Unprepared & Unorganized

[MAJ]

Reading some other posts made me wonder.

I have a few clients that bring their bare bones paperwork {W-2, Mtg interest, etc} and nothing else. When I query them for additional information {charity, business mileage, etc} I know they are making the numbers up as they go OR ask what they did last year. Not matter how much I try to GUIDE them or supply them with client organizers.

So this brings up a few questions that I'd like some general responses on.

1) Do you do client organizers and if so, what is your completed return rate on them?
2) When clients appear to make up numbers what are your thoughts - do you ask or demand receipts?
3) When they ask what did I do last year - Do you answer them?
4) At times, I've had to have the client log into their mortgage or other online accounts to obtain proper paperwork that they forgot. Do you charge extra for this? I used to send them away and reschedule but it's easier to just get the data while you have their scenario in your head already.

Enjoy the weekend.... Too many days of warm weather here in Jersey!

[OtisMozzetti]

experience

When I query them for additional information {charity, business mileage, etc} I know they are making the numbers up as they go OR ask what they did last year.

I honestly don't know that they are overstating the deductions; in fact some of them, including some who use the phrase "oh, maybe...$X" while some of them stare at the ceiling, are actually trying to furnish a conservative estimate that they are completely confident they can defend if audited. I am not an auditor, and I may accept the client's numbers without independent verification. According to Circular 230, my duty is to make reasonable inquiries, which I do. I do try to persuade my clients that it is in their best interest to keep thorough records, in order to make taxes less stressful in the long run, in order to avoid potential IRS problems, and in order to avoid wasting deductions that they are too conservative to claim without thorough records. If someone insists on putting something that is clearly false into the return, I tell them I can prepare the return only if the information is made accurate, and accept the fact that some of those undesirable clients will walk out.

2) When clients appear to make up numbers what are your thoughts - do you ask or demand receipts?

See above. I always keep in mind that the apparent client might actually be a U.S. Treasury Dept. investigator.

3) When they ask what did I do last year - Do you answer them?

I do answer them. It is useful comparison information, in some ways a legitimate guide. I will point out that it isn't OK just to claim the same, or Y% more or less than last year. See the above about reasonable inquiries and wholesome bedside manner (persuasion of clients to keep thorough and accurate records). I believe it is better for all clients to keep working with a tax professional who makes reasonable inquiries and who always tries to persuade the client of the need for and value of thorough records, instead of having those clients go home and cheat on their taxes with TurboTax.

4) At times, I've had to have the client log into their mortgage or other online accounts to obtain proper paperwork that they forgot. Do you charge extra for this?

I really should charge extra for sitting there while clients and I dig out the information which the client should have brought with them to begin with. At the moment, though, I usually do not charge extra for it. At least it results in a much more accurate return than if they are providing me figures about which I make reasonable inquiries. Logging into the online accounts could be considered the sort of reasonable inquiries that are needed. I have an endless bag of tricks about where to go for various numbers, such as the local property tax amounts, so much so in fact that I get confronted with "can/can't you look that up (for numbers that there is no way I would be able to obtain)?"

[MAJ]

Good points -Thx

I too do not charge for the lookups & sometimes it's hectic to get this information.
I now scan and save all documents including those obtained from web sites as a precaution to show my due dilegence. I try to GUIDE my clients some respond. Others - well we all know the story...

Having documents from last year online is great to look up account numbers and other information. Sometimes they can't even remember the names of their financial entities.

Also, IRS regulations justify my upgrading to Win 7 Enterprise for the encryption of the hard drive(s).

[PIGLEE]

I have had people that guess, and I convinced them to keep records (especially mileage). In every case the people that had been guessing and then kept records discovered that they had been shorting themselves, big times. Plus they would have been dead in an audit. Most of my clients do real good. But when I put a ceiling fan in my office I was temped to get some numbers and stick them on the blades, just for fun. I also have my clients sign an Engagement Letter that states that they have records.

[dyne]

I REQUIRE that all of my clients fill in one or more of my questionaires with the amounts
of income or deductions, etc. If they do not, I will not prepare their tax returns. This
procedure has worked well for me for many years.

[Gretel]

I stopped writing down anything obtained verbally and get the info in the client's hand writing. I also insist on seeing receipts for donations (any donations) and if I am not furnished with a log book but mileage sounds reasonable, I will take the mileage and check the box "not written".

[Black Bart]

...a few questions that I'd like some general responses on.

1) Do you do client organizers and if so, what is your completed return rate on them?

No I don't. I'm lucky if they bring in all their W-2s, much less fill out a form for me. But others here do -- these from a while back:

http://www.thetaxbook.com/forums/showthread.php?t=15143&highlight=organizers

2) When clients appear to make up numbers what are your thoughts - do you ask or demand receipts?

I don't demand receipts but without 'em I require their written list of income and expenses. If the "wingin' it" becomes so embarrassingly obvious that the sheen is peeling off my professional image, I say we aren't allowed to use estimates and ask them to bring me the real figures later. Then they can go home, make up the numbers there and return -- thus saving (my) face.

3) When they ask what did I do last year - Do you answer them?

Sometimes; sometimes not. Depends on the client; if he/she is okay, then I might look and see. If they're risky business, I'm strictly business.

4) At times, I've had to have the client log into their mortgage or other online accounts to obtain proper paperwork that they forgot. Do you charge extra for this? I used to send them away and reschedule but it's easier to just get the data while you have their scenario in your head already.

I don't do that, but don't reschedule either -- just say bring it by later or mail it to me. If I did do it, I probably wouldn't charge for it (while gratitude doesn't last long/pay much, it can can get you repeat business). However, if they're needy about lots of things, then I just raise the overall fee enough to make me feel okay about extra work rather than nickel and dime ''em for each chore.

Enjoy the weekend.... Too many days of warm weather here in Jersey!

Jersey, eh? I was there once -- those folks speak a gravelly brogue. After we ordered a cone uh ahs cream, the manager grinned, gathered the employees around, and said, "Talk for them!"

Best regards, BB

[OtisMozzetti]

no log book furnished

...
if I am not furnished with a log book but mileage sounds reasonable, I will take the mileage and check the box "not written".
...

I believe that the software proceeds to compute a deduction of "zero" for the mileage, as we know is the statutory requirement for the business use of listed property.

It raises the question of whether clients should be provided any guidance in "reconstructing" their mileage from whatever written calendars, etc. they may possess, and/or whether clients should be encouraged to go home and come back when at least it is hoped they will have searched for and found their written record/log book.

It is a no brainer that clients must be offered, in the strongest yet persuasive terms, that log books will be a necessity for the rest of their lives.

[Black Bart]

Say Otis,

...It is a no brainer that clients must be offered, in the strongest yet persuasive terms, that log books will be a necessity for the rest of their lives.

Please excuse some more of my "spirited views and UNinformed business judgment" but exactly what strong and persuasive terms do you use on 'em? I've never been able to persuade more than half a dozen or so slackers to actually make and use a log for any length of time. Do you threaten to run 'em off if they don't come up with something?

I stopped writing down anything obtained verbally and get the info in the client's hand writing...if I am not furnished with a log book but mileage sounds reasonable, I will take the mileage and check the box "not written."

I do the same.

[OtisMozzetti]

Black Bart's incisive questions, spirited views, and other whoops deedo.

Please excuse some more of my "spirited views and UNinformed business judgment" but exactly what strong and persuasive terms do you use on 'em? I've never been able to persuade more than half a dozen or so slackers to actually make and use a log for any length of time....

Roughly (at this time of the evening) what strong and persuasive terms and manner that I use on 'em is that I adopt the song and dance that I am providing them the service of tax advice intended to help them have a happier life. I remind them that the IRS will very likely throw out any mileage deduction if they don't have written substantiation such as a log book. I purchased several stacks (30 log books for $27) from Tax Materials Inc. and hand most of those clients a log book during the discussion. I point out that keeping a log is much less stressful than worrying about what to do if you didn't keep a log. For those who might have sinned from January 1 up until the current date, I remind those clients that many IRS examiners have reportedly accepted some months of mileage data and have allowed that data to be extended to the rest of the calendar year in a reasonable but conservative way.

[dyne]

I also purchase a supply of mileage log books from Office Depot and give them out to my clients and TELL them that they MUST enter the miles in the log book and bring it back to me every year, otherwise I will NOT prepare their tax returns. Some of them do not come back to me but those who do come back have the mileage for me to use.