Past Client Call About Letter

[Crank]

A client of about 10 years decided to go it on their own using H&R Block online self filing for 2015.  I didnt even know that existed.  They called me yesterday about a letter they received from the State indicating they owed about $1100.  At first they were irate thinking it was an error I made until I pointed out that I didnt do their taxes for 2015.  They would have needed to use the premium product which is about $95 for a federal & state for Itemized deductions and a small business, including EITC.  I charged them $180 the year before (2014) which I think is a VERY good price..  I told them I couldnt help them since I didnt prepare it and frankly I was annoyed at their tone when they thought I did it (or pretended that they thought it did it).  They called me back, apparently after talking to the State tax dept. and thanked me and said they would be returning to me next year.

 

Whats the opinion of the group.  Would you have helped this person out like I did by telling them who to contact.  Would you take them back as a client this year?

[Lion EA]

I would've told them to call the state.  Might've given them the number if it was at my fingertips.  Taking them back would depend on how contrite they were on that second call (after showing attitude in the first call) and how much I did or did not like having them as clients in the past.  IF I did take them back, I'd inform them that my prices increased in 2015 and will again in 2016, so a return comparable to their 2014 return is now $220 (name your price, but definitely over $200).  With the due diligence for EIC, I'd charge a whole lot more than $200 for an EIC return that includes a Schedule C.  In fact, I probably wouldn't let an EIC client return after leaving me and showing attitude!

[Crank]

They were very nice in the returned voice mail and thanked me.  They were never a problem to work with except they took a long while to return calls and usually finished it up just before the filing deadline even if they dropped off in Feb.  Yes I do know my prices are too low and have been raising them slowly each year.  Thats all I hear from my wife is that my pricing is to low for a CPA.

Im betting if I take them back that upon reviewing the self filed returns for 2015 there will be amendments needed too.

[FDNY]

 Yes, I would have helped them and yes I would take them back only because I know clients are not perfect.  Once they return I would explain that they need to respond to your questions in a timely manner as tardiness interrupts the workflow  process and could increase their price.

Also I would definitely listen to your wife, they usually know better, just from their intuitive perspective, and it serves us well to obey, if we know what is good for us.  I learned the hard way.

[SaraEA]

Client with EITC and SCH C?  First, just with the due diligence requirements and risk involved, you should definitely be charging more than $200 (way more if the SCH C has more than a few lines).  We fired all of our clients in this situation with the exception of a few we know well and know their businesses are legitimate.  We referred then to HRB, where preparers are better trained in due diligence and what records to keep than we are.  We take few new clients and none with EITC, SCH C or not.  This year due diligence expands to ACTC and AOC.  Again, we know our clients so will likely trust those with these credits.  We haven't discussed yet whether to raise their fees.

[JohnH]

I like your attitude. We know that some practices must prepare  EIC returns in order to survive, so this isn't a subtle attempt to slam them.  But I decided I simply can't charge enough to compensate for the penalty risk of preparing a return claiming EIC, especially when there's a Schedule C  involved.  So for many years my solution has been to refer them to HRB, while explaining that they need a preparer who is comfortable with those type of returns, has the deep pockets to cover any surprises, and can give them the quick turnaround most of them are seeking.

Maybe things are trending that way with ACTC and AOC, although my gut feeling is that this credit by and large involves a type of client whom we don't have to second-guess and interrogate on every response.  Or a client who has already visited one or two other preparers and has been coached on what to reveal and what to leave unsaid.  (or as my father-in-law Sam Cook used, to say - "Somebody who knows how to play fast and loose with the truth".)

[Crank]

Im leaning towards not doing EITC returns.  I dont believe I had any last year.  The client in question was primarily w-2, single, 2 dependents and a small sch C for that one year, trying to sell electricity on commission in his spare time.

[Catherine]

I have only two clients who qualify for small amounts of EITC.  I have no problem doing them as they give me good records to work from and both are married couples.  One brings the kids in with them and the other has no kids so that's not an issue.

Anyone new - I doubt I would take them on.  The requirements are far more than I want to deal with for anyone new.

[ADGFINANCIAL]

We do quite a few EITC returns.  Do an engagement letter to cover concerns.  It's on our letterhead and reads:

Mr. Girard went over the questions on the Paid Preparer’s Income Credit Checklist Form 8867 with me for 2015.  I had ample time to review the questions and to the best of my knowledge they are accurate.

(Client Signature)____________________________________ (Date)_______________

I have read the above terms of the engagement letter and agree with the terms of this engagement.

The engagement letter is 2 pages and this is at the end of the one for EITC clients.

 

[Jack from Ohio]

31 minutes ago, ADGFINANCIAL said:

We do quite a few EITC returns.  Do an engagement letter to cover concerns.  It's on our letterhead and reads:

Mr. Girard went over the questions on the Paid Preparer’s Income Credit Checklist Form 8867 with me for 2015.  I had ample time to review the questions and to the best of my knowledge they are accurate.

(Client Signature)____________________________________ (Date)_______________

I have read the above terms of the engagement letter and agree with the terms of this engagement.

The engagement letter is 2 pages and this is at the end of the one for EITC clients.

 

Even a signed form like you show does NOT relieve you of your requirements for due diligence documentation.  We are now responsible for the accuracy of the information on the tax return, despite what the taxpayer may or may not say or sign.

[Karen Lee]

And why did I retire....