Too soon for this

[SueBaby]

Had a client I went on an audit over the summer. Got them out of a mess and they got a hugh refund back. I sent them a bill for it. Haven't received it yet and was going to present them with it along with their taxes this year.

Found out by a friend they are going to someone else to get their taxes done FREE; which is just fine for me. I had over 400 clients last year and don't mind a bit in losing a few. Sent them the third bill and still haven't receive payment for my work; which was 3 hours long.

So what I am asking, what would you do from here? Forgot it; write it off; send another statement; or get dog gone mad???

[erchess]

I struggle with receivables too

I am vaguely under the impression that as a professional my options are more limited than they would be if I were not a professional. That unease leads me to avoid the situation by making sure that I get paid before the client receives the benefit of my work. Even if they pay me with a check that turns out to bounce, I have them by the throat unless they want to move out of the community fast with no forwarding address. Trouble is the EIC/RAL crowd contains too many individuals who are in a position to do just that. There we have one more reason why I don't offer bank products and why when I did offer them the only way to get your money was a debit card.

Sue I think I would ask my professional organization whether I could sell the debt to a collector. If the answer was yes I might invoice one more time with a note about what is coming if the debt is not paid.

[BHoffman]

Can you just call them and ask them nicely to pay you?

If that doesn't work, then I send out a credit memo with "BAD DEBT" clearly spelled out, signifying they are scumbags and I don't want to hear from them again.

That said, I had a very sticky audit over the summer and turned it over to someone more experienced with these things. I spent about 20 hours of time organizing the client's paperwork to respond to IDRs. I considered the unbilled time sort of like tuition.

[SueBaby]

Can you just call them and ask them nicely to pay you?

If that doesn't work, then I send out a credit memo with "BAD DEBT" clearly spelled out, signifying they are scumbags and I don't want to hear from them again.

That said, I had a very sticky audit over the summer and turned it over to someone more experienced with these things. I spent about 20 hours of time organizing the client's paperwork to respond to IDRs. I considered the unbilled time sort of like tuition.

Tried calling no answer (maybe caller ID). Sent a nice letter out and each letter gets less nicer. I guess with that many people you will have that. Maybe if I put 'scumbag' on one letter I will get a response. Any response is better than none at all. THANKS feel better already!

[Koss]

Rubber Stamp

Some office supply stores sell a rubber stamp that can be used on invoices...

which says...

Please pay us

So we can pay THEM

and they can pay YOU

BMK

[SueBaby]

Some office supply stores sell a rubber stamp that can be used on invoices...

which says...

Please pay us

So we can pay THEM

and they can pay YOU

BMK

I could stamp this all day long on their papers or letters and I think now they would not blink an eye NOT to pay. It is not the money as much as me getting his paperwork organized and getting prepared and then to be with 2 auditors to TRY to intimate me over 3 hours to PLEAD his case. On my summer day at that.
In the end he not only got his refund for last year but back taxes the IRS owned HIM. He had gotten over $23,000; and I only asked for 250 of it. Oh well, live and learn.

[Anarchrist]

Too late now, but $250 is way to low of a fee to handle an audit. So my first recommendation is to raise your fees.

Second, never do audit work without a retainer. If it's at the irs office, we can assume the meeting will be 3 to 4 hours. An hour to drive there and back. An hour meeting with the client beforehand. Knowing this is starting off at 6 hours, a $1000 retainer seems to be a bare minimum. If additional meetings with the irs are required, the retainer is replenished prior to the meeting. If the retainer isn't replenished, work stops. This is all spelled out in the engagement letter which the client reads, signs, and returns to you with the $1000 retainer prior to you doing any work.

Here in Michigan the small claims court procedures are pretty simple. The statute of limitations for non-payment is 6 years. The statute for malpractice is two years. To prevent the deadbeat from filing a counter-suit to get you to drop your suit, wait two years and take him to small claims.

Your engagement letter should also spell out late fees for non-payment of invoices. That $250 from last summer should be up to $350 or more by now.

[joanmcq]

$250 for an office audit?????? SueBaby you are wayyyyy underpriced. Take 'em to small claims court.

[geekgirldany]

Yeah and throw on some late charges too!

[DaveO]

Your client's sense of entitlement extends to your fees.

[SueBaby]

$250 for an office audit?????? SueBaby you are wayyyyy underpriced. Take 'em to small claims court.

WOW!!! I will print all of these posts out for the client to see. Thanks for all input and yes I will go wayyyy up for an audit. People don't know what we have to go through behind the curtain of taxes! THANKS TO ALL TO RAISE MY BAR AND MY PRICES FROM NOW ON!

[BHoffman]

Heavens yes raise your fees by all means!! And get at least $1000 as a retainer and charge a minimum fee of $1500. Representation is a specialized service and deserves to be priced accordingly. If you're out there doing a great job and getting refunds for clients for a lousy $250, then how are the rest of us supposed to compete?

[ChEAr$]

maybe

Heavens yes raise your fees by all means!! And get at least $1000 as a retainer and charge a minimum fee of $1500. Representation is a specialized service and deserves to be priced accordingly. If you're out there doing a great job and getting refunds for clients for a lousy $250, then how are the rest of us supposed to compete?

Your Phoenix fees are in line, and probably are. But remember, every area of the country
is different and every audit is different and not all office audits justify a $1,000. It depends on
the time it takes. For three hours work as I think Suebaby said, $500 may even be too high.

Facts and circumstances! (grin)

Oh good grief. I just had a bad dream. I dreamed I was in an IRS audit for a preacher!

[JG EA]

I looked into IC? recommended by NATP. They collect by threatening a bad credit report for them. They charge $150 for 2 years and take a percentage. So, you'd come out with not much on $250, but I thought I might consuder to use them if the amount was higher.

One of the points they make (and it is a good one) that a bad debt has to be taken into consideration with your profit %. You have to take in two new clients that each pay $250 to make up if your % is 50% (just say).

As you point out you have plenty of clients, so the freeloaders get away with it again.I think that going after them is overall bad for our reputation and so don't do it. But they get away with again.

[PIGLEE]

In the past I have sent my bad debts to the Collection Agency here in town. I get a little revenge by hurting their credit rating. I do get some of the money(and they take a percentage). This way I can write if off my books, and hopefully forget about them. NOW I HAVE A QUESTION. With the new 7216 rules, will we be able to do this any more? We do have to provide their address and their Social Security number.