Client owes me $$

[Davc]

I will not contact an attorney, as I'm up to my eyeballs in attorneys right now.

I hope you're wearing a bio hazard suit!

[sea-tax]

I have a similar situation. A client wants copies of past corp tax returns. These were provided when the taxes were done but the client cannot locate them.

The client wants me to provide new copies but owes me $500 for accounting services provided several months ago.

Can I ethically insist on this payment for amount due before providing the additional tax return copies$

You want the ethical answer or the legal answer?

Legally you can ask someone for just about anything. Personally I would tell the client that he is more than welcome to get a copy of the return which I already provided and that it will cost $500 dollars which is my copy charge. Of course this must be paid upfront.
This way you are not denying him access to the return. IF he chooses not to pay for the copy charge than that is his decision.

[questconsulting]

I have a similar situation. A client wants copies of past corp tax returns. These were provided when the taxes were done but the client cannot locate them.

The client wants me to provide new copies but owes me $500 for accounting services provided several months ago.

Can I ethically insist on this payment for amount due before providing the additional tax return copies$

[sea-tax]

1099-C instructions:



If IRS sqwaks, I'll just say that per Congress, tax preparers are now officially a federal government agency as we are required to squeel on all taxpayers who take a position that has less than a 50% chance of making it through an audit.

Tax professionals do more to administer and enforce tax laws in this country than any official government agency ever will or ever has done.

Well Bees good luck with that argument. Personally I don't think it will hold up to get the penalty abated but if you can do it I say more power to ya.

[Bees Knees]

Ah Bees the 1099c option. It is my understanding based on a recent Western CPE seminar that I attended that by doing this the practitioner may have violated circ 230 and also disobeyed the 1099-c instructions.

1099-C instructions:

Who Must File
File Form 1099-C if you are:
1. A financial institution described in section 581 or 591(a)
(such as a domestic bank, trust company, building and loan or
savings and loan association).
2. A credit union.
3. A federal government agency including:
a. A department,
b. An agency,
c. A court or court administrative office, or
d. An instrumentality in the executive, judicial, or legislative branch of the government, including government corporations.
4. Any of the following, its successor, or subunit of one of
the following:
a. Federal Deposit Insurance Corporation,
b. Resolution Trust Corporation,
c. National Credit Union Administration,
d. Any military department,
e. U.S. Postal Service, or
f. Postal Rate Commission.
5. A corporation that is a subsidiary of a financial institution
or credit union, but only if, because of your affiliation, you are
subject to supervision and examination by a federal or state
regulatory agency.
6. Any organization whose significant trade or business is
the lending of money, such as a finance company or credit card
company (whether or not affiliated with a financial institution).
The lending of money is a significant trade or business if money
is lent on a regular and continuing basis. Regulations section
1.6050P-2(b) lists three safe harbors under which reporting may
not be required for the current year. See Safe harbor rules
below.

If IRS sqwaks, I'll just say that per Congress, tax preparers are now officially a federal government agency as we are required to squeel on all taxpayers who take a position that has less than a 50% chance of making it through an audit.

Tax professionals do more to administer and enforce tax laws in this country than any official government agency ever will or ever has done.

[sea-tax]

Ah Bees the 1099c option. It is my understanding based on a recent Western CPE seminar that I attended that by doing this the practitioner may have violated circ 230 and also disobeyed the 1099-c instructions. I for one would go the route of a debt collector before I would issue a 1099-c. The reason being that once I send the 1099-c if it was even allowed is me saying I give up, and my daddy didn't raise a quitter.

Also it may take a while and I may loose 30% but I will get more in the end that writing it off.

[Bees Knees]

I guess it is all relative. To me, I never do work or lend money that I can’t afford to lose. What I mean is, if the work is so much that I could not afford to not get paid, I wouldn’t start, without first getting paid.

I have had several over the years not pay. I maybe do one more year and bill them for both years. Then they get cut off. The guy who built my house hasn’t paid in two years. I did not send him an organizer this year. If he calls, he can pay me first. I paid him for the house years ago.

Another thing you could do, assuming you have written off getting paid, is send him a letter saying your forgive his debt. Then include a 1099-C.

Wait until the end of February before sending the 1096 and 1099-C to IRS. He might call and ask what the 1099-C is. You can respond by saying he will have to ask his new tax preparer. He might decide paying you has some value.

[DTS]

To All

Each and everyone of you have a good take on this and good suggestions, as well. We all hate it when people put us in uncomfortable positions like this, regardless of the situation. Problem is, I think they know this and how to manipulate it!

I will email him today and see if I can get some kind of acknowledgement from him regarding the bill. At this point, I'll be happy if he agrees to pay $50 p/mo until paid off. I will not contact an attorney, as I'm up to my eyeballs in attorneys right now.

Anyway, I've learned a good lesson that will not be repeated in the future! You do something kind for someone and they take it as a sign of weakness.

Thanks, again!

Dennis

[sea-tax]

Then it will survive the bankruptcy. If he values his relationship or needs your professional services he will be willing to do this.

I think Dave is on to something here. It is also my understanding that if you can get some written proof that the person who owes you recognizes this fact as is will to set up an agreement to pay you off irregardless of the BK then I think you maintain the legal right to collect the debt. However you would have to look to state law.

As a side Dennis don't feel bad and it is not you who should have to worry about the family relationship, it is the client who has embarrassed himself not you.

The fact is I do feel some what bad for clients like these but at the end of the day I have a family to feed as well. Also I might add I do not go eat at a restaurant and consume the $100 steak unless I know first that I can pay for it. If I did not pay the establishment would contact the local authorities and I might be arrested on the spot. What this gentleman is doing to Dennis is the equivlent of stealing.

[DaveO]

Have him reaffirm his debt to you

Then it will survive the bankruptcy. If he values his relationship or needs your professional services he will be willing to do this.

[Jesse]

Work with him and be patient. I had a client who went bankrupt and later when he got back on his feet he paid me off in full, even though he was not legally obligated to. He appreciated my hanging in there with him.

Another case were facts & circumstances need to be looked at carefully. Some people think the act of filing bankruptcy autimatically qualifies the person as a "deadbeat", when this is not always the case. However, sometimes it is the case.

I am from a small town and think I am too compassionate, I have efiled returns for so many people over the years and allowed them to pay me when their refunds come in rather than pay the high RAL fees from other branches and every year I have more and more people that don't return to pay me and just go elsewhere to have their returns prepared the following year.

Some of these being people I considered part of my extended family as I have done their taxes for so many years and I thought I could trust them. No more patience, especially this time of year, like JohnH quoted, "If I'm not going to get paid, I'd just as soon take the time off."

[John of PA]

Work with him

Work with him and be patient. I had a client who went bankrupt and later when he got back on his feet he paid me off in full, even though he was not legally obligated to. He appreciated my hanging in there with him.

[Jesse]

Been there, done that.

................Now, when he does file bankruptcy, the client may need some tax work done, or copies of his file. Charge for the work and the copies, in advance. The courts will usually allow this.................

Consult w/ a lawyer on this, but it is my understanding that if you bill before Brptcy filing it will be entered in as a bill to be discharged. So if you do more work this person, maybe better to bill after you know he filed so that it can't be entered into the Brptcy filing and then you have the right to bill, call whatever to get your money for the "new" bill.

[Donald Rihn, EA]

Uh Oh, he owes!

Been there, done that.

If banruptcy hasn't been filed, try everything to get something. If not cash, get assets...his lawnmower, TV, whatever he will give you.

Now, when he does file bankruptcy, the client may need some tax work done, or copies of his file. Charge for the work and the copies, in advance. The courts will usually allow this.

File a claim when you do get the bankruptcy notice. You may get something.

I did on a corporate bankruptcy and about 3 years later I got about 1/3 of what they owed.

I was in a better shape than you, maybe. I knew they were having financial trouble for several months and I insisted on my fee, marked up some by what I thought I would lose if they went bankrupt. I was paid before I did the next month's work. So I was only out about 1 month of work.

As a side note, I don't sell used vehicles to relatives nor loan them money.

[Jesse]

If he does file it is doubtful there will be any assets or money available for the creditors and your probably wasting your money on a lawyer. I had a couple file and received a notice from the bankruptcy court at which time I could not send any more invoices or make any contact to ask for money. If there is a possibility of any available funds to pay creditors you will receive a notice that you can file a claim.

If you receive that notice it might be worth it to have a lawyer do so, it depends on his total creditors that file a claim for their fair share so you could get pennies on the dollar. It stinks!

The client can "volunteer" to pay you, as I actually had a client that filed and told me in advance that he had no choice but to list me as a creditor. It was only for $65, but I was appreciative that he came in after he had filed and paid his bill.