Potential new client. Thanks, but no thanks

[So and So]

Had a new client come in this week for a price on their returns. (actually they are prior clients that left us about 10 years ago because we were too "nosey" and charged too much.)

So, now they're kind of behind the eight ball and shopping for a preparer. They have a Family Ptnrsp, a Grantor trust. personal return, and about four returns for their kids who "work" for them Also, the needed a 5500 filed.

They dropped off last years returns for us to review and give them a price we would do the work for. First of all, I asked where the income info was. Wife told me she would tell me whatever I needed to know. I asked if she used QB. I would like her to load info on a CD and I could download on my computer and see the info for myself. They said they do not feel comfortable giving all their financial info out. Whatever!

So, I see a prior year Form 5500. I asked why the financial instituion didn't file this for them. They stumbled around and couldn't seem to answer that. As the conversation went on, they revealed they had received some IRS letters. Seems there are 5 years of unfiled 5500's. I asked to see the letters. Again, no. They would tell me what I needed to know.

So, I thumb through some more. I see returns for the kids. One child they paid about 4000. is 3 years old. I asked what this child did to earn that much money. "Oh, she stuffs envelopes"

The Ptnrshp had it's own set of questions.

So, we politely passed on preparing the returns. They asked why. We told them that we didn't have the time this late in the year to get them out by Oct 15th. Which is true. We have our own current clients waiting for their returns. Not to mention having to pull teeth to get info from them. Which we did not say to them.

Then they wanted to know our fee if we had done them. We would not give them a quote. Wife said she had some quotes from other firms and wanted to see if they were in line. We told them we don't quote a fee on a return we don't prepare. Now wifey is ticked off. Who cares.

But, one thing I saw on their return I have wondered about. They had two Sch C's. One was for his main occupation. The other was for Photography. But, the only income on the Photo Sch C was 7000. paid to him by the other Sch C. No other Photo income at all. What would be the point to that? There was only about 300. of expenses against the Photo income. That could have been deducted on the primary Sch C. If it was business related. Can anyone see any reason to do this? I think it looks funny to the IRS. Just screams audit.

Just another day at the office. :)

[JohnH]

Good call.

Looks like the 3-year-old is pretty smart - maybe she could learn to prepare the returns.

If they wouldn't accept the pleasantry of "We're just too busy right now", then my next response would be:

"I was just trying to be nice, but since you insist on a straight answer I'll give you one - most knowledgeable preparers wouldn't touch your return with a 10-ft pole. And I'm pretty sure you knew that before you came in my office."

[So and So]

The people who did the '05 return are a very reputable CPA firm here. I was curious as to why T/P is not returning to them. Maybe that group kicked them to the curb too.

It seems strange for them to be shopping prices. They have a real mess.

[TAXBILLY]

Run away from these folks!

taxbilly

[Mike D]

Your encounter reminded me of a potential client that was recommended to me by a CPA firm that I had some exposure to at that time.

I had just become a CPA and was attempting to grow my practice. The potential client was in the electronics importing business booked about $5 million in sales in 1977 with unaudited pre tax income of $400,000. All they needed from me was my signature to an inventory valuation for as I recall approx. $11 million. For this alone they were going to pay me $25,000.

So whats wrong with this picture? Had I gone along I am centain that I would not be in practice today and probably would not have a right to vote as well.

Just for the record I lambasted the CPA firm that referred them to me and ironically about 15 years later this same firm was indicted for complicity in sales tax fraud with some of their clients.

So your decision was centainly a good one.

Life is good!

Mike Dubin CPA

[kcjenkins]

I, too, would have turned down these people, maybe not quite as politely as you did. But I would, had they asked, given a 'ball-park quote', prefacing it by saying, "this is just a ball-park estimate, but I'd say this was in the ____range" In that blank I would put my normal fee for such a mess, times 4. Not only would that get rid of them fast [my normal fees are fairly high], but it would be a help to prepare them to pay a fair fee to whoever they manage to talk into taking this on.

Oh yeah, if I could see what they paid the last CPA, I'd make sure my quote at least doubled and maybe tripled that amount.

[mcb39]

Run away from these folks!

taxbilly

They probably need you, but YOU don't need them. Just the fact that you asked indicates that you know what the answer is. You don't need to run as you don't owe them anything; but don't get involved...IMO

[So and So]

No, we have no intention of taking on these clients. Sometimes there just isn't enough money.

I just thought I would post this experience here to see if others encounter this very often. I figured if people wanted to do "shaky" things with their return, they just did the return themselves with an off the shelf program.

[mcb39]

No, we have no intention of taking on these clients. Sometimes there just isn't enough money.

I just thought I would post this experience here to see if others encounter this very often. I figured if people wanted to do "shaky" things with their return, they just did the return themselves with an off the shelf program.

I believe that they think it is safer to pass the buck to the preparer even though they are responsible for signing the return and the information they give to the preparer is all that he/she has to go on. However, most of us are experienced enough to know when things are not what they should be. Yes, we all run into these from time to time, but this is an extremely flagrant example.