Client refusal to Pay CPA Fees

[sami]

I would like to obtain some opinion on the situation I just encounter: I did a tax preparation for a new client who was behind in filing her 2015 tax return and received a notice from the IRS. She hired to prepare her 2015 tax return. She wanted to do all the work remotely and I asked her to pay a retainer prior to starting the engagement, which she paid. I sent her the tax return remotely for her to review. Upon review client wanted to me changes on few items as she found more receipts for some business expenses. I made the changes and send the final tax return along with my bill for my services.

Till now she has not paid my invoice as it has been over three months. I have tired emailing the client, calling her and mailing her the invoice but have not gotten any respond back. I never have come across this kind of non payment issue before. Any recommendations will be appreciated.

[TaxGuyBill]

Other than "for late filers, get paid before doing anything", you might just need to accept that you won't get paid for the rest of the bill.

You could try sending it to a bill collector/agency, but I suspect that won't be worth your time.

[New York Enrolled Agent]

Perhaps you could initiate a case in Small Claims Court.

[sdarave]

You definitely got stung. I never do a 100% remote return for a new client. This person may have had you unwittingly prepare a fraudulent return. Sorry this happened to you. Under certain circumstances you may be able to claim a bad debt deduction, depending on you business entity.

[spanel]

You definitely got stung. I never do a 100% remote return for a new client. This person may have had you unwittingly prepare a fraudulent return. Sorry this happened to you. Under certain circumstances you may be able to claim a bad debt deduction, depending on you business entity.

Exactly. Extremely difficult if not impossible to verify even identity of the taxpayer. Never do this again, always receive payment before right after you give copies via credit card for remote clients that are your prior in person clients.

Walk away with lessons learned.

Chris

[spanel]

You definitely got stung. I never do a 100% remote return for a new client. This person may have had you unwittingly prepare a fraudulent return. Sorry this happened to you. Under certain circumstances you may be able to claim a bad debt deduction, depending on you business entity.

The bad debt deduction would only apply under accrual tax purposes? If so, he has probably not at this point counted it as income?

Chris

[terryats]

When I do clients remotely, I have them upload a picture of drivers license, and a utility bill. When return is ready for client to review they need to pay by credit card, and then I send it through Encyro Secure messaging center to review, and sign 8879. I tell clients this procedure up front, so there are no surprises

[ATSMAN]

Sometimes you just can't trust people. I got stung by a long time client (probably 10 years) who is ignoring my request to pay the remaining $200 from this years invoice. She claimed that he had some unexpected expenses and if I would be nice to her and allow some grace period. Well it has been almost 6 months since filing and my e-mails and phone calls are going unanswered. This is a remote client so going to small claims court would not be cost effective! I guess I just have to eat the loss.

[Twin Turbo Z]

While a situation we had was not a remote one. We prepared a return for a first time client and while reviewing it, they didn't like their refund amount. It was cut and dry and I told them so. She said she wasn't happy and wanted to go elsewhere. So I gave her her original documents back and she was on her way. Didn't charge her because I could tell she was a pain in the ***. A week later she came knocking at the door and wanted us to do it. I politely told her no. Found out through the grapevine she went to three preparers in our area. Same refund with them. But they all charge more than us, so she came back. Fast forward 5 years later. She came to the office wanting us to prepare her return I politely said no. When she asked why I reminded her what she had done and that we are not taking any new clients. Sometimes you have to take the loss to weed out trouble people.

[ATSMAN]

I politely said no. When she asked why I reminded her what she had done and that we are not taking any new clients. Sometimes you have to take the loss to weed out trouble people.

Some people are either too stupid or have no shame. I have one taxpayer (Sch C Filer) calling me every year around mid Feb or early March asking for a quote. The first year I actually gave her an appointment and she was a no show. Later I had a long phone conversation and figured out that it is going to be trouble. I have told her politely that I am not willing to be hired by her but she never takes a no!

[tax_pro_pam]

Remember that old saying? "In God We Trust. All others pay cash"? Chalk this up to the cost of a life lesson, my friend. I agree with the prior reply regarding obtaining copies of Driver's License or other gov't issued photo ID before beginning any work. We also obtain a signed engagement letter, which outlines terms of payment and collection policies.