Collection Letter

[thomtax]

Hmmm!

I was just responding to the comment about enforcing a contract, without studying the small details about small claims courts. My written "Privacy Policy" states that we will not reveal any non-public information such as on W2s etc. It would appear to me that a person can sue for the services rendered and fees accrued, just as a carpenter, mechanic, etc., without violating any privacy by revealing any details of the return.

Of course, keep in mind that I am not a lawyer - I only play one on TV, and reserve the right to be wrong.:-)

LT

[erchess]

I was terribly unclear

A bank has no discretion as to how to allocate deposits. It would be impossible for the bank to collect for a customer without it being authorized.

As to collecting before the tax return is filed... I never receive payment for a tax return before I deliver it to the taxpayer. Yeah, sure, I have had a few not pay me but it was very few and it was well worth it to get rid of the taxpayer. On the other hand, I have lost tens of thousands of business due me when a good client I was trying to help went under, but I had made thousands off of the client in prior years. You win a few... you lose a few. Thats the way our business goes.

I only sued a client once to collect.. got judgment and the **** x-client died before I could collect. You just can't win them all.

Jack I was not talking about when the IRS directly deposits into a normal account at someone's local bank credit union or savings and loan. I was talking about the deadbeat going to another tax office and either the same bank or a different one, for a Refund Anticipation Loan or whatever that Bank calls the service where client check comes after IRS Deposit. The last time I was doing such products, the contract specified that if the taxpayer owed money to a bank from a past year, the fees would be collected before the client received anything. Not only that, but I have been in situations where my client had that happen. The prior bank and preparer were paid and my firm got paid, and substantially less went to the client than he or she had hoped for.

[Black Bart]

Judgments and collection agencies

How can you get a judgement or turn over information to a collection agency for a tax client?

Don't know about the judgments, but last time I talked to a lawyer he said he had a drawerful of 'em and they'd never be collected.

Collection agency -- Go to Google, type in "credit bureau" and the name of your town. A business name and phone number to call will come up. I once worked for a place that turned them over to a local agency -- they kept half of what they collected and sent the rest to us.

[Black Bart]

All good points and

This is easy to say - not as easy to do.
Small claims court - sure you can probably get a judgement. Judgements are running around all over the place without being able to collect. Plus there is a cost to get one and then a cost of time and money pursuing it.

Credit Bureau - If they are not concerned with the IRS collecting, then how much do they care about the credit bureau.

No clients under $35K - One of them beat me last year.

I only lose one or two a year, usually because of a sob story, and it's just not worth spending a lot of time and stress on it, at least to me. I just consider it a "cost of doing business."

LT

exactly right, I think. I'm on about a 99% cash basis and lose maybe $100 a year.

I agree it's more time and trouble than it's worth -- you'll spend about as much to collect as you do collect. If you make them really mad rather than just sheepish for not paying, they may "bad-mouth" you around town more than $100 worth. Many won't put much stock in deadbeat's tales, but a few probably will.

Like you, I consider it a cost of doing business, plus the upside is that I won't ever have to deal with that person again.

EC's $35K limit seems a tad high-falutinistic to me -- I'd lose about 1/3 of my clientele. However, if I do go with that plan, I'm also excluding: people with bad breath, people with difficult problems, all bores/windbags, the unwashed, those who call me at home on Sunday, everybody listed on my "enemies list."

P.S. You're on TV? Who? Perry Mason? Matlock? F. Lee Bailey? D.A. McCoy? Fred Thompson? Nancy Grace?

[Joe Btfsplk]

Dump those clients with bad breath or unwashed

[QUOTE=Black
I'd lose about 1/3 of my clientele. However, if I [i]do[/i] go with that plan, I'm also excluding: people with bad breath, people with difficult problems, all bores/windbags, the unwashed, those who call me at home on Sunday, everybody listed on my "enemies list."

If I lost a third of my clients every year that would be OK. I could retire in three years.

[erchess]

Under 35K

I don't turn away clients. But I don't offer RALs at all and if the client insists on going through the bank I give them a cash card. I will not print checks. (I do returns in their homes and offices. I do have an office in my home but not for tax purposes and not for seeing clients.) I usually e-file and I collect my fee before e-filing or before I give them their copies to mail. Now of course I will go away unpaid if they are not satisfied with the return I prepare, but in that scenario they have nothing in writing from me. When I worked for a storefront firm I thought sometimes that people were trying to learn whether they had overlooked anything favorable to them. That's my cost of doing business. I do keep a list of these people and if they want me in the future they have to pay their entire previous bill in cash before I get to work on their current return. If they want the return in question and I deleted it earlier and therefore have to prepare it twice, they must pay for it twice.

Now if they are too poor to pay for my services and have a problem that I think the local free services can't or won't handle, I help them call the free clinic two hours by car away. The nice people there help verify the facts of their situation and then refer them to me. With the facts verified I give free service with everything my paying clients get. The people I call deadbeats admit to bountiful incomes and still don't want to pay.

[thomtax]

I Wish

P.S. You're on TV? Who? Perry Mason? Matlock? F. Lee Bailey? D.A. McCoy? Fred Thompson? Nancy Grace?

That is just a line I use jokingly around here when people start asking me for advice that I feel more properly should be asked of a lawyer. I try to keep it light so that they won't get upset with me when I won't give them legal advice. Sometimes, it seems, you have to walk a narrow tight line to not offend.

Sorry if you thought I was serious. If I was on TV it would probably be Losing Court Cases 101.

LT

[taxmandan]

Like you, I consider it a cost of doing business, plus the upside is that I won't ever have to deal with that person again.

Last year had a guy stiff us for the fee. April 5th he walks in to get his '06 return done and first thing hands us payment for last year. Told him he'd have to pay for this years fee before I would prepare it and he paid up right there. Probably wouldn't have done that if I had sent threatening letters or called in a collection agency. And I agree with your assertion, it's a cost of doing business and I just try to minimize the no-pays to 1 or 2 each year.

[JohnH]

I like your approach

I don't pursue the few that turn out to be deadbeats, because the shame will usually keep them away in the future. Same for the rare client who complains about the size of the fee - just tell them to pay you what they think it's worth and find someone else next year.

I like the business approach my father-in-law used in the real estate business years ago - he never asked customers to sign listing contracts. Occasionally someone would bypass him and not pay his commission. This was in a small town, back when housing prices were much lower and commission percentages were a fraction of what they are now, but the principle was the same.

He always took the position that it's valuable information to know if someone will cheat you out of a few hundred dollars, because that guarantees you'll never let them get into the position to cheat you out of a few thousand.

[veritas]

Unless the client gives you

permission, you can not use any information gathered for tax preparation to turn over to a court, collection agency or anyone else.

What do you think the chances are that's going to happen?

Secondly if you were to sue the client they may decide to turn sue you just to retaliate.

[Black Bart]

The crassness of it all.

[QUOTE=jainen;38019...taking a questionable tax position...deceptive use of...rules...so crass I can hardly discuss it.[/QUOTE]

Aw c'mon. You've been simmerin' in that sensitivity sauna out there on the coast too long. Buck up; you're liable to be dissed or crassed again anyday and you gotta be ready to withstand the slings and arrows of outrageous comments.

Crass (gross/obtuse/without refinement/thick/coarse/loutish), eh? You remind me of myself tryin' to put on the dog. Just last month I tried to slip that one into a conversation and, even though it sailed right on through, I thought he might show me he's in the know by comin' back with sump'n like "Yeah, I was really mad at that guy; just talkin' to him gives me the red crass."

[Black Bart]

Oh -- sorry!

permission, you can not use any information gathered for tax preparation to turn over to a court, collection agency or anyone else.

Suppose I should have known you'd -- yuk, yuk -- already heard of Google. You mean how could we legally do it?

Hmmm; I don't know. In fact, I was just wonderin' about something like that myself; to wit: How can you sell your practice to another accountant (giving him all the dope on your clients) without violating the confidentiality rules? Or, is the answer something self-evident that I've obviously overlooked (snide remarks -- and all crass comments by George Boutwell -- will be ignored)?

[erchess]

Natp

has a recommended collection agency. I don't believe they would have that if preparers can't use one. I could almost believe that un-enrolled preparers can and EAs cannot, but that would have the NAEA rioting in the streets of DC.