begin, reminding them that they would not go to work and expect not to get paid would they?

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Crank...is it worth the headache?  If she balks at a $150 fee, how good of a client is she?  I don't know what was entailed in her return, but $150 seems reasonable, certainly when you compare it to The Big Box Stores.  Sure, you did the work and you SHOULD be paid.  You DESERVE to be paid.  With that said, if it were me, I'd seriously consider placing all her info in a box, hand it back to her and move on to your next client, who probably completely respects you and your abilities. 

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I agree with all the responses above.  (well, I have to especially agree with Rita since she said she agreed with me). Each response has its pros and cons, nothing is a sure thing, but you have more info. You can't do all of them simultaneously.

So, Crank, you are going to have to decide which suggestion or combination of suggestions works best for you, taking into account your own personality and the gut feeling you get from your limited interaction with this woman. That's what we do in business - we make business decisions.

 

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This is what I do. I am an EA so holding documents hostage does NOT cross my mind. When new people come to the office, I prepare the bare minimum, I don't fill out the W-2s payer info, I don't prepare for efile, etc, and I tell them the final product. If there is any dispute on the refund or payment, I give them their documents back and suggest to go to HR block or think about it and come back when they are ready.

You don't want these people as clients anyways and if they come back, you quickly prepare their return and charge them. If they don't come back, you didn't sign a return for which you didn't get paid.

Some of these people go to other preparers and when they try to collect their papers, they are not able to get them back and they learn their lessons the hard way.

For customers whom I have prepared their taxes at least one year, I tell them to come and pay me back when they receive the refund. About 3 people take advantage of that and they come to pay me as soon as they get their refund. A family of 4 earning 40K don't have 100 on hand at the time of tax preparation and that's understandable.  In any event, let's say that this person doesn't come to pay me and leave. I technically prepared two returns for the price of one, which goes to the bottom line, except for the paper and toner.

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Where I live I will not accept a post-dated check as then if it bounces I have no recourse with the sheriff.  By accepting a post-dated check it is deemed that I knew it would not be honored and accepted it anyway.  The only recourse with the sheriff on a bad check is if it is currently dated, and it also helps to have a copy of the issuers drivers license.

 

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For those that are getting refunds via direct deposit and can't pay out of pocket, I offer FeeCollect and they love it.  I simply tack the processing charge for the bank product onto their prep fee and we are good to go.   If they don't use direct deposit I will occasionally allow them to pay me when they receive the refund if I know them or their family well.  Otherwise, I quote the fee up front based on the info they give me and tell them that as soon as they pay me I will prepare and file the return.  

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2 hours ago, gfizer said:

For those that are getting refunds via direct deposit and can't pay out of pocket, I offer FeeCollect and they love it.  I simply tack the processing charge for the bank product onto their prep fee and we are good to go.   If they don't use direct deposit I will occasionally allow them to pay me when they receive the refund if I know them or their family well.  Otherwise, I quote the fee up front based on the info they give me and tell them that as soon as they pay me I will prepare and file the return.  

What gfizer said...except I don't quote the price up front.  I tell all my new clients that they can see (but not take) my price list.  Whatever forms that the tax return generates will be charged for.  I also tell them that if they don't like the price I will take my tax return back and they can have their documents back and we can both go our own way with no hard feelings.  I don't want unhappy clients, but I feel my prices are fair so I am not negotiating after the fact.

This reminds me of my Econ Professor, Mr. Yergi.  He taught us the "Prostitution Principle of Economics".  The value of a service declines immediately after it is provided so service businesses should always get paid before the service is rendered.  That is why hookers get paid up front.  You should have seen the shocked looks on the faces of my classmates when that lecture happened.  Still brings a smile to my face when I remember that lesson.

Tom
Newark, CA

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11 hours ago, Tax Prep by Deb said:

This is what I do for a number of clients, or if they don't  write checks, I ask that they leave me a copy of their debit or credit card with approval to charge it on a certain day.  We write out an agreement and they sign it.  I have never had an issue and have been doing it this way for 20 years, but if you let them leave without some sort of payment, I chase them all year long and usually do not have them return until they think I have forgotten about it which of course never happens.  When they do finally return I remind them of the past due and require payment in full for the past due and current due before I even begin, reminding them that they would not go to work and expect not to get paid would they?

I agree with the others but am not sure about holding a copy of a credit or debit card. I would be careful of the legality here. Maybe I am off base here but I remember signing documents with a CC processing company that stated very clearly about not holding credit card information. I like the post dated check idea as well as letting them pay when they get their refund. Crank if all else fails, just cut your losses and move on. Been in your shoes a few times and it always happens that for every client I lose, I get two or three in their place. Don't know why this is but it is.

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On ‎2‎/‎14‎/‎2017 at 11:43 AM, lynn EA in Louisiana said:

Where I live I will not accept a post-dated check as then if it bounces I have no recourse with the sheriff.  By accepting a post-dated check it is deemed that I knew it would not be honored and accepted it anyway.  The only recourse with the sheriff on a bad check is if it is currently dated, and it also helps to have a copy of the issuers drivers license.

 

I have 100% success with the post-dated check thing.  I don't deposit it until that date or after.  I only have a couple and they are repeat clients.  BTW, if you have any doubt about the check's validity, take it to THEIR bank after the day it is dated, and inquire whether it is good or not.  I took a check one time at a yard sale, and suspiciously felt that it might not be good, went to the bank drive-in window on two occasions and asked if it was good  -- it wasn't either time -- so I asked whether a specific time of the month might be better, and teller said "Try on the 1st."  I was there johnny-on-the-spot and got my money!   I think this would work only if the check is made to you, and not to a company -- but you never know. 

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AFAIK, you can hold CC info, OTHER THAN the security code.  The security code is not needed for a merchant to try a card, but some card issuers may decline without the security code.  Less publicized is a security code of all zeroes was how one used to say a card did not have a security code, it was illegible, or it was not provided, so if you have a code of all zeroes on an actual card, it is USELESS...

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