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E-Filing process and payment collection

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#1
golfinz  
Posts:
606
Joined:
8-Aug-2014 9:45am
Location:
USA
Long story short, but our firm does not E-File Federal tax returns. Don't care to get into the why not, you're required to (IRS came to us a few years ago and agreed we didn't), etc. Instead, I'm trying to gather as much info as I can in order to present this to my business partner in hopes she wants to do this next tax season.

Our process:
1) Complete return,
2) Process three copies: IRS copy (with properly addressed envelope), Client copy, our copy,
3) Contact client and let them know their return is ready,
4) Client comes into the offices, pays for return, and then signs and mails to the IRS

Can are very efficient with the above and because of our process, we have very low AR and we receive a lot of checks. My business partner is afraid that if we E-file, our AR and merchant fees will grow.

What I'm hoping to gather from the community is this:

1) What is your firms process for finalizing a return, getting it to the client for review, for collecting 8879 and filing a return?
2) Do you require payment to be received before E-filing? Are we allowed to not file if we haven't been paid?
3) Does your firm charge an admin or E-file fee?
4) We use Lacerte. How is their E-filing process?
 

#2
Posts:
317
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30-May-2014 1:43pm
Location:
MA
You can e-file returns without changing your payment terms. Our firm only accepts checks and we have really no desire or need to accept credit or debit cards at this point. But we still e-file 99% of our tax returns.

Also, we let the client know their tax returns are complete. We do not have a sit down meeting for review or present a return for review, if the client wants to look it over before returning the Form 8879 that is fine but I am guessing that 95% of clients sign the Form 8879 before even looking at the return and I would say 75% of clients never look at their copy.

We do not show a separate line item for E-file fee. At this point, where efile is expected, I think it would be a mistake for your firm to charge a separate fee for E-filing. Just build it into the price
 

#3
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1816
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24-Apr-2014 7:54am
Location:
Wisconsin
Some of this is difficult to answer because I have never been at a firm which didn't e-file... my first tax season was 2005 so I don't have the greatest comparison to what you're facing.

1 - I prefer to meet the client after the return is prepared**. The post-prep meeting allows me to review the 2 year comparisons with the client, showing why their refund/balance due is higher or lower than the prior year, etc. They'd sign the 8879 and pay at the meeting. In these COVID times I upload a draft to the client portal and have a phone call if the client prefers that or the numbers are way off from last year, or good old snail mail for the clients that shouldn't be allowed near a computer.

I have some remote clients, where I use eSignature to get signatures. It's an extra step and a learning curve, but once a client has gone through the process once, they love it the second year.

2 - Most of the time, yes, but I make exceptions for business clients and people I know are good for it. You can create your own rules however you want, and many firms require payment before e-filing 1040s. Client gives you 8879 with payment, all one step.

3 - No. Actually, I charge extra for a paper-filed return... assembling... stapling... slip sheets... UGH! Death by a thousand paper cuts!

4 - I can't speak for Lacerte but I'm sure it's fine. The main thing to do is have one person in your office in charge of all e-filing.

I don't believe that my AR is higher than it would have been before e-filing but that's really tough to judge. As far as merchant fees, I do accept card payments through Square and have since I started my own firm in 2015. It's a convenience for some clients, making it easier for them to use my service, but for my remote clients it's a godsend. Sure, it costs me about 3% of the fees for those that use it, but not every client uses it. And a client that moves away that I can retain pays for 20 others to use their credit cards.


** Getting your firm to the point where you could do this is probably out of scope, but I do want to mention this as it is part of my process. With easy clients (pre COVID) I prepare the return while they wait. It fits in with people's busy lives, and we turn a stressful occasion to a more enjoyable meeting. The client brings the documents, I prepare the return, we review the 2 year comparisons, they sign, they pay right away. While their return is being printed, I scan the documents and assemble everything. No AR, no WIP, just in and out. On these, I do hold e-filing for at least a day in case of the dreaded "I just remembered X" phone call, but normally we identify missing information during the prep meeting. There is a variant of that where you prepare the return while the client is there, review the draft with the client, but not finish it that day.
 

#4
CathysTaxes  
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Suburb of Chicago
I let long term clients send me a check after e-filing. I send them their copies after payment. Some clients pay me with PayPal. I know I'm paying a fee but it saves me time.
Cathy
CathysTaxes
 

#5
Posts:
1962
Joined:
4-Mar-2018 9:03pm
Location:
In the office
It seems your partner's concern might be mitigated if you require payment before the return is efiled, same as you do now for paper returns.

It might be more convenient for your clients if you accept payment online either via e-check or e-check and debit card/credit card. Unless the strong majority of your client base is elderly and more comfortable with checks, I think they might appreciate the options.

I use invoicing through QuickBooks Online, and it allows me to set default payment terms (I use net 15) and set up auto-reminder emails. The latter means that if an invoice remains unpaid by X number of days before or after the due date, a reminder email is automatically sent. I have found reminder emails help out a lot with certain clients. Previously I had to monitor A/R a lot more closely and send reminder emails manually. I love how this process is now automated.

If you're going to accept esigned 8879s and 8878s you'll need to learn about "Knowledge Based Authentication" ("KBA"). Lots of threads about it here and information out there via Google.
 

#6
ATSMAN  
Posts:
1614
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Location:
MA
My business partner is afraid that if we E-file, our AR and merchant fees will grow.


Why is that a problem? What is the real reason?

Your firm can insist on payment by cash or checks ONLY.

Our process:
1) Complete return,
2) Process three copies: IRS copy (with properly addressed envelope), Client copy, our copy,
3) Contact client and let them know their return is ready,
4) Client comes into the offices, pays for return, and then signs and mails to the IRS


That was my process before e-filing became mandatory. You will save a lot of money in toner, paper, envelopes, printer and storage cabinets if you went electronic. I e-file 99.99% of the tax returns unless it can't be e-filed for some reason. I pdf all input documents and I have not purchased a storage cabinet in a decade! I have a handful of older clients that don't want to e-file for some paranoid reason and they pay extra for the privilege of paper filing.
 

#7
FLAcct  
Posts:
325
Joined:
21-Apr-2014 2:47pm
Location:
Florida
I have been preparing tax returns for 26 years. I switched from paper to e-filing about 2 years after e-filing became available as I wanted to be sure all of the kinks had been worked out. I much prefer e-filing. One less tax return copy to make and I get confirmation of extensions and tax returns being accepted by the IRS.

I don't accept credit cards for payment. I refuse to pay 3% of my earnings to a bank so that my clients can get points on their credit cards. Clients can either pay with a regular check, an electronic check or in a few cases cash. I do not e-file their returns unless I have either 1) received payment or 2) have a long history with the client and know they will pay.
 

#8
Posts:
218
Joined:
23-Apr-2014 8:17pm
Location:
FL
Your A/R should not increase if you require payment before efiling. Just because you complete the work doesn't mean that you have to efile if you haven't been paid. Efiling gives you a trail that the return has been submitted and that the IRS has received it. Also, prevents any keying errors by the IRS which can happen with a paper return. I had one years ago where client got a letter saying that he owed another $10K. He had a heart attack and died that night. What a mess! It was a keying error by the IRS that I then had to straighten out for a grieving widow!

Also, efiling makes sure that the client doesn't "forget" to mail the return. Or decide not to mail it because they owe money and don't want to mail it until they have enough money to pay. You then get the joy of handling the letters/penalties for late or no filing!
 

#9
novacpa  
Posts:
553
Joined:
28-Apr-2014 1:16pm
Location:
Arlington, Virginia
Your Golf game will vastly improve if you e-file all returns, get e-signatures on 8879s, and collect your fees electronically by PayPal or something like it. Paper tax returns are a double-bogey, because they are so time consuming to print, assemble, sign / mail /get proof of mailing. Paying taxes by Paper Voucher is a triple-bogey, since the taxpayer can easily go online to the IRS and State Rev Dept and make an e-payment.
Lower your handicap with e-file, e-pay, e-collect fees, you will be the next club champion.
 


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