Client blames & threats, what to do?

[Lion EA]

I have one like that now. Retired teacher who neglected to give me her NY and CT 2021 Forms 1099-R. I knew she needed them (long-time client) but she claimed she gave them to me with her 2021 tax info in October 2022. She finally obtained duplicates from NY and CT in February 2023. Now she says her neighbor the CPA tells her that I should pay all her penalties and interest because I filed her returns so late!! She is threatening further action if I don't "do the ethical thing." I've contacted my E&O provider who wants me to file a claim. Very time-consuming. In the meantime, she dropped off her 2022 tax info; I filed 2022 extensions for her. And, of course, she did NOT pay my 2021 fee. (She said she was leaving me a check when she picked up her 2021 tax return folder, but she did not.)

By the way, this woman has been communicating electronically and was one of my first to use CCH's eSign to sign her returns and receive her review copy a few years ago. But for some reason this year she said she cannot use FileShare that she's used for years nor eSign, not even email except when she chooses to email me. She has been mailing things like the missing Forms 1099-R and Form 8879, adding weeks to our 2021 preparation time.

[mcbreck]

38 minutes ago, Lion EA said:

I have one like that now. Retired teacher who neglected to give me her NY and CT 2021 Forms 1099-R. I knew she needed them (long-time client) but she claimed she gave them to me with her 2021 tax info in October 2022. She finally obtained duplicates from NY and CT in February 2023. Now she says her neighbor the CPA tells her that I should pay all her penalties and interest because I filed her returns so late!! She is threatening further action if I don't "do the ethical thing." I've contacted my E&O provider who wants me to file a claim. Very time-consuming. In the meantime, she dropped off her 2022 tax info; I filed 2022 extensions for her. And, of course, she did NOT pay my 2021 fee. (She said she was leaving me a check when she picked up her 2021 tax return folder, but she did not.)

Seems to me this client needs to be released into the wild.

I'm very close to informing mine that they need to go elsewhere. I'm certainly not paying a penalty which will likely lead them away - hopefully. The wife is very nice, the husband thinks he's a VERY big deal. Previous years he made 2.5x more than she does and this year she's expecting to make about 50% more than him. I'm interested to see how that dynamic unfolds in our conversations.

[Medlin Software, Dennis]

Some people have the strategy of either purposefully trying to offload responsibility, believe responsibility cannot possibly be theirs, or have a plan to defer and deflect as long as possible. 

[Medlin Software, Dennis]

I would fire immediately based on the threat, then do nothing. No need to file a claim or take any action based on a childish threat.

Any customer who leads with or starts with some sort of threat immediacy becomes an ex customer. In my case, threats are usually to cancel, to challenge a charge card payment, or to post bad reviews. These are almost allays the first sentence in the first message in a thread. It seems safe to believe these folks have Come to believe being unprofessional is the way to get things done. 

[Medlin Software, Dennis]

Same as are taught to sports officials, personal, profane, and/or prolonged is a request to be ejected. For pro sports, profane is ignored. For amateur games, profane may be ignored if no spectator could have heard it, depending on the situation. 

[Lion EA]

I'm afraid that an immediate firing will lead her, especially if she has that CPA's written or recorded opinion, to filing in small claims court or turning it over to her lawyer (she has a biz so has had legal issues and doesn't hesitate to engage her lawyer). I don't expect to get paid for 2021, but do hope she calms down or is mad at someone else about something else now.

Because she dropped off 2022 when she picked up 2021, I do need to fire her, what, in August to give her a couple months before her extension ends? Or, July? Now?

[Medlin Software, Dennis]

Are you saying you are essentially hostage? What is the loss of firing when you have already reached out to your insurer? If you did nothing wrong, you have at least some chance of a successful defense, assuming they follow through. Sadly, one can pay for any desired opinion.

[Lion EA]

Good point. This is why I have insurance.

Should I mail her back the 2022 info that I will not use with a cover letter to fire her? (I've had the letter ready since she refused to continue to use my portal and eSign while preparing her 2021, finally, after she got me her missing 2021 info in 2023.) I have the USPS flat rate w/tracking envelopes. Or, should I use registered mail? Or, certified mail? Return receipt requested? Or, ask her to pick up her materials, since she dropped them off each year. If I do that, do I need her to sign a list of what she's picking up, because missing documents were the 2021 issue. Then I have a confrontation with her if she won't sign, and I can't keep her tax info. That's what I hope to avoid by waiting her out...

[Medlin Software, Dennis]

Personally. I would return all documents, keeping copies. Some sort of signed delivery. I would not ask for any back amount due, and I would send something like a note agreeing to forward copies to their next preparer if desired, or include a sealed set of copies intended for their next preparer. The idea is to make it clear you are done, but not to be closed off or showing emotion.

It sounds like a catch-22.  You cannot prove non receipt of something and they cannot prove you received something specific. BUT, consider there must be a reason the person is not using their “neighbor” already, so personally, I would not be surprised if that part of the statement is a toothless threat, if even true. Either way, once the letter is sent, no need to communicate with them directly again. If needed, you have your insurer to step in.

Maybe your insurer has advice, or is willing to help with the firing?

[Lion EA]

Thanks, Dennis. I should ask my insurer before I make a move.

She had a new house built, sold her old house, so was displaced for awhile with some things in storage. The CPA is a very new neighbor. Of course, he could be a corporate CFO or something not related to personal income taxes at all.

[Medlin Software, Dennis]

Likely the wisest steps. If the neighbor wanted to get involved, the client would already have given you the neighbors signed and backed by their license and e&o opinion letter. Instead, you likely have a no evidence based threat to get you to pay for their mistake  

A younger me would handle it differently, but age and experience has taught me not to waste time on folks who handle themselves in such a manner. And that paying for insurance is a reason to use the service one is paying for.

[jklcpa]

9 hours ago, Medlin Software, Dennis said:

...and I would send something like a note agreeing to forward copies to their next preparer if desired, or include a sealed set of copies intended for their next preparer.

You are not allowed to give those records to anyone except the soon-to-be former client without her written consent to release the information.

Personally, I wouldn't do that even with permission because that opens yourself up to be a responsible party for those documents being conveyed to her next preparer and this (missing docs) is already her complaint against you. Why would you give her another opportunity to blame you again if there is something SHE has missed giving you in what you have for 2022.

[Lion EA]

She already picked up a physical folder of her 2021 returns, and I uploaded a set to FileShare and sent complete copies via eSign. No future set unless she pays her $800 fee to me! And, picks them up in person AND signs for them.

[Medlin Software, Dennis]

14 minutes ago, jklcpa said:

You are not allowed to give those records to anyone except the soon-to-be former client without her written consent to release the information.

Personally, I wouldn't do that even with permission because that opens yourself up to be a responsible party for those documents being conveyed to her next preparer and this is already her complaint against you. Why would you give her another opportunity to blame you again if there is something SHE has missed giving you in what you have for 2022.

I do understand a release is needed, thus maybe the second set already copied. While the client may be less than business like, I try not to be, especially when I would rather play in the mud.

In my case, I do not communicate with third parties, but it is because there is no reason to pay a third party for help with my software. Even when I fire someone, I provide information how to get the figures out of the software so they can setup their new software, and even though a refund is given, I allow use of the software for several months for transition. It is a bit boggling how many (most) fired folks ask to come back.

Kind professional acts often deflect action. I have been threatened more than once in 40 years, but so far, never served.

[jklcpa]

10 minutes ago, Lion EA said:

She already picked up a physical folder of her 2021 returns, and I uploaded a set to FileShare and sent complete copies via eSign. No future set unless she pays her $800 fee to me! And, picks them up in person AND signs for them.

I'm talking about her 2022 original documentation.

[Medlin Software, Dennis]

10 minutes ago, Lion EA said:

She already picked up a physical folder of her 2021 returns, and I uploaded a set to FileShare and sent complete copies via eSign. No future set unless she pays her $800 fee to me! And, picks them up in person AND signs for them.

Is there a responsibility to even respond to doc requests when you have given Them the info already? Meaning are you obligated to be their filing cabinet?  If not, then maybe you can be done with them and not respond further, or a generic reply stating all documents were provided on x date, and no further work was contracted for or done after said date.

Employers, for example, are asked to provide things for employees such as old stubs, w2, and letters stating employment status. Such requests should be declined, assuming originals were given timely, and no state or local law has a filing cabinet rule. 

[Lion EA]

9 hours ago, jklcpa said:

You are not allowed to give those records to anyone except the soon-to-be former client without her written consent to release the information.

Personally, I wouldn't do that even with permission because that opens yourself up to be a responsible party for those documents being conveyed to her next preparer and this (missing docs) is already her complaint against you. Why would you give her another opportunity to blame you again if there is something SHE has missed giving you in what you have for 2022.

 

8 hours ago, jklcpa said:

I'm talking about her 2022 original documentation.

I was asking if I should mail her 2022 original documentation to her/the soon-to-be-former client. Certified? Registered? Return receipt requested? Is electronic tracking enough? Now? August? When? With the Firing Letter? Have her pick up in person, because she dropped off in person? Have her sign a receipt listing her documents picked up? I'm trying to avoid anything that will add to her idea that I misplaced any documents. Fire her, but NOT make her more angry than she is already. And, cover my butt, because she IS angry.

[Margaret CPA in OH]

This would be my choice:

Have her pick up in person, because she dropped off in person? Have her sign a receipt listing her documents picked up?

[Bart]

Sounds to me like this client is so upset you do not need to fire her.  She will leave.  If she comes back triple her fee.