Too soon for this

[Acownt4it]

collection agency

The questions regarding if we can send a client to a collection agency had me curious and worried so I contacted the Illinois CPA Society and asked them the question if we could infact disclose our client's information.
Thanks to Michele in the Information and Resource Center she found out that under IRS Reg. 301.7216-2(l) Permissible disclosures or uses without consent of the taxpayer: Payment for tax preparation services.
Hats off to Michele, she worked on this for over 2 days.

[Snaggletooth]

Forgive Indebtedness

Your next letter should say that they no longer have to pay you, you have written off their debt.

As a footnote, should also say you are issuing a 1099 for forgiven debt, and it will be sent for the year that was under audit.

Probably can't do this, but it will work.

[S T]

Can we really do this

Snags,

Could we issue a 1099 for forgiveness of a debt of a client? That would be awesome, that really would be sweet revenge!

Sandy

[Nashville]

Probably Not

as the qualifications for being able to do this are probably limited to financial institutions or some other narrowly defined circumstances.

But it would be sweet in more ways than one. SueBaby says for 2008, her clients found a "free" way to do their taxes. This could be TT, free IRS software, VITA, or any number of the "free" alternatives.

How many of these "free" providers can handle a 1099 for debt forgiveness??? Revenge is just multiplied fourfold.

[BHoffman]

Based on recent experience, it comes to mind that anybody can issue a 1099 for any reason. I'd do it if I wanted to shake up Bum nonpaying client. I know another accountant who sends a letter notifying Bum that he intends to let the IRS know he is NOT a paid preparer. I've never done that.

I try to never let a client owe me more than around $500. If the work is going to be more than that, I get a retainer. If I think the client could be a no-pay, I get a retainer. Almost all new clients needed high-dollar work are going to be paying a retainer. I'm not shy about asking for payment up front. I'm also not shy about withholding my work until I'm paid. I'll return their original docs, but my terms are "see me pay me" when they pick up tax or accounting documents I've prepared. For the iffy clients, I make darn sure to tell them on the phone how much they owe me and to make sure and bring a check. If they forget their checkbook, I look real sad and disappointed and tell them I have to be paid before I can give them my work. I always return original documents, paid or not.

When I get burned, (and I have), after exhausting all reasonable efforts to collect I just kiss them off and send them a resignation letter with a credit memo marked in bold "BAD DEBT" and go about my business. They've already wasted enough of my time.

The best revenge is to live well.