How to regain trust and confidence with a frustrated client?

[aussiegeoff]

I had prepared a 1040 return for a client this past season.

I missed the APTC payment, which I should have figured out from their 1095-A and W2. Because he then got a great job, they had to repay it. They got a letter from the IRS. It's a new thing but it's no excuse. I prepared the follow up paperwork but the APTC turned their refund into a balance due. I had explained this but they're still unsure.

Has anyone had to handle this awkward situation before? An omission on a return leading to a ticked off client?

What can I do to make it up to them? Make them pleased with me? I want to take ownership of it but I'm worried I've lost credibility and their future business.

[ATSMAN]

I had prepared a 1040 return for a client this past season.

I missed the APTC payment, which I should have figured out from their 1095-A and W2. Because he then got a great job, they had to repay it. They got a letter from the IRS. It's a new thing but it's no excuse. I prepared the follow up paperwork but the APTC turned their refund into a balance due. I had explained this but they're still unsure.

Has anyone had to handle this awkward situation before? An omission on a return leading to a ticked off client?

What can I do to make it up to them? Make them pleased with me? I want to take ownership of it but I'm worried I've lost credibility and their future business.

First realize that we are not perfect. We do make mistakes in the busy tax season. Second you have to decide are these people reasonable or are they out to get a pound of your flesh.

About 4 years back I screwed up the state tax return of a 2 state filing taxpayer because I was in a rush and did not double check. To make up for the mistake I offered free tax prep for him and his daughter the following year and paid the interest on the balance due. I did not pay the tax. Taxpayer is still my client.

Apologize and offer free prep. If they are reasonable they will come back otherwise move on!

[AZ-Tax]

I have a policy to

First realize that we are not perfect. We do make mistakes in the busy tax season. Second you have to decide are these people reasonable or are they out to get a pound of your flesh.

About 4 years back I screwed up the state tax return of a 2 state filing taxpayer because I was in a rush and did not double check. To make up for the mistake I offered free tax prep for him and his daughter the following year and paid the interest on the balance due. I did not pay the tax. Taxpayer is still my client.

Apologize and offer free prep. If they are reasonable they will come back otherwise move on!

I have "if its my fault I will pick up interest and any penalties" written on my website. The potential problem with this is the TP could lie to you that he or she gave you the 1099-R, W-2 etc. form when in turn they didn't. Another reason I have a detailed tax organizer. I only had that happen once and they left and that was ok with me.

[Uncle Sam]

Frustrated Client

I make it a practice of photocopying EVERYTHING the client provides me at the time of preparation and attach it to the back
of my copy of the tax return.
Yes - it's a painstake to go through that extensive step and keep photocopies of paper - but it provides
me assurance of what documents I had to prepare the return with.

[zeros]

Made a Mistake on 2011 Return

Yes, mistakes happen. On 2011 return, on federal tax exempt interest, some of it was supposed to be added back to the state return and I missed it but the state did not. In 2016, he is still bringing up that incident. Apparently, he thinks that I should pick up the tab on the additional tax. Interest and penalties, well, ok. He is on my list to delete for next year.

[ATSMAN]

I have "if its my fault I will pick up interest and any penalties" written on my website. The potential problem with this is the TP could lie to you that he or she gave you the 1099-R, W-2 etc. form when in turn they didn't. Another reason I have a detailed tax organizer. I only had that happen once and they left and that was ok with me.

You are correct, some one could lie to you that they gave you a certain document when they clearly did not. Having learned from past experience, I too make a list of source documents, especially income and go over with the taxpayer before finalizing the return. Things to watch out for are your typical 1099-R, 1099-B and K1 which most often arrive late and is easy to overlook. It is relatively easy to deal with a missed deduction but way too hard to add back income due to an oversight. For some strange reason, intelligent taxpayers fail to appreciate the fact that if the income was included in the return correctly they would owe the tax, yet they want the preparer to pay the tax. Interest and penalties as a result of the mistake is generally paid by the E&O policy, but not the tax.

[TAXNJ]

Save

I make it a practice of photocopying EVERYTHING the client provides me at the time of preparation and attach it to the back
of my copy of the tax return.
Yes - it's a painstake to go through that extensive step and keep photocopies of paper - but it provides
me assurance of what documents I had to prepare the return with.

Save money by considering a scanner.

[David1980]

I've taken to making a list of forms / documents received from the taxpayer and including and reviewing the list with the final return. Doesn't take me long, also gives me a list of things to check off as I complete the return.

[FEDUKE404]

Keeping copies of everything

Save money by considering a scanner.

My thoughts exactly!

I cannot imagine the mountain of paperwork I would accumulate if I chose to go that route. . .

FE

[Rapid Robert]

Has anyone had to handle this awkward situation before? An omission on a return leading to a ticked off client?

I suspect the answer is "yes". 100% client retention is an unrealistic goal except maybe for the tiniest of practices. Unless you depend heavily on social media like Yelp for marketing, or serve a small-town client base where everyone knows everyone else, losing a client over a mistake should simply result in an opening for you to take on a new client.

For some strange reason, intelligent taxpayers fail to appreciate the fact that if the income was included in the return correctly they would owe the tax, yet they want the preparer to pay the tax. Interest and penalties as a result of the mistake is generally paid by the E&O policy, but not the tax.

H.R. Block does offer to pay the extra amount of actual tax due to their mistake, if the client buys the extra coverage for $35 or whatever it is. Some people may have gotten the idea from them. Block can afford to self-insure, most others can't.

[TaxGuyBill]

H.R. Block does offer to pay the extra amount of actual tax due to their mistake, if the client buys the extra coverage for $35 or whatever it is. Some people may have gotten the idea from them. Block can afford to self-insure, most others can't.

Really? I didn't know that.

From the number of mistakes I've seen in Block returns, I would think that policy would cause them to be bankrupt. :-)

[Rapid Robert]

Really? I didn't know that.

From the number of mistakes I've seen in Block returns, I would think that policy would cause them to be bankrupt. :-)

When I worked there, they called it Peace of Mind option. Preparers were strongly encouraged to push the product, and if a client filed a claim, it was a black mark on your record. It's funny, more than two years after I quit working there, I got a form letter out of the blue from the District Manager at Block, informing me that a claim had been paid on a return I prepared, I guess I was supposed to feel guilty or something. No chance for me to defend my work, but I have a hunch it was a client who had a history of not bringing in 1099-OID statements, requiring amendments in other years.

[Lion]

And, because Block was reimbursing for a tax owed by the client, Block issued Forms 1099-MISC to the clients.

The client had to purchase the POM for about $39.95 (years ago) or be a premium office client where POM was included in the higher prices. In our district at that time, the district manager approved all claims and sent to Kansas City for payment. We never heard if one of our clients filed a claim.

[JohnH]

You are correct, some one could lie to you that they gave you a certain document when they clearly did not. Having learned from past experience, I too make a list of source documents, especially income and go over with the taxpayer before finalizing the return. Things to watch out for are your typical 1099-R, 1099-B and K1 which most often arrive late and is easy to overlook. It is relatively easy to deal with a missed deduction but way too hard to add back income due to an oversight. For some strange reason, intelligent taxpayers fail to appreciate the fact that if the income was included in the return correctly they would owe the tax, yet they want the preparer to pay the tax. Interest and penalties as a result of the mistake is generally paid by the E&O policy, but not the tax.

Wonder how many of those clients who expect the preparer to pay the additional tax would also be willing to give any additional refund to the preparer in case of a mistake discovered after filing. (Yes, I did pose that question to an unhappy client one time. Somehow he reasoned that it "wasn't the same" in case of a refund. We didn't bother with delving into the logic. )

[ATSMAN]

Wonder how many of those clients who expect the preparer to pay the additional tax would also be willing to give any additional refund to the preparer in case of a mistake discovered after filing. (Yes, I did pose that question to an unhappy client one time. Somehow he reasoned that it "wasn't the same" in case of a refund. We didn't bother with delving into the logic. )

Human nature! Sometimes if it is an easy 1040X , I don't even charge if it is a long time client.