Client Letter

[DTS]

Anyone have a client letter you mail at the start of tax season prepared that you could share with me? I have gotten so behind with "stuff" and am no where near doing one from scratch. If you would not mind sharing, I'll PM you my email or fax number.

Thank you.

Dennis

[Uncle Sam]

January 2013

To My Income Tax Clients:
Happy New Year.
Now that the festivities of the holiday season are behind us, it is now time to focus on the organizing and gathering of your income tax information for the preparation of your 2012 income tax returns.
During the coming weeks you should be receiving the following income tax related forms:
W-2 - from places of employment
1099-B- from proceeds from the sale or exchange of investments
1099-INT-from banks, credit unions, and other financial institutions
1099-DIV-from corporations issuing dividends, mutual funds, brokerage firms
1099-MISC-from payers of compensation for non-W-2 income
1099-R –from payers of pensions, annuities, IRAs, Keogh Plans, etc
SSA-1099-from Social Security Administration for Social Security Benefits
K-1 - from investments in partnerships, S Corporations, Estates/Trusts
1098 - from mortgage lenders disclosing tax deductible interest expense

The envelopes to this information usually will have “Important Tax Information Enclosed” written on the outside of the envelope. Please watch for them and put them in a safe place for organizing your tax information.
It is also suggested that you begin gathering your tax-deductible items by going through your checkbook and organizing that information in the meantime.
If you have any questions at all regarding this, I suggest you review your last year’s tax return and/or call me in adequate time to track down any required information relative to the preparation of the return.
If you sold investments during the year, please note that in order to properly report that information, it is required to have your cost basis for reporting. If you don’t have that readily available, I suggest you contact your investment person, whether it be a stockbroker, financial planner, or investment relations department of the entity itself, before we meet.
Please contact me to set an appointment as soon as you have all, or substantially all of your information.
The income tax organizers, if you have used them in the past, will be sent under separate cover. If you would like one and haven’t received one, please call me and I’ll send one to you. Please bring the organizer to the tax appointment, regardless of how much has been completed.
Please note, that unless otherwise pre-arranged, unless you have contacted me by March 29, 2013, there is a possibility your tax return may be placed on extension for filing. An extension for filing is NOT an extension to pay any balance due by April 15th.

[DTS]

Uncle Sam

Thank you very much. This will do nicely.

Dennis

[Burke]

I also send out a similar letter each January. Except for the opening paragraph, which deals with topical issues (like the fact Virginia is no longer going to send refund checks -- its direct depost or prepaid debit card) -- it pretty much remains the same each year. This may not be the best way to do it, but they actually look for it to come in the mail.

I find attention spans are short; for some clients it obviously is not read thoroughly and for some not at all. I used to tell them (when I went skiing out west every year) which week I would be out of the office. They forgot. So I no longer mention planned absences. I used to have a paragraph about stock sales and providing basis. Forget it. I still had to do the usual digging or contacting brokers. They think it is on the 1099's. Most don't have it elsewhere, and those that do will give it to you.

The letter is usually returned to me in their tax papers when I get them. It cannot be too long, or wordy, so I never make it more than what will fit on one page. Short sentences. Beware of TMI. This year I made it "interactive." I asked them to update their email address and the place to put it is at the bottom of the letter.

You have to entertain people these days. If its boring, they won't get very far into it. The biggest advantage is that you don't get beaucoups of phone calls asking if you are still doing taxes this year!

[Uncle Sam]

Client Letter

I also, after I mail that notice, mail the organizers to only the ones who actually used
it the prior year, as well as the new clients from last year.
If they don't use it, I don't send it the subsequent year.

[JohnH]

I've switched to email for sending out the letters. It's faster, cheaper, and it establishes a line of communication other then the darn telephone. Any questions they have can be asked by simply clicking "Reply". I found out a long time ago that if I can keep my clients out of my office and off my telephone, I'm much more efficient.

[Burke]

To Uncle Sam's post about mailing organizers to those who request them:

I think that is a great idea. I find most organizers ask for far too much detail, i.e, employer info, W-2 info, 1099 info, K-1 info, all of which I will take from the forms and not the organizer anyway even if they fill it out. The forms are much more reliable. And I require the tax reporting documents and copy them. I sure don't want to copy or keep the organizers as well. Also, its hard to modify them very much. The most useful are those from business or rental clients.

[DTS]

I think my clients like getting them, but I'm not sure how closely they read it (quite a few do do over it in detail with me). I find the letter either on the top of their documents or on the bottom (I don't take that personally).

I did not send it out one year due to illness and I was surprised that many of the people expressed a number of concerns when they did not receive theirs.

[FEDUKE404]

Use varies

My experience with organizers is there are two groups of clients:

Group A thinks they are the greatest thing since (on a family board) sliced bread.

Group B thinks they are totally useless.

My solution: I send them to all via PDF attachments, with clear instructions "use is completely optional on your part." I also don't waste any paper/ink/postage/time going that route.

I have also found (via working with a CPA firm some years prior) that some clients just don't take too well to a Spanish Inquisition type of organizer.

Although I don't keep records, my guess is that perhaps 25% of the organizers get returned to me with any significant data entered.

My personal opinion is that a good instructional cover letter can do just as well. (If it says "Important Tax Information Enclosed"....I need to see it!!) Don't make it look like those Christmas card inserts telling of the exploits of every family member to include distant cousins! As Burke noted, the organizers DO serve a useful purpose for a client with rental and/or Sch C entries.

FE

[DaveinTexas]

We did the same this year

I've switched to email for sending out the letters. It's faster, cheaper, and it establishes a line of communication other then the darn telephone. Any questions they have can be asked by simply clicking "Reply". I found out a long time ago that if I can keep my clients out of my office and off my telephone, I'm much more efficient.

The older clients that don't "use that email thang" will miss out but they usually call us in January anyway. We attached a newsletter and tax document checklist to the email. So far, so good.

[JohnH]

I like it when they bring in the entire envelopes full of boilerplate stuff in the "Important Tax Documents Enclosed" envelopes, especially the brokerage statements. Then I sit there chatting with them while cramming 90% of the stuff from the envelope into the shredder. The look on their faces is priceless as it sits there just grinding away.

[Burke]

Its better than just bringing the first 2 pages. Then they have to go back and get the rest if brokerage accounts are involved. The Merrill Lynch statements are sometimes 18+ pages. It all goes back to them when I am done. I only trash the envelopes and "propaganda," as it doesn't need shredding. And I learned a long time ago to keep that "trash" in a big bin until tax season is over. I am just now disposing of last year's.

[AZ-Tax]

I Categorized my tax organizers

I Categorized my tax organizers. 1 PDF file dedicated is for "Personal Data" (name, address, SS, DOB, marital status & dependents names, dob & ss plus if they prefer to have any refund deposit in same acct as last year. For new clients, a line to enter their acct # for any refund.

Separate organizer (separate PDF file) for "Itemized Deductions"

Etc.

In the email body, I instruct my tax clients that while there are several attachments, many to most may not pertain to you but to know, print the 1 page instuction page. This page will, based on your personal situation, instruct you which tax organizer forms apply and don't apply. On the instruction pg, it states that if there is NO changes to your marital status, address, dependents, family members etc., only the taxpayers name needs to be entered into Personal Data form and check the box, No changes below from previous tax year. All tax organizer forms are PDF fillable.

Each pg I have a line for the TP to initial which very few do and most of TP's who do, only print and not write it. TP is never required to enter data from a official tax document on to the tax organizer. I use a couple tax organizers when remodeling my tax organizer one being TTB but as with the TTB, all these tax organizers include entries for W-2, 1099-R etc. and since I opened my practice, I have always pull that data directly from the tax document.

Roughly 90% of my repeat clients complete my tax organizer but out of those 90%, about 50% complete it entirely.

[taxea]

I also, after I mail that notice, mail the organizers to only the ones who actually used
it the prior year, as well as the new clients from last year.
If they don't use it, I don't send it the subsequent year.

If my clients don't complete the organizer, I send it back to them and remind them that they forgot to complete the form/s. Their taxes don't get prepared until I have completed worksheets and other required documents. My clients have been trained not to give me anything until that can give me everything.

[taxxcpa]

It annoys me that instead of removing the tax documents, people think I want them enclosed in an envelope which I have to open.
Another type client will hand you each document, explaining, "This is my W-2. then he hands me another one, "This is my wife's W-2.'
I sit there acting as if his helpful explanations are vitally important.