Getting Payment from Client

[equinecpa]

I have helped out a neighbor over the last couple of years doing assorted bookkeeping, and tax work. I have just finished preparing their 2005 return. The IRS is holding their 2004, and 2006 refunds pending the filing of their 2005 return (also a refund).

They now owe me about $750 for my work and I'd like to get paid (they are aware they owe me the money but are so in debt I've never been a priority). The client wants to pick up their 05 return on Sunday and I said I need some payment even if a postdated check. She said they don't have a checking account (believable as they've written a lot of bad checks in the last year or so). She offered to bring me a couple of hundred dollars next Friday but wants to pick up the return Sunday.

I'd like to get paid for this. What is my best bet at this point? I'm thinking I should not release this 05 return until I get something...I'm quite willing to wait until they have their refund in hand but how can I ensure I get my part and unfortunately to get the refund they need this return? Should I ask that she open a bank account, write me a check and put direct deposit requests on these refunds so I can be sure the account gets funded and therefore I get payment?

Any creative payment ideas out there? I once had a client sign a promissory note after they were slow to pay the first year...but for this client I'd think that would be worthless - I believe they owe a lot of people money.

Is there anything else I can do?

[taxmandan]

Don't give them the return until paid in cash in full. Let the pressure from the IRS force them to pay up. Your in business, get paid for your efforts, you'll never see them again anyway, so who cares what they think. They can borrow it from a relative if it's that important to them to get those refunds. And I wouldn't meet them on a non-business day like a Sunday unless they pay up.

[Jiggers]

Getting Payment

I have helped out a neighbor over the last couple of years doing assorted bookkeeping, and tax work. I have just finished preparing their 2005 return. The IRS is holding their 2004, and 2006 refunds pending the filing of their 2005 return (also a refund).

They now owe me about $750 for my work and I'd like to get paid (they are aware they owe me the money but are so in debt I've never been a priority). The client wants to pick up their 05 return on Sunday and I said I need some payment even if a postdated check. She said they don't have a checking account (believable as they've written a lot of bad checks in the last year or so). She offered to bring me a couple of hundred dollars next Friday but wants to pick up the return Sunday.

I'd like to get paid for this. What is my best bet at this point? I'm thinking I should not release this 05 return until I get something...I'm quite willing to wait until they have their refund in hand but how can I ensure I get my part and unfortunately to get the refund they need this return? Should I ask that she open a bank account, write me a check and put direct deposit requests on these refunds so I can be sure the account gets funded and therefore I get payment?

Any creative payment ideas out there? I once had a client sign a promissory note after they were slow to pay the first year...but for this client I'd think that would be worthless - I believe they owe a lot of people money.

Is there anything else I can do?

Your client made their problem your problem. You are not a priority because you haven't made yourself a priority.

The quickest way is to insist on full payment before releasing anything else. The returns are already late so if they don't mail it Sunday/Monday, it won't make that much difference, especially if they have a refund coming that the IRS may or may not hold.

I know I hate to be hardnosed about issues like this, but I have been stiffed too many times many years ago and I won't let it happen again. I have to eat too.

[Uncle Sam]

Getting Payment

I would insist on getting paid part of the $ 750 before releasing the return.
You stuck your neck out in cooperating with them to satisfy their need - a little courtesy is due you.
Get paid SOMETHING up front.

Years ago, I had a real cutie who would come in to my office real late in the filing season - like 1st week of April - come in with incomplete information - and ask me when I'd have the return ready and how much of a refund she was due. The first season she waited until she got her refunds.
From then on, I'd always ask for a minimum advance fee when she came in for the "first" visit - knowing that she would never come in with all her stuff the first time.

[John of PA]

Similar situation

I just had a similar situation. I did 05 return, client could not afford to pay. 06 return would hvae a big refund. Client ask me to do 06, then they would pay me for both years out of the proceeds from the refund. Becasue it's the off season, I went along with it. I also reminded the client that if they have any problems from IRS, me not getting paid can effect my ability to spend a lot of time helping them resolve thier matter with IRS. I trusted the client, the way I look at it, if they take advantage of me, it's thier loss, they lost a good accountant and also lost thier right to have me help them if IRS audits or adjust the return. It's also a way I can test them to see if they can be trusted. If they stick me, though I took a loss, I'm better off becasue I got rid of a client which lacks trustworthyness, which could save me much headace in the future. As I write this, we are waiting for the refund from IRS.

[fliszt]

Somewhere I read

that if they ask for their paperwork that they brought in to you, you are required to give them their property. You don't have to give them the return you prepared. I think I read this in Cir 230. You probably know this anyway.

[erchess]

I certainly would give them anything they gave me

but I thought that whether you had to depended on Sate Law. I further understood that in NC you have to give them their paperwork back without receiving payment unless you have a signed contract specifying otherwise. I personally guarantee that if at any time prior to their mailing off the return or my e-filing it, they are unsatisfied, I will either talk them into being satisfied or give them anything they gave me in exchange for their giving me everything I gave them. If they have left me with their return, then I need to see the return they intend to file instead of mine

I would be more inclined to do pro bono work than to let someone have their return without giving me at least a post dated check. I have never actually done this, but every year I sign up with a bank so that in the event a financially strapped client is getting a refund, the IRS will deposit with the bank and the bank will deduct all fees and make the balance available on a debit card. This saves me from printing checks and gives me a way to help some without much risk of going unpaid.

[ChEAr$]

If you're an EA, or

other preparer subject to cir 230, you must return their original documents to them,
with or without the tax return, regardless of state law.

As for post dated checks, they're nothing but IOU's, and I don't maintain accounts
receivables.

[Joe Btfsplk]

Neighbors

You may want to handle a neighbor's fees different than you would for most clients. I have sometimes done returns for very low fees for neighbors or old friends. I did one woman's returns for $ 40 per year until she was able to quit filing altogether. I do a former co-worker's taxes for $ 75 which includes his 1040, his retarded son's 1040 and a Form 1041 return for investments he set up for his retarded son.

When I moved recently, a neighbor offered to buy some drive-up ramps for a riding mower, but did not pick them up, so I took them to his house and left them. He never paid me, but I had been to several parties at his house and had never reciprocated so I never asked him about it. Recently we went to lunch with him and his wife and when I offered to pick up the bill, he insisted on paying and explained that he should pay since he never paid for the ramps I gave him.

Ordinarily, I would drop a client who did not pay, but would not allow the unpaid bills to get to anything like $ 750. I'm not sure what I might do if a neighbor owed me $ 750. I think I would either just wait and hope or I would bug him about it and maybe even sue if I got annoyed enough about it.

[ED SMITH]

You can have the checks come to you by having them sign a POA and filling out line 6.
Then you can hold the checks or make some arangement to cash them.

It is not foolproof. I did this with a client and the check still went to her.

[BOB W]

An ounce of prevention is.....................bla bla bla. I have a CPA friend who post a sign in his office " All tax returns must be paid when the return is picked up, no exceptions". He says this lets them know what is expected. He also has another sign, " Bounced checks will be charged a $30 fee. All bad checks are turned over to the District Attorney for collection".

He is vey "hard-nosed" when it come to getting paid.

[equinecpa]

Good points all. She didn't call on Sunday so now we're at Monday, she gets paid Friday. When she calls I'll let her know

a) She doesn't get this return without full payment (something is better than nothing after all isn't it?

b) I need at least a postdated check for the balance (she can deal with her banking issues, they are her problem not mine)

I value all of your advice and will let you know how this transpires. I think I will also try to get her to direct deposit her refund into her brand new checking account so I at least stand a chance of getting paid.

As to how this got so high? I foolishly paid for their Articles of Organization ($300) when assisting them with their LLC filings - I should have demanded payment right there and then for that but didn't and now the rest is water under the bridge. Live and Learn.

Carolyn

[Joe Btfsplk]

Another suggestion

Instead of asking for just one post-dated check, you might get more than one with different dates. I have a client who sometimes used to pay me that way. She also does that with some of her suppliers.

[thomtax]

Post dated checks

In some states a postdated check is considered an open ended IOU, to be paid whenever, and if, the writer wants to pay. If they do not want to pay, they do not have to pay and you cannot force collection. I will take checks dated today, and hold them until a specified date, but they must always be dated the date of the service rendered.

[WhiteOleander]

In some states a postdated check is considered an open ended IOU, to be paid whenever, and if, the writer wants to pay. If they do not want to pay, they do not have to pay and you cannot force collection. I will take checks dated today, and hold them until a specified date, but they must always be dated the date of the service rendered.

I don't know if it still is, but, in Texas, it is illegal to write and/or accept a post dated check. This could have changed, but I haven't heard if it has.