Client's Past Due Bill

[luke]

pay up front

My psychologist wife was complaining about her clients not paying for her service! One of her prostitute clients told her "you're doing it all wrong, honey. ALWAYS get the money UP FRONT"!

[arlo]

a tenth to the Lord

I work in a town with high poverty level and if they do not pay me I consider it Charity.

[Mo Sheets]

MO - I'm sure you MEANT to say "after I get their SIGNED 8879 in my hands, I electronically file"??

yes, I failed to mention that didn't I....I do have a signed the 8879 prior to filing in all instances.....my point was that I have a level of trust in my clients and they have not failed me yet. Thanks for clarifying that point for me though.

[erchess]

My policies

My situation is complicated because I do most of my work in the homes or offices of clients but I also have both preparation and representation clients who I work with remotely. When I go to the client I never seem to have a problem getting a good (even if post dated) check or a credit card payment. I seem to have no trouble getting paid timely by those remote preparation clients who get me their stuff timely and file by the extended deadline. Where I ran into a problem was with some of my remote representation clients. It was originally my practice to bill at the end of the job but I ran into a few problems with that. One guy wants to be a self preparer but wants to pay for representation which he needs since he cannot be bothered to file until the government threatens to or actually does seize money from his accounts. Otoh he has plenty of money and pays me promptly when work is done so he gets to keep the old policy. One case is dragging on and on but since he is also a paid preparation client and pays timely for his returns I don't mind adhering to the original terms of our deal. Then everyone else was quickly resolved and as quickly paid but one guy years ago has not paid yet so I now get remote late filers to pay half of my fee and the total estimated expenses up front. I occasionally have clients decline these terms but of those some come back expressing surprise that they could not get better terms from anyone who struck them as otherwise ethical and competent and I have yet to have a problem with anyone living up to the terms. after agreeing to them. Another wrinkle is that my truck went in the shop a week ago this past Wed and I cannot always get a ride when I need one so in this crunch time a total of four returns have been converted to remote status. These are all returns for long time fast paying clients. When a return is ready I email encrypted pdfs of their file copies and the papers I need signed. Some have digital signing software and some print out sign and scan back in but at their discretion fax or email brings me back the signatures and I am efiling. When the checks come I will send printed hard copies for those who desire them. (I charge $20 extra for paper copies unless the client does not have a computer or the return is not eligible to be efiled.)

[DMICPA]

Carrying over fees

Had a client for 35 years. Always paid full price and large fees. For the last several years, I have done tax planning and just carried a portion of the time over until the tax return was done and we squared-up. Just sent a bill for a portion of the work done and carried over $600 on my records. Collected the fee and still have the carryover. All is paid from His point of view. Client just passed away. Wife is checking the records and everything is paid up according to her.

Well, I don't think I will send the remaining balance as this would be quite difficult to explain since the bill cannot just appear and me explaining the carryover seems to be confusing and uncomfortable.

Guess I should bill everything from now on.

Bob

[ATSMAN]

2010 I had a similar experience. The wife always took care of the bills and they always paid but in arrears. She died in an accident and the husband had no clue what was still outstanding. I let it go and I now bill current.

Carrying past due balances is risky but I do understand it can't be avoided in certain situations, especially if this process is once used, it is hard to break the bad habit.

[DMICPA]

You are so correct

The way you start a client billing method largely determines the future. Once you give the client the returns and mail the bill later, the harder it is to ask for the money next time when the return is done.

A client gets used to a certain way and any changes are unwelcome.

With new clients, I try to have them pay when the return is done. The old clients, I send a bill and they remit because I have retained them for many years.

I have had the situation where the new client comes in and "forgets" to bring the checkbook but promises to pay when they get home. They tell me that it is too hard for them to have to make another trip here just to pay me and say that I must not trust them or don't believe them when they say they will pay and it is almost like calling them a liar or a flake. I have given them the return and eventually get paid. It may take a month or two but I did get paid.

[ATSMAN]

If I am stiffed once, it is cash on delivery after that. I have had to eat a lot of bounced check fees over the years and my current bank is up to $30 for a returned check.

I actually have told a few clients who I knew were chronic problems that they can go to the ATM a mile from my office and come back with cash before I e-file their return. I lost 1 client who rolled her eyes and threw the money on my desk. I said good riddance. It is someone else problem now I am sure.

At various times I have considered using bank products just for that purpose. Get my fees collected.

[Lion]

I too ask for payment before returns leave my office, before I e-file. But, I've made exceptions.

For the OP, if you will be preparing the final 2013 1040 or the estate's 1041 or any other returns connected with your client who passed away, you can certainly increase your fees on one or all of those to make up for fees expected from prior filings that you think you lost with your client's passing. If you will not be preparing any more returns for him or his beneficiaries, then do send an invoice immediately and reference services provided from the time of his last return or similar short, sweet, generic reason.

[Burke]

They tell me that it is too hard for them to have to make another trip here just to pay me .............................

Oh, please. There is always the US mail. Just give them a return envelope, and sweetly advise you are happy to do this. Oh, and PS: When the check is received, return will be efiled.

[AZ-Tax]

Wouldn't accepting a Credit Card or Debit Card pretty much take care of this?

As like Burke, I have some clients out of state and like Burke, the check needs to be included with the signed 8879 and state authorized form OR the return is not e-filed and the original tax return is not mailed to the TP. Currently I only accept checks and cash but I am getting pressure to accept credit card and debit cards which could help reduce or eliminate non-paying clients BUT even that would not avoided a situation I had about 5 year ago when I was almost done with the return and the new client which was a referral from a current client, backed out and said they went to some other preparer. This is where the 50% up front would have helped but asking clients to write two checks vs. just giving me their credit card or debit card PLUS I am yet to hear about any of my local competitors charging up front. Also, about 2 years ago on Oct 15th, 9pm, I had a repeat client forget their check book. Got paid but thinking about this, this could happen more often especially with new clients. I would like to see it be a standard for all tax preparers to charge an up front fee.

[JohnH]

You could also accept Paypal.
Most people who buy online now have Paypal accounts.
The fees aren't very bad.

If you use a smart phone, the the Square is a good option.

Personally, I just let 'em mail me a check.
I try to do everything possible to keep them out of my office so I can get some work done.

[ATSMAN]

Many years back I had to get an attorney for a legal problem and after paying the retainer I was given a schedule for payments. After a few court appearances, I was given a reminder that the retainer amount has run out and I MUST make the next payment before any future court appearance. He was fully paid and then some by the time case was concluded.

I think we could adopt something like that in our practice, especially for complex business returns.

[joanmcq]

Since I got Square & set up a PayPal button on my website, I have a lot less of the "I forgot my checkbook" issues. Clients are relieved that they can just use their credit or debit card, and remote clients like the paypal option. I hate the merchant fees, but it's less than getting stiffed on even one return.