Discussion:Non payment of Tax Prep

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Discussion Forum Index --> Business Growth Community --> Non payment of Tax Prep

Ztom (talk|edits) said:

9 September 2011
Is there a form to send IRS regarding non payment of fees? I understand you can send IRS a statement of form stating you are a non paid preparer for non payment of fees.

NoVATaxes (talk|edits) said:

9 September 2011
Previous discussions on the same topic seems to indicate it's more of a scare tactic than something you can actually do. My office avoids this dilemma by never e-filing or releasing a return to the client without full payment ahead of time. In cases where the fee is to be withheld from the refund, they're turned over to collection if the refund doesn't materialize.

CrowJD (talk|edits) said:

9 September 2011
It's getting harder to collect in the present environment. Find a "heavy" in the neighborhood who will rough them up but not break any bones. It's hard to do, but I tell my clients up front I come before their kids. They can have another kid in 9 months, but they need me right now.

Bbowers (talk|edits) said:

9 September 2011
I used the "threat" a couple of time 4-5 years ago. One perosn didn't pay so I sent a letter to the IRS & got a response back that they would not make that change. Since then I've tried to hold to the pay before we file plan like NoVATaxes uses.

Fletch (talk|edits) said:

9 September 2011
Don't do any of that sillyness. Life's too short. Send late notice monthly for 12 months. Cost appx $7. Tell 'em they cannot deduct the tax prep fee this year if not paid by 12/31/11. This actually works! If continue unpaid, its the Price of experience in the school of hard knocks. Move to the popular collection-prior-to-e-filing strategy if you feel that need. My transmittal letter says that, but I don't enforce it. My collection problems are near zero. I have 5 or 10 that predictably pay me right before they need more work done the next year. They get a PITA surcharge. This is more of a pride issue for the preparer. NOT a money issue. Really, how much $$$ are we talking about. What % of total revenue? 1%? 0.1%?

Lizzit (talk|edits) said:

10 September 2011
Debt collectors work on a percentage basis. Or just follow their proceedures yourself. You may lose the client, but do you really need this one?

Mdubincpa (talk|edits) said:

10 September 2011
I have used the following letter as a method of confronting the deadbeats with a potentail IRS issue unless they pay timely in full.

I would send them a cover letter suggesting that if I don't receive payment in full within ten days from the date of my letter I will have no other option but to forward this attached letter to the IRS.

Date Taxpayers Name Address

RE: Fee for preparation of your 2000 U. S. Individual Federal Tax Return - $ Taxpayer SSN Spouse SSN


Pursuant to Section 10.34 of United States Treasury Department Circular Number 230, Title 31, Code of Federal Regulations, I prepared the above referenced Federal tax return in anticipation of payment for my services, and accordingly, signed the return as the PAID PREPARER.

As of this date, I have neither received payment from you nor have I received communication, written or oral, indicating your intent to pay the preparation fee.

I, therefore, will on (some date in reasonable future) notify the Internal Revenue Service of the inaccuracy in the reporting of PAID PREPARER information on the above referenced tax return. Your Attention to this very important matter is hereby requested and your prompt remittance of the ($ amt) is anticipated to be forthcoming.


CC: U. S. Department of the Treasury, Internal Revenue Service, Examination Division DATE TO SEND

It has actually worked for me on more than one occasion.

Best of luck

Mike Dubin CPA

LJK CPA (talk|edits) said:

10 September 2011
If they are a long time client I will hold a check. I have only gotten burned once doing this. Getting the check later is more difficult.

Fletch (talk|edits) said:

10 September 2011
Mdubin: a colleague of mine did that exact same thing, the client retaliated by filing complaint with Texas State Board of Public Accountancy. Board suspended his license for 90 days, which, since he issued appx 90 compilation reports per month, effectively put him out of biz. He surrendered his CPA certificate and is now an EA. This happened about 10-12 yrs ago. FOLKS! we have MUCH more to lose than a deadbeat client or two. Do NOT play chicken with them. Of course they are in the wrong. So what? Move on. Life is too short even without this kind of risk.

Wkstaxprep (talk|edits) said:

18 October 2011

I believe what you wrote, but is it possible we are missing somethign here? Just because he sent a letter he got his license suspended? Something doesn't seem right. Also, 90 compilation reports per month? Seems a bit unrealistic. I'm just saying....

I do agree with what you wrote, that it's best to just mov eon and let it go. It's like anything else in life, always a few bad seeds in the bunch.

Szptax (talk|edits) said:

18 October 2011
If you have a recurring deadbeat - don't release the return without payment and if mailing is requested, send COD through the post office. I have a few that have drug their feet in years past. They get an email/text/call and when I arrange pick-up or delivery they know the amount is due. If we cannot meet in person (to review etc) and I don't trust their history, I mail it COD. If I do trust them and they send the 8879s back without payment, I request an updated one with the appropriate signature date when they pay.

Fletch (talk|edits) said:

18 October 2011
90 compilations reports each month was his writeup biz. Yes, it happened. I left out no salient details. It was horrible.

Wkstaxprep (talk|edits) said:

18 October 2011
ok Fletch thanks :)

also, the more i think about it i can see the IRS getting a bit annoyed at receiving such a letter.

LJACPA (talk|edits) said:

19 October 2011
I am also very humbled that I do not deal with this very often, however I have a couple of clients who are notorious for conveniently 'forgetting' to include the payment with the 8879. I added a paragraph in all my engagement letters that states that I cannot e-file with an open invoice and they still ignore it. As I end up telling any client who does this they are putting me between that 'rock and a hard place' by giving me the 8879 thus putting the requirement on me to not stockpile and to e-file within 3 days and e-filing as paid preparer when I'm not (adding that this might be construed as a fraudulently filed return; a bit of an exaggeration?). Usually works but sometimes I still have to pursue. Just downright disrespectful as far as I'm concerned.

DZCPA (talk|edits) said:

19 October 2011
The non paid preparer letter works great and is not breaking any rules per AICPA or CA Society of CPA. Just because the IRS will perhaps do nothing does not mean one should not disclose to them the facts regarding payments.

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