Client's Past Due Bill

[zeros]

Every year after tax season, I have a few that haven't paid. Some don't pay until the next tax season and then expect to have 12 month terms on that bill. I write off 4-5 during the year that never pay. Send a couple of notices during the year. Anybody else have the same problem?

[JohnH]

I've had a few of those over the years. They're usually moderate-priced returns. IMO, the best way to handle them is with hefty fee increases. That way you don't mind waiting for the payment, plus after 2-3 years you should be the equivalent of one return ahead of them based on what you'd normally charge for the return. Money has a time value, you know. If they bolt when you hit them with an increase, you've solved the problem of having to deal with them next year.

[geekgirldany]

I had that problem when I first started but I have all my clients pay me before the return is filed and before they get a copy. Haven't had a person's check bounce on me yet (knock on wood).
Getting my money when they come by stopped any collections I would have to make.

[Gary]

Why

Why would you file a return before getting paid?

[JoshinNC]

Collect your fee before you file/hand over copies

Period.

Problem solved.

[ruthc]

Get Paid First!

I have always made sure payment is made BEFORE giving a copy or filing the return. That way there are no problems or hard feelings with clients. Takes a load off your mind, and something you don't have to worry about until the next tax season. If you send out engagement letters before you do the taxes include that a payment policy change has been made for this year and that payment is required before releasing or filing the return. That should eliminate your payment problems.

[John of PA]

I have found with most clients who are slow pay, working with them while they are struggling pays off in the long run. I agree make sure your getting a little more in your fee for the extra administravie stress. As for why would we file a clients return if we are not paid yet, the answer lies in the same question, for example: Why would our doctor provide services to us before being paid, why would the electric company give us electricity before they are paid for it. I believe in the old fashion courtesy of extending a term of 30 days for payment. Along with this, I am very discriminate as to who I take as a client, generally they must come as a referral to become a client. I do not use marketing or advertising. Hope this helps.

[JohnH]

Interesting discussion about payment policies. I lean more toward John of PA's thinking and have never required payment up front, mostly because of the reasons he has mentioned. Also, most of my clients mail or email their info to me and I mail the return back to them along with an invoice. So trying to collect before providing the return would not fit my business model at all. But I don't collect up front even for those few who pick up their returns.

But I understand the thinking of those who require payment up front, especially if you are dealing with a fluid clientele. And with e-flinging, you're having to get all the documentation signed before you actually transmit the return, so you may as well get the check as well. I just don't care to jump through all the hoops.

[ruthc]

Emailing/Sending Returns & Info

I have heard many TP email and send returns/info to the client. (and vice versa). When signatures are required I have a feeling a lot of TP don't get original signatures back in the mail and they fall through the cracks. Is that the norm now? (for obvious reasons, I doubt if many TP would admit it).

[ATSMAN]

For new clients I do require a down payment (typically 50% of the estimated fees) with their paperwork. Balance due upon delivery. I will NOT accept a fax or e-mail of the efile authorization for new clients for that purpose. They will have to make arrangements to come to my office (As an exception i have visited their home within a reasonable distance).

For my existing clients most pay at delivery but then there are others I have to chase them for the money, especially the mail clients.

[S T]

My practice, is a lot of long term clients and mail-email so billings. I sometimes have to give some taxpayers "leeway" on payments - I do not have my practice set up for Walkin's and taxpayers I do not know.

I do identify those clients that are so slow - in paying - that those 1%-2% I receive a payment first. These clients already know who they are!

Guess all of our tax practices are different - but it is always welcomed information from all that is posting on this subject

Sandy

[DaveO]

Had a few of those who would pay the previous year when they brought in the current year, always with a promise to pay the current year once they had their refund. Finally cracked down and demanded payment in full. Lost about half of them but that was no great loss.

[Burke]

I agree with the pay-up-front rule. I too, have many clients who are now out of state, so I mail the returns to them. But Efiling has made it easy. They have to mail the 8879's back to me so they include a check in the mail with the forms. If it is not there, I don't efile until I get it. Others give me a check when the returns are picked up. I will take a post-dated check if they are in a bind. But I have it and don't have to chase it. And I have one retired client who for years has paid in two installments. Only have had 3 clients not pay in 35 years, and that was because I just did not pursue it. My bad.

[Mo Sheets]

Always Received Payment......

I handle mine the same as John of PA. I meet with my clients and have them fill out a worksheet (although I do mail some worksheets to clients who will take the time to fill them out ahead of our meeting time) and sign an engagement letter. I go over with them any changes that have taken place during the last year (marriage/divorce/kids moving away from home). They leave their W-2's, 1098's, etc., signed engagement letter, and the completed worksheet with me. Once I complete their return, I contact them with the figures I've arrived at to make sure this is in the ballpark of what they expected (also to make sure they don't say "Oh, by the way, I received another form in the mail." ) After they say, o.k., I electronically file. Once I get the acceptance back from both Federal and State, I call them and let them know how much is owed and make arrangements for them to come pick up their return. I've only had one client that did not pay (mailed income tax return copies back to her) right away and she did eventually pay (took about six months). Knock wood...never been stiffed.

If someone comes to me and has not filed several years worth of income tax returns, I make them pay up front. My conclusion is if they failed to file/pay Uncle Sam for several years, I'm probably not going to have an easy time getting money from them either. In all cases, this has worked out well.

Mo

[luke]

i am sure you meant

Once I complete their return, I contact them with the figures I've arrived at to make sure this is in the ballpark of what they expected (also to make sure they don't say "Oh, by the way, I received another form in the mail." ) After they say, o.k., I electronically file.
Mo

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