NT But Sort OF

[Terry D EA]

I have an s-corp client that runs their own payroll but has retained my services to process all of the payroll taxes. they use QB and a remote connection really simplifies things. I pay all payroll taxes through the EFTPS system. The client received a letter from the IRS concerning a 940 deposit that the IRS assessed a late filing penalty. My confirmation shows the settlement on 10/31/2009 and filed before 8:00 PM on 10/30 because the client asked me to wait until a deposit was received. Regardless, the payment was timely on my end. This client insists on holding my invoice until I prove that the penalty was generated from something other than my fault. Can a client withhold payment for any kind of reason? My logic is, my current invoice was for services provided at a different time so PAY ME. My engagment makes no reference to me having any liabilty due to late filing errors. If I simply forgot then I would feel like I owe the client something but this is not the case. What is the best way to handle this? This has only occured twice in our short two year realtionship and both times due to the client not having the money on time.

Terry D.

[Wayne Brasch]

I have an s-corp client that runs their own payroll but has retained my services to process all of the payroll taxes. they use QB and a remote connection really simplifies things. I pay all payroll taxes through the EFTPS system. The client received a letter from the IRS concerning a 940 deposit that the IRS assessed a late filing penalty. My confirmation shows the settlement on 10/31/2009 and filed before 8:00 PM on 10/30 because the client asked me to wait until a deposit was received. Regardless, the payment was timely on my end. This client insists on holding my invoice until I prove that the penalty was generated from something other than my fault. Can a client withhold payment for any kind of reason? My logic is, my current invoice was for services provided at a different time so PAY ME. My engagment makes no reference to me having any liabilty due to late filing errors. If I simply forgot then I would feel like I owe the client something but this is not the case. What is the best way to handle this? This has only occured twice in our short two year realtionship and both times due to the client not having the money on time.

Terry D.

Terry D.,

My suggestion to you would be for you to teach that client to make their own EFTPS payroll tax deposits. By doing that, it makes that client responsible for making that payment on a timely basis and getting that responsibility where it belongs-on them and not on you.

Wayne Brasch

[TAXBILLY]

Sound advice from Wayne.

taxbilly

[Gail in Virginia]

If they want to hold up your payment over a penalty notice in these circumstances, I would at least consider making them responsible for all of it by telling them "I quit."

[ILLMAS]

I have an s-corp client that runs their own payroll but has retained my services to process all of the payroll taxes. they use QB and a remote connection really simplifies things. I pay all payroll taxes through the EFTPS system. The client received a letter from the IRS concerning a 940 deposit that the IRS assessed a late filing penalty. My confirmation shows the settlement on 10/31/2009 and filed before 8:00 PM on 10/30 because the client asked me to wait until a deposit was received. Regardless, the payment was timely on my end. This client insists on holding my invoice until I prove that the penalty was generated from something other than my fault. Can a client withhold payment for any kind of reason? My logic is, my current invoice was for services provided at a different time so PAY ME. My engagment makes no reference to me having any liabilty due to late filing errors. If I simply forgot then I would feel like I owe the client something but this is not the case. What is the best way to handle this? This has only occured twice in our short two year realtionship and both times due to the client not having the money on time.

Terry D.

Have you seen the IRS notice for yourself? The IRS has been sending "This is not a Bill" notices, however it does look like a bill, it shows how many days the payment was late and what would of been the penalty and interest if charged. I have a client that is a weekly depositor, I also file via EFPTS, sometimes I make the payment a day or two late, a couple of months later they get the "This is not a Bill" notice.

[Terry D EA]

Yes, I have seen these notices as well. The one my client received does show the penalty amount due and is indeed a bill. I have considering the approach that Wayne Brasch mentioned and will approach them with the intent of withdrawing my services completely. As for my current invoice, I still consider it valid and expect payment. They agreed to a service at a price, the service was provided professionally and timely. No excuses here, they should just pay it.

How many times do we go to a doctor and the doctor really has no clue what is wrong other than a coverall "virus" and he expects payment. If the same doctor misses the diagnosis we can't withdraw payment, instead, he/she expects payment anyway even if we visit them two or three times we get billed for each visit cured or not. Why is it that as accounting professionals, people seem to think they can treat us differently and refuse to pay for our services? Wouldn't it be nice if we could be like a dentist and only fill one tooth at a time and bring them back for multiple visits when they were already numb in the first place. Let's see, first visit form 1040 page 1, second visit 1040 page 2, third visit Sch A, fourth visit, State Return page 1... and bill $85.00 per visit! Maybe we have been doing it all wrong.

Thanks for letting me vent

Terry D.

[kcjenkins]

Terry, clearly this is a BAD CLIENT. While it sounds like you did file timely, if there is a penalty, it is THE CLIENT'S FAULT, because they needed you to wait.

It's not your responsibility unless they had the funds, authorized you to deposit them timely, and you just did not get it done on time. In this case, they are trying to make their collection problems into your fault. That is outrageous, and if you do keep the client you should raise your fees to include a PITA fee.

[BulldogTom]

Terry,

A really nice letter explaining that due to the state of the economy, you have noticed that many clients are slow paying their invoices. Due to the nature of your services, you will now require payment in advance. Also, you are so sorry to have to raise your fees to cover the cost of all these collection activities that take time away from your core business activities.

Send it like it is a form letter to all your clients, but just mail it to them. IF they stay, you have an advance pay customer who is paying more. If they leave, good.

Just my 2 cents.

Tom

Lodi, CA

[mcb39]

,

A really nice letter explaining that due to the state of the economy, you have noticed that many clients are slow paying their invoices.

I sent a letter similar to that in December to a great many of my clients. Of course, the letter covered other issues such as whether they wanted an organizer or not, etc. I have been amazed at how many have come to their interview with checkbook in hand prepared to prepay. Some have not returned (primarily the ones that the letter was meant for) and that is fine.

[Terry D EA]

Tom and Marilyn I like that idea. Much nicer way of eliminating the PITA clients. After some thought, I will get these folks to do their own payroll taxes. I have a signed agreement for the year but it does state that either party can revoke the agreement at any time.

Terry D.