New clients

Does anyone have experience with new clients wanting to know how much their refund will be? This is before they are a client.
I am telling them that I cannot say that unless I process their return. Any suggestions on how to handle such prospective clients?

I haven't had that happen, but if I did I would tell them if that is a service they need they will have to find someone else to prepare their tax returns.

I simply tell them I would need much more information to even begin to answer that question. If it were that easy, they wouldn't need to be talking to me in the first place.
Further, once I have their return drafted, there may be opportunities to increase their refund based on what is there. Identifying those opportunities are the real value they'll find working with me.

I'll sketch out a rough estimate with certain select clients whose returns are straightforward. I would never offer to do that with a new client. I've learned over the years that if you are wrong to the high side, and their refund is lower, that's all they will remember. In the back off their mind, they think you screwed them or are incompetent.

It's a no-win situation and one I have done sparingly with long-time clients with easy returns. I'd advise against it.

This is an age old question from folks who are shopping for the highest refund because they get refundable credits. I have seen online calculators etc. I will not play that game. I need to see documents to determine the tax refund. Believe me folks who play that game don't keep those taxpayers as clients for long.

I make one promise. If I miss a tax credit that they deserve based on the Questions/Answers in my organizer, I will amend their return for free.

^^ yup - shoppers. And if they land on you this year, they often dont stick around anyway.

I explain very nicely that it depends on many factors and that I can't do that for them.

Also I make clear (again, with extreme politeness) that once they see their refund, if they are not happy with the results, we still charge them for preparing the return.

I find that I really don't miss out on many good clients this way.

Fortunately, I'm in a position to where I don't have to work for free in hopes of gaining a client for the year - and one who might do that same thing next year and go elsewhere anyway.

If you really need the clients, you might consider calculating it "for free". If not - I would be very nice and very clear that you charge either way.

If you really need the clients, you might consider calculating it "for free"....

I knew a fellow in my neck of the woods who did exactly that. He basically told people to bring him their tax return prepared by a CPA or EA and he will get them the same or better refund or they don't pay him. His "public office" was at a local bar and he worked out of his Chevy Van most of the time. He had quite a following. He used Turbo Tax and taxpayers mailed a paper return for an average price of $50 1040 without EITC and $100 with EITC. Cash payment only.

^^I see what you're doing there.

you're right.

OP, you're an educated professional and you have expenses to cover. Get paid for your work!

I make it clear I will not make any estimates concerning their tax position without seeing all tax documents and preparing a return. It eliminates the shoppers, though fortunately I do not really have to contend with them. If the first or second question is what do you charge, I throw out such a high figure that they quickly go away. On flip side, the prospective clients that wait to ask that LAST, after they have learned about me and/or met me, are typically very good clients.

Does anyone have experience with new clients wanting to know how much their refund will be? This is before they are a client.
I am telling them that I cannot say that unless I process their return. Any suggestions on how to handle such prospective clients?

If this is happening a lot you should pinpoint why. E.g. are you competing with seasonal, high-volume tax operations?

I've started to qualify prospects by email before I decide to schedule a prospect call. I've found this gets rid of a lot of the chaff so to speak... 30-60 minutes is way too much time to spend on a tire-kicker or prospect who could be easily identified as not a good fit with 5 minutes of email correspondence.

I've started to qualify prospects by email before I decide to schedule a prospect call. I've found this gets rid of a lot of the chaff so to speak..

Interesting. I actually do the opposite. I will talk to them 10 to 20 minutes tops in the initial call to determine if I want to proceed further. I find composing e-mails and putting the right questions takes longer.

One sure giveaway that it is a "price shopper" is that they will focus on the price and ask you to give them a price at various stages of the conversation. The other giveaway is that they used a prep chain store previous year and they want to get a price by giving you the type of return filed. I have had prospects tell me up front that they get EITC and how much I will charge them.

Last week I was talking to a fellow who supposedly works only part time. His question was why can't he deduct permit fees? Then it comes out that he is also a "self employed carpenter" but that has nothing to do with this tax return? When I wanted to get into a bit more, he promptly hung up!

Interesting. I actually do the opposite. I will talk to them 10 to 20 minutes tops in the initial call to determine if I want to proceed further. I find composing e-mails and putting the right questions takes longer.

I do it with my individual (1040) prospects only. Usually the questions are so similar that I can just copy the body from a previously sent prospect email as a template and do minor tweaking. Doing it this way takes no more than 5 minutes of my time, which includes a response email or two. I ask what their AGI was on their most recent return, to describe their income streams and investments, etc. If they pass this preliminary screening, we schedule a 30 minute call.

Last year I scheduled calls for anyone and everyone. The new two-step method is much more efficient.

I ask what their AGI was on their most recent return, to describe their income streams and investments, etc. If they pass this preliminary screening

I know an accountant that will NOT work with a prospect/client less than $100K AGI. But then they are strictly working with referrals. They don't take any walkin.

Last tax season he sent out disengagement letters to a bunch of his clients that fell below his threshold, and he was curt but professional in the letter. After this tax season, I may approach him to see if I could take some of his "low value" clients as long as they are good paying clients. I don't want people that are always complaining about price.

I don't have a hard and fast rule.

The answer to the AGI question, along with answers to the other questions help quickly screen out the individuals who have less than $100k AGI with NO other investments. No schedule C, schedule E, large brokerage investments, etc.

Yes...I have had one or two of those knock on the door. I politely tell them they don't have enough complexity to justify my fee and that they would get the most value just using DIY software.

Ask who was your previous tax preparer, why do you want to leave and how much did he charge you!!!

why do you want to leave

And how long they have been with the (former) preparer...

Ask who was your previous tax preparer, why do you want to leave and how much did he charge you!!!

IMHO. When you are talking with a prospect the first time, you have to be very careful how you ask that. Don't be surprised if you have someone say, Tell me what will you charge me, not what I paid him before!

When I get to a point where I feel I would like the prospect turn into a client, I start by telling them the services I provide. I am available 12 months for consultation, respond to tax notices etc. and then I get into the billing arrangements (retainer etc.) and usually by then the prospect starts talking about previous billing arrangements and you can get your answer.

The point is that I don't even want to know what they paid the other guy, unless I am seriously looking at them as a client and what they paid the other preparer has little or no bearing to what I will charge. If they were lucky to be with a low charge preparer and my typical charges would be 50% more, I am not going to give a price match like some retail store.

Assuming a client's needs are in line with the services we provide (which we are VERY picky about), our firm does not generally turn down clients unless we sense some kind of misconduct.

But we have a series of simple but effective controls that prevent clients from behaving in a manner that is stressful to us.

Deadline disclosures, extra time disclosures, completed organizers (especially for non-bookkeeping clients), non-refundable retainers, recalculation/re-delivery fees, etc, etc, etc.

From Google and blogging (as recently discussed in another thread), we also get a lot of freeloaders - but we politely stiff-arm them right form the beginning. $300 per hour, one hour minimum, for tax advice - period. We also demand (from new clients) all documents in advance and a near completion of a tax return BEFORE we discuss anything that resembles tax advice.

Many bad clients are just mis-managed clients (not all, of course, some of them are just bad).

When the truly bad clients in this group act unreasonably, their bad behavior is probably covered in the disclaimers that we provided in advance and we show it to them. They can pipe down or they can leave, but they DON'T have the option of

-stressing us out
-putting their work in front of other clients who provided data first
-having us do things that we do not want to do
-not paying us (in advance) for extra work that their behavior requires
-etc

If we make a mistake in our foresight and miss warning a new client about some sort of bad behavior that comes back to haunt us - it goes in the "new client disclaimer can" for the next new potential butthole. After over a decade now, our engagement letter is pretty complete .

stressing us out
-putting their work in front of other clients who provided data first
-having us do things that we do not want to do
-not paying us (in advance) for extra work that their behavior requires

How true. I really get worked up when some procrastinator will demand that I take care of them right away because they are "Paying me". Last tax season I had to throw a client out of my office because he said you are not doing me any favors. I am paying you [nasty swear]. They are so enraged that it does not matter what the engagement letter says about delayed documents and extension.

Last tax season I had to throw a client out of my office because he said you are not doing me any favors. I am paying you [nasty swear].

The appropriate response is immediate disengagement IMO. Although you'll want to tread lightly if the client has a statutory deadline coming up soon. Perhaps disengage after the client is taken care of.

When I first started out I heard a story about a client verbally abusing a firm employee. The employee wasn't very high up, probably an associate or senior associate. The managing partner and founder was nearby and heard the interaction. He walked up to the client and said: "I don't care who you are, who you know, or how much you're worth to this firm. No one treats our staff like that. You're no longer a client of this firm. Please leave." Allegedly the client was stunned. Probably the first time they'd ever been called out before.