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Terry D

What To Do?

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A previous client told me they found someone considerably cheaper than me to prepare their 2017 tax return. Okay no problem with me as this client has issues anyway. Now, here they come. They are under the guidelines of an OIC and must have all returns filed timely. According to the client, the new person did not follow thru. An extension was filed but as far as I can tell, the return was never finished nor filed. Of course, its an emergency and they are asking for my help. Would you take this client back? If I do, I feel like tripling the fee with a PITA multiplier added to it. Seriously, it will be an easy return but I am afraid there will be other problems with it. 

Part of me wants to apply Jack's theory of "Run Forest Run" What say ye?

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Lots of things to consider, but only you know the nuances of this situation.  You were comfortable with them leaving, so what has changed other than THEIR wants, needs, circumstances, desperation, etc?  Your last sentence of the first paragraph may be the key to your decision.  

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I would decide based on how much time and effort I want to spend on this person that left me already. How much extra liability and stress will it impose on me and will I be able to prepare the return without falling behind on something else. Can you get paid for a PITA fee without them leaving again? Obviously, they don't value your services or they would not have left just based on price. 

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I would raise the fee plus charge extra for time involved to speak to IRS to keep OIC  enforce. All money would have to be paid up front.

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Had a similar issue before, PITA TP every year, never failed, that my fees were too high for 1 hour work etc.... For 2016 he called me to let me know he was going to prepare them himself, I said great, he fired himself and I was happy.  A couple of months later he called me non-stop, he needed help responding to an IRS letter and even offered to pay me to sort things out, I said no thank you, I am busy and don’t have time, he even had since aunt call me to convince me to help him and I still said no.  

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Evidently client got what they paid for with new preparer.  Now they are coming to you with hat in hand to save them from the pickle they got themselves into.  So they are probably relying on your good nature to take them back as they know they screwed up.  Tough decision, you'll have to decide if larger fee is worth it, but they may balk and give you grief on price increase.  On second thought, I would run on this one.

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1 hour ago, Terry D said:

A previous client told me they found someone considerably cheaper than me to prepare their 2017 tax return. Okay no problem with me as this client has issues anyway. Now, here they come. They are under the guidelines of an OIC and must have all returns filed timely.   According to the client, the new person did not follow thru. An extension was filed but as far as I can tell, the return was never finished nor filed.

Well, the cow is already out of the barn, right?  2017 was not timely filed.  That would bother me some.  More issues.  Depending on how much I enjoy the client, I'd either: 

1)  Decline their kind offer to return  (eye roll)  as there are plenty of tax pros sitting around wanting something to do, and I charge too much.  /s 

or

2)  Accept their kind offer to return because I like money as much as the next girl, and really, I'm goofing off quite a bit right now.

Seriously, this decision would be strictly based upon how this client treats me and respects my time.  That's where I am.  If he is contrite and apologetic, I'm forgiving and helpful.  If he is unpleasant, uncooperative, wants free handholding, blames me for anything, and I do mean anything, etc., I'm really too busy goofing off for that.  As John says I'd just as soon have the time off. 

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Sometimes, these situations turn out to be the best for you in the long run.   I have had a couple of clients leave me over price.   When they get what they paid for, they come back and never leave again and never complain about the price.    

On the other hand, if the client is a sleaze bucket....do you really want to deal with them again.   

I have no problem taking back a client when they come back after shopping and decide I still provide value and service they are looking for.

Tom
Modesto, CA

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Some great points have been made on both sides.  As I see it, it comes down to your second sentence:  "This client has issues anyway."  What would make it worth, to YOU, to deal with those issues again?  How much is it worth, to YOU, NOT to be dealing with those issues?

Simple return, grovelling before the IRS on the OIC, OK... it can all be done.  How much would you have to charge him, up front and in cash, to deal?  Feel free to say  $10,000 if you were that glad to see the back side of him walk away.  $500?  $750?  More?  Less?  If he'll pay that, up front, in cash, happily - or at least without verbal grumbling anywhere you can hear him,  take him back.  But he gets ONE chance to accept, and ONE opportunity to pay in full up front - or out he goes.  If he doesn't kiss your boots (metaphorically) and happily hand over full cash right away, then he'll be nothing but trouble from the minute the cash hits your hand.  

Should you take him back, what you want is a happy compliant client who does what you tell him to do and who never fusses about your fee.  You do not want the client equivalent of chronic lower back pain!

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17 minutes ago, Catherine said:

Should you take him back, what you want is a happy compliant client who does what you tell him to do and who never fusses about your fee.  You do not want the client equivalent of chronic lower back pain!

^ This!

Fwiw, I almost never take a client back that has left when the relationship has soured.  If they left me over fees that they thought were too high when that was caused by something like lousy records, inefficiencies or disorganization, procrastination, and if I feel the charge is reasonable and know that I'm usually below the going rate around here, then it's pretty clear that the client doesn't respect me, appreciate my efforts, or the product or services I've provided.  The client's extreme need or pressure from the IRS usually doesn't cure their bad habits or the sour attitude; they only need you as long as you can "save" them, then you're back to the reason they left you in the first place.  Unless the fee is so lucrative to put up with those headaches and take on the added risk, why take them back?

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53 minutes ago, jklcpa said:

^ This!

Fwiw, I almost never take a client back that has left when the relationship has soured.  If they left me over fees that they thought were too high when that was caused by something like lousy records, inefficiencies or disorganization, procrastination, and if I feel the charge is reasonable and know that I'm usually below the going rate around here, then it's pretty clear that the client doesn't respect me, appreciate my efforts, or the product or services I've provided.  The client's extreme need or pressure from the IRS usually doesn't cure their bad habits or the sour attitude; they only need you as long as you can "save" them, then you're back to the reason they left you in the first place.  Unless the fee is so lucrative to put up with those headaches and take on the added risk, why take them back?

Judy,  you absolutely nailed it.👍

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Thanks for all the replies. All of them are very good suggestions. Just to clean things up a bit, the parting of this client was not unfriendly. I completed and filed the OIC and it was accepted. When they wanted me to start the State OIC, they found someone cheaper to prepare the State offer. I thought I was dirt cheap anyway but guess not. Apparently they retained the same person to file their taxes for TY 2017 and that's where it goes south for them. Yes, they are unorganized which is the major issue with me. I agree dealing with the IRS for the late return filing may not be a major issue but it will cost them. I don't know if they got any correspondence from the IRS regarding the lateness of the return yet. So, I guess we'll see. I will help them with the 2017 return completion. They always paid when their returns were finalized.

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2 hours ago, Terry D said:

 I completed and filed the OIC and it was accepted. 

I don't know if they got any correspondence from the IRS regarding the lateness of the return yet. 

I will help them with the 2017 return completion.

@Terry DOne of the requirements of the offer is that all tax returns must be filed for the next 5 years or the acceptance can be withdrawn.   I assume you have POA for these clients.   You better get with the Service quickly to stave off a default.   They may have messed this up big time.

Tom
Modesto, CA

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Now that I think about this, I would not touch it.   If that offer goes into default, and you agree to prepare the 2017 return late....man, I don't know if they can get to your E&O, probably not...but I would not chance it.   Let the guy who took on the engagement for 2017 have his E&O hanging in the wind.   He knew or should have known that they needed to complete the returns to keep the offer in effect.   That is negligence on his part.   You have a clean break from the client.   Don't muddy the waters by getting back into it.

I change my stance and I would definitely do the Jack mantra "Run Forrest Run!".

Tom
Modesto, CA

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Thanks Tom and I think you are spot on and thanks for the word of caution. It is the taxpayer's responsibility to file ALL tax returns timely. As their previous preparer, I don't quite see how I can be held accountable for their failure to comply with the requirements of the OIC. They knew this up front without a question. Might not be the best thing to do here but, I am going to go ahead and try to take care of this. I have already explained to my client the risks. With that said, everything will be documented. They insist an extension was filed, I want a copy of that. I have already printed off the text and voice mail transcript of when they (the client) made the initial contact with me. Today, the client shows up with only some of the necessary forms to complete the return. Again, documented. If I don't get everything I need by the end of this week, I will set them free and refuse to work any further.

Here is another question for you. I just learned the client's spouse is working in CA. I think the spouse has been there, lets say at least half of the 2018 tax year. Will they need to file a non-resident CA return, or part year CA resident and part year NC. Their tax home is NC. I'm not sure if the organization the spouse works for is paying all of the associated expenses or not. I am curious in case they want to retain me for TY 2018 so it will be another reason to send them packing.

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Terry,

Yes, the client would file a non-resident CA return.  You will know right away from the W2 if the employer withheld correctly.   There should be withholding for CA SDI and CA PIT on the W2.   If not, the employer is not treating the client as an employee working in the state.

Tom
Modesto, CA

 

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