How to regain trust and confidence with a frustrated client?

[kathyc2]

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

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.

I handle such items by doing what I would expect if I was the client, and then going a little beyond. In a case such as yours, I would refund the processing fee since the return was not correct and pick up penalties and interest. That should keep the majority of clients happy, but if it doesn't this may not be a client you want going forward.

[WhiteOleander]

I work in a H&R Block franchise office. We do offer the Peace of Mind service. The program covers more than just paying for a preparer error. If the client is audited for any reason the audit is handled at no charge. As everyone here knows, taxpayers can be audited for any reason at anytime. If they have not purchased this program, they will have to pay us to assist in the audit. We would review the notice and advise them what needs to be done. However, under the Peace of Mind program, we will handle everything. If we have to go in person to the audit and represent the taxpayer, that is also covered under the program.

In our office, we do not 'push" the program on anyone. We do offer it to everyone. We explain the benefits and shortfalls of the program. In this office, our manager pays one half of the premium and the client pays one half of it. It is a good program for most, but not all, of the clients.

[Gretel]

Check Marks

I was taught to check mark on the client form each form that I processed. Then I scan these forms and give them back to the client. That way I always know what went through my hands.

Just now I am dealing with a letter audit for a client who missed to give a W-2 form that I could not have known about. Even after he talked with the IRS and realized this, he sent me the IRS letter (out-of-state) along with all the original tax forms, still stapled together. I didn't even occur to him that that form was NOT part of the pile of the original documents. In addition he did not give me form 1099-SA, didn't think I need it and did not mail me back the organizer asking about this. Mind you, I am not sending out complicated organizers, only questions to not miss something important.

[Rapid Robert]

At what point in the tax prep process do you push the taxpayer to buy the "Peace of Mind" contract?

Usually it's near the end of the process, when the signing and fee paying is about to happen. Unless they've changed, client must accept or decline POM offering in writing, and if accepted, acknowledge which categories of tax docs they brought it (to avoid the easy cheat of not bringing in an income document and then later claiming you did). I recall client also has to pay the actual tax up front, then wait for reimbursement.

[TAXNJ]

Excellent

The Block practice of charging $35 is similar to buying an extended warranty when you buy a product. Example, on a $2000 lawn mower you can buy additional warranty coverage for appx $300. I have had salesmen more interested in pushing the extended warranty than they were in selling the product itself.

If I charged $35 per return, and paid out all additional tax to customers that was my fault, I would make a ton of additional money every year.

Excellent point. Business is business especially when one is confident and knows the quality of their service

[Snaggletooth]

Like Buying a Warranty

The Block practice of charging $35 is similar to buying an extended warranty when you buy a product. Example, on a $2000 lawn mower you can buy additional warranty coverage for appx $300. I have had salesmen more interested in pushing the extended warranty than they were in selling the product itself.

If I charged $35 per return, and paid out all additional tax to customers that was my fault, I would make a ton of additional money every year.

[ATSMAN]

This is a question for folks who have worked at HRB for a long time. At what point in the tax prep process do you push the taxpayer to buy the "Peace of Mind" contract?

I would think if this conversation came up right at the get go, some taxpayer may have some doubt about the "skills" of the tax preparer. But if you charge them when they are about to pay the fees and get out of the store it may be an easy sell?

[FEDUKE404]

Banking on optional client coverage

Block is not the only "store-front" operation to offer that type of option.

For certain (complex) returns, as well as for certain clients, it could easily be money well spent. (Many professional tax software packages offer a similar "audit protection" type product.)

The problem I saw was the situation where the manager pushed each preparer to offer the optional protection, even for the simplest of returns (think W2 only returns).

At one time the preparers where I worked received a separate "reward" (dollar coin or two??) for each plan purchased. The bulk of the clients, when properly interviewed, would say something like "I don't think I need that" or "I trust you!" (which I always took as a compliment). Where things got interesting was most of us, especially those with "established clients," would get enough coins with each paycheck to perhaps purchase a nice lunch, while one preparer seemed to leave everyone else in the dust for the "rewards" accumulated. Turns out, upon review, the preparer was essentially automatically including the extra fee on virtually all returns prepared. Every now and then a client would say "What's THAT??" and the "error" would then be corrected. It goes without saying that the EITC crowd, who essentially weren't paying anything for their tax returns in the first place, were prime targets for this preparer.

There was also a lot of mutual back-scratching going on (manager and preparer both "looked good") but after a few "Why can't you folks sell XYZ as well as Joe does?" the entire situation became an irritation.

FE

[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.

[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. )

[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.

[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.

[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]

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.

[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