What would you do with a very difficult client

I have had a client for 25 years and his corporation has paid significant fees over the years. I knew when I started with this client that he was difficult. Had significant mood swings and outburst of anger so I made sure that up front I was given access to the monthly bank account and check images so that I could keep the records, general ledger and tax preparation relatively independent of routine contact with this individual. Over a 25 year period, this approach worked relatively well. However during all of that time, I would always wonder when the shoe may drop. Outburst, threats, yelling would occur several times per year. When I was fortunate enough to meet with this client, he would act as though everything is perfect and just fine. I went along with this program because I was paid well. The corporation's gross was approximately 5 million and I handled the payroll, the general ledger, the tax payments, the employment agencies and taxes, the banks, the loans, the corporate taxes, city taxes, state taxes, personal taxes, licensing, etc. I was paid well.

Each year I thought is a basic miracle to have survived and would be relieved to see January bank statements arrive, and a normal process begin that would start a new year.

This year, back in December a new employee was hired by this client. This employee knows everything. He is going to rework the whole office administration of the business. I warned my client that this much trust in a new employee presented possible problems, and that my job was complicated and very involved. I started to see that the new employee, (a non CPA, a non accountant) basically a formally uneducated individual was advising my client on important tax matters and accounting matters. Such as how things should be set up and who does what. I warned my client, and over a period of weeks, by client took and had many temper tantrums screaming that I was ripping him off and that his whole office was ripping him off. But yet, he made no changes. The new year came, and I began a new year of payroll preparation, with the expectation that bank statements would arrive in February coming up for January representing the start of a new year. Well, to my surprise I receive notice from the bank, that the statements have been changed to go somewhere else, and not to my office. This is a first time in 25 years.

I can't call my client, as he will not answer the phone as he cannot tolerate any degree of facing me or confrontation. So, I sent a text asking what is going on? Explaining that I need the statements to properly do my job. No response. I need the statements as to account for millions of dollars over the years time, the many employees, and the many banking and taxation responsibilities that are applicable.

I am left in the dark. Here it is yearend, the w2s are coming due, the year end financial statements for banks and then of course the tax preparation related to the corporations, and related parties. I have historically maintained the general ledger and all supporting subsidiary accounting books. I suppose there is an expectation to some degree however I don't know what that is. This is a crazy situation because of the long relationship, the very significant yearly fees, and the complete uncertainty of it all.

Perhaps the answers here are obvious, however I am still interested in the points of view in this group.

I had a similar experience with a client several years ago, and to his credit, he is still my client today. He hired a woman to do in house and daily work, then he hired a young man who was supposed to be a sales clerk. The two of them began collaborating, and started a new QB file with a COA they created. She started counseling the client in changing his business entity, complained that she was going to get a 1099 for her work (she didn't want to report any income, she wanted it all to go on her significant other's SSN, don't ask how that was supposed to happen). When I found out about the new data file, I called him into my office, sat him down and had a very honest and frank discussion about what the two were doing. He is a very amiable person, so no nasty ourbursts or negativity. He ended up firing the employee and eliminating the bookkeeper. Then I had to go back to the original set of books and enter stuff for the current year. I think this situation was easier than yours Szoboszlay because the nature of my client was more pleasing. I'm not sure if I would have stayed with someone as cantankerous as yours for 25 years, even for the money. Good luck. It sounds like he is setting himself up for something like embezzlement, which will bring him back to you when it is confirmed.

Send a letter certified outlining the responsibilities you outlined here. Represent you expected to handle these, but have received no response and are formally disengaging from service and any obligation to prepare any tax returns, information returns, or bookkeeping effective immediately.
Do this now to ensure no deadlines pass before the letter is received.
This is not a client I would have kept for as long as you have.
I would be double careful to enaure the client has no reason to pin the impending failure on you.

The Captain is absolutely correct. Use this as an opportunity to exit this engagement. There is better work to be had.

The Captain is absolutely correct. Use this as an opportunity to exit this engagement. There is better work to be had.

Agreed.

Disengage, send ALL your records (his really) to him certified and in writing make it clear you are available for any questions etc... but he must send the request in Email or mail so there is a trail.

I personally would not put up with that client.

To the OP. Are you self employed or an employee of another company that has this client?

If you are self-employed the ONLY option for you to reduce your stress is promptly disengage! No amount of money is worth your health and happiness, not to mention the legal exposure with a flaky client. Over the years I have disengaged many times as soon as I got that "gut" feeling that the client is going to be trouble down the road.

I have made it very clear to all my clients, that if they "seek or receive" tax advice from someone else and they act on it, do yourself a favor and don't pay me, save the money! Go to them for all their tax prep and consulting needs. Believe me anyone with a little bit of intelligence and pride will get the hint

I receive notice from the bank, that the statements have been changed to go somewhere else, and not to my office. This is a first time in 25 years.

Sounds like he's already disengaged.

Reminds me of a client we had many years ago, six figure annual client but he was bipolar. Never knew what each day would be like. The experience existed for a reason which still benefits me today, and it ended for valid reasons, too.

You know the answer. It is time to professionally disengage and move on.

I receive notice from the bank, that the statements have been changed to go somewhere else, and not to my office. This is a first time in 25 years.

Sounds like he's already disengaged.

Yup. But he'll be contacting OP again when all of this goes south and his new "golden boy" turns out to not be so golden.

Sounds like he's taken everything you do for him for granted. The disengagement and ramifications will wake him up.

You know the problem - his account represents a large amount of your fee income - and its not easily replaceable.
When I have problem client - I charge more - much more for the anxiety.
Before firing him - send him a notice increasing your fees 300%.
Surely, that will get his attention.

I think there will be ample opportunity for fee renegotiation when (former) client contacts OP again later down the road.

OP has given him 25 years of streamlined, worry free service (at least it seems). When this blows up, the new "hometown hero" is running around like a chicken with his head cut off, and former client starts receiving notices, fines/penalties, interest, etc better believe he will run to somewhere safe and comfortable -- OP's practice.

At that point OP has the upper hand, has his attention, and can have a frank discussion.

Before firing him - send him a notice increasing your fees 300%.

I strongly disagree with this approach. As Howard noted above, the client has already disengaged on his end. Confirm your understanding explicitly and walk away. The risks you've outlined here do not justify ANY level of fees.

As tough as it is, it's over. Perhaps the very best advice I learned years ago at GearUp (are they still around?) was to fire a client each year. Even tho' you have some hefty money at stake, the freedom you'll get is worth more.

It sounds like the new employee " is up to no good "- as my Mom would say. The new employee knows everything. It is interesting how your client would have so much trust in a new employee.
You are better off without this client.
Do not be surprised if the client asks you to come back after he cuts you loose.

You know the problem - his account represents a large amount of your fee income - and its not easily replaceable.
When I have problem client - I charge more - much more for the anxiety.
Before firing him - send him a notice increasing your fees 300%.
Surely, that will get his attention.

This approach will grab his attention BUT it is a double edged sword!

1) If the taxpayer can't find a replacement they may agree to your terms and then you just backed yourself into a corner!

2) That written notice of 300% fee increase without explanation may come back to haunt you if the relationship sours and lawyers get involved.

If you want to end the engagement, there is a professional way to end it. After all there is no law that forces you to have Mandatory Engagement.

This approach will grab his attention BUT it is a double edged sword!

Agree. Don't play games.

Get the certified letter out in the mail today like CaptCook suggested.

Enjoy your Friday and have a good weekend. It's someone else's problem now.

I have thought about this matter the entire night, through the night and on my 4 mile walk/run exercise in the beautiful hillsides of Seattle, Washington. The weather is a little rainy today, but it was very pleasant and meditative.

I very much appreciate the feed back I have received above and I concur with the vast majority of it.

Here I am, end of year. The client has in the aggregate (current, and throughout the year) 45 employees, many subs, two corporate returns due, an LLC due, land transactions i.e. purchases/sales, bank reporting requirements for loan renewal, and a current employment audit that is on going. My client wont speak to me, avoids my calls, non responsive to emails, letters and texts; I am up against a wall. I have been paid around 400k in fees from this client over a 27 year period; big money to me and it has certainly been a primary reason I have stayed with the program. I also stayed because I had the control over bank statements, check images, credit cards, loan documentation, property transactions, etc. I felt I could do a fantastic job and I did so; I have no concerns over my work. My client as has been mentioned is quite unstable. He is a drunk, his wife in disarray. Last year she drove his truck through the front of the house causing 100k in damages. My client screams most of the time, calls people names, talks down on them. When I see him though, rare: I am the next best thing to sliced bread.

I am thinking about talking to my friend today who is an attorney about liability issues. I know that this relationship has run its course. I will need to accept the cut in fee income for a year or two. The time involved in this client is approximately 40 hours per month.

I am thinking I should finish out the year, the w-2s, 1099s, employment reports with IRS and the State, the corporate tax returns etc. But do so with a letter of understanding, and with the corporate and personal returns a signed engagement letter. I have not been formal with this client as we go way back and this was never initiated by me because I always knew that asking him for formalities may send him over the edge.

I have two weeks to go for the many year end reports. It would be very difficult for this client to effectively get these tasks done and from a standpoint of professional ethics I think I am obligated.

There is also an emotional component for me. I am more than furious. He brings in a guy, that is going through bankruptcy, does not have a pot to piss in and this guy is supposedly the expert on office operations and that he will handle all aspects to include take the bank statements and check images away from me and make the representation that I can do my job just fine: wrong. Or maybe, just like was said, I am being fired and don't know it yet. That I am being used to finish up the year and then given the boot. This makes me very angry as I have given a lot to this client over the years and that has been taken for granted.

I need to get out of this situation, get paid, do my work for yearend and release myself from the liability that could come as a result of the ill advice that my client is receiving. I can see that I can be a scape goat for future problems.

Lack of engagement letter is a huge issue. Get that signed ASAP.

This client will not sign an engagement letter at this stage of the game. Speaking to an attorney is a good idea !
Do not E- mail or speak to the client without speaking to your attorney first.