Concerned about a disengagement by phone

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#1
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Client provided documents last year (in 2019) to complete his 2018 return.

We called him in to review and finalize his taxes and it turned out that his property rental was possibly supposed to be on a trust tax return.

Client provided documents that confirmed this.

He insisted that we report it on his personal return and I refused and he left.

He called today to make an appointment - I'm not sure for what.

I took the call and told him that I am not accepting clients right now.

He asked, "what about in two weeks or so".

I said, "no, I am over saturated with work and I am not accepting clients at this time, please find another preparer".

I am worried that this was a mistake. It's not the real reason. I just said it because I didn't remember exactly why I didn't wan to serve him anymore until I looked up my notes.

I'm worried that he will call or email for a quote and see if we are or are not taking clients and my staff will quote him. He seems like the type to do this.

Client is in a protected class, but the reason I won't serve him is because:

1) I don't trust that he is honest with me about his taxes or that he takes being honest on his tax returns seriously.
2) I did lots of work for him and didn't get paid. I didn't bill him, but he was supposed to come back with more docs and file the trust return, and he never did.
3) I don't have the bandwidth to deal with clients that are not tax compliant or have situations that need extra time and attention.

What is my next move?

Do I send him a disengagement letter of some sort?

Do I stop taking all clients for 3 weeks or so, so if he "tests" us, he gets a consistent answer?

Do I suck it up and call him in in 3 weeks because it's safer to serve him than not to serve him?
 

#2
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I would communicate to your staff that this individual exists and is not to be engaged. If they call, they are to be routed to you and you can appropriately and directly share you have no desire to work with him.
Thank him for the inquiry, but he needs to find another professional to work with.
If he presses, you can simply state "I'd rather not say." You have no obligation to serve anyone. Any explanation provides him something to spin.
~Captcook
 

#3
ATSMAN  
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You don't want to be caught doing this:

"O, what a tangled web we weave when first we practise to deceive!

Walter Scott"

1) Was there an engagement letter signed in 2019? If yes then that became invalid because client walked away.

2) What did you do then? If a client refuses to take action based on my advise, then I automatically send a dis engagement letter.

3) If no engagement letter was signed, then as a business person you make the decision if you want to engage again based on what you know. I don't think there is any Federal law that says you have to engage every taxpayer because doing otherwise would violate some anti-discrimination law??

I routinely refuse engagements with referrals that turn out to not meet the "smell test" with books and records and their past habit of not been upfront. I don't want to pay for their bad behavior!
 

#4
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I'm with ATSMAN, a disengagement letter should have been sent for the 2018 return if the client walked...and I would have billed for my time there if the engagement was terminated (effectively) by the client. There's no reason for you to eat all of that time if the former client was being difficult.

I prefer to be clear in these situations: "I am not able to serve you as a client, I advise you contact another preparer as soon as possible."

"I'm not accepting clients right now" is easily verifiable as not true, as you're well aware based on your post.
 

#5
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I send a disengagement letter, regardless, even if client disengages. I do not give a specific reason, just that my firm cannot render any services to them. It is a simple statement and holds true regardless of which party chose to disengage.

We are allowed to set quality control standards for client engagements. When a client does not meet those standards, we are allowed to not render services. I would not worry about the protected class thing other than him figuring out you are willing to take on clients, just not him.
 

#6
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Please note:

It is a fact that we have taken only a few clients in the last 3 months and turned most away. It is also our plan going forward. We are only taking a select few.

I don't think there is any Federal law that says you have to engage every taxpayer because doing otherwise would violate some anti-discrimination law


No, but that doesn't mean he wont sue me anyway of course. It makes sense to also proceed in a manner that reduces that chance.
Last edited by ItDepends on 19-Aug-2020 3:15pm, edited 1 time in total.
 

#7
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ItDepends wrote:No, but that doesn't mean he wont sue me anyway of course. It makes sense to also proceed in a manner that reduces that chance.


I'm talking in circles...but again, I suggest you try my approach going forward after speaking with a local attorney: "Thank you for your interest and consideration. However, I'm not able to serve you as a client. Best of luck moving forward." It is direct, honest, and vague all at the same time.

If a client presses, I can respond with a variety of vague answers that don't back me into a corner, but also offer further truth.

"Your tax situation is not a good fit for my practice, I believe you'll be better served by another firm that is more specialized."

"I don't believe I can effectively serve you in a manner that will be satisfactory for both of us."

etc

Saying "I'm not taking on clients at this time" to get a former client or prospect to leave is easily verifiable as not true, and impossible to damage control for.

You're worried that the former client may call and give a different name? Have a friend call? Are you going to turn down all prospects for a month to C.Y.A. for fear of a lawsuit?

The best you can do is send an email to your staff as Capt Cook mentioned. Other than that...live and learn...it's not the end of the world.

On the protected class...I'm not an attorney, but it's my understanding you may refuse service to a protected class, just not arbitrarily. The executed engagement letter from last year, the disengagement email from last year, emails that led up to the disengagement email...those would be really helpful to C.Y.A. here from any accusation thereof in this specific situation...

Document, document, document as if each disengagement is going to court, and sleep well.
 

#8
Frankly  
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ItDepends wrote:What is my next move?
You already made your next move. You said "no". Nothing else needed. Done.
 

#9
ATSMAN  
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No, but that doesn't mean he wont sue me anyway of course. It makes sense to also proceed in a manner that reduces that chance.


Anyone can sue for practically any grievance. Therefore it is always prudent to CYA!
 

#10
Frankly  
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ATSMAN wrote:Anyone can sue for practically any grievance. Therefore it is always prudent to CYA!
I think one is already CYA'd by two factors:
1. Attorneys won't pursue a frivolous lawsuit unless the client pays the fee upfront.
2. A frivolous suit will piss off the judge. They take a dim view of a crackpot wasting the court's time. An attorney, even if paid upfront, doesn't want to be admonished by the judge.
 

#11
ATSMAN  
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1. Attorneys won't pursue a frivolous lawsuit unless the client pays the fee upfront.
2. A frivolous suit will piss off the judge. They take a dim view of a crackpot wasting the court's time. An attorney, even if paid upfront, doesn't want to be admonished by the judge.


From personal experience. There are many vindictive people who will pay an attorney to file a frivolous lawsuit because they want their "enemy" to spend money to defend themselves. Seldom do courts order complete reimbursement of defending a frivolous lawsuit.
 

#12
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He called today for a quote.

Our phone person asked him if he was a new or returning client, because we are not taking new clients.

He said, "he is sort of a return client but didn't finish his previous years taxes with us". And he said he wanted a quote.

When we quoted him our rates, which was more than a couple of years ago, he wasn't happy with the price.

I'm thinking that he wont call anymore.

If he does, I will talk to him and ask him the same question, then get his name, then perhaps tell him that "before I do any more work for you, I expect to be paid for the work I've done already".

(the truth)

If he accepts (he won't) I will then tell him that "I have a note that the rental was in a trust, but that you pressed my to skip the trust filing and put it on your personal return. I will need to verify that the rental is not in the trust, as I can't willfully file a tax return that I know to be incorrect".

(also the truth).

If he agrees to pay me and show me proof, I'll get a signed engagement (include a clause that we charge by the hour for clients requiring additional time and work), a retainer (we do that for multiple returns with any client), and just do the darn work. Not the end of the world.

(but he wont engage for those rates and terms - which are our normal rates and terms).

Does that sound reasonable and safe?
 

#13
ATSMAN  
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My only question to you is How bad do you need this money and can you trust this fellow?

Personally I would avoid him like a plague (or a Covid 19 infection) :twisted:
 

#14
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ATSMAN wrote:My only question to you is How bad do you need this money and can you trust this fellow?

Personally I would avoid him like a plague (or a Covid 19 infection) :twisted:


I don't need it and I don't want to help him.

But I also don't want to pay legal fees to defend myself.

I think it's much safer to help him than as to fire him. I feel like I screwed up when I talked to him on the phone and left myself vulnerable. And that can be fixed by not directly disengaging with him. So what if I have to do his taxes. I'll live.

I also think that if I stand my ground with the engagement agreement (prices, retainer, proof that he is not lying about the trust) that he will fire me, which would be the best result. Or filing his taxes and charging him by the hour. That's not so bad.
 

#15
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This guy is wasting your time and firm resources.

If you proceed with the path laid out in post #12, I feel you will only further inflame the situation.

What is so difficult about saying:

I am not able to serve you as a client, I advise you contact another preparer as soon as possible.

and being done with it?
 

#16
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In nearly 95% of the situations I truly regretted dealing with a client, I knew before I engaged them that they would be a headache.
The only thing you've done to leave yourself "vulnerable" is be vague and misleading. You are still very much in a position to be clear and truthful as MvsT has suggested. You are under no obligation to serve anyone. Even if you have a signed engagement letter, you can disengage if things go poorly (with certain considerations).

I'd let this guy bother someone else.
~Captcook
 

#17
ATSMAN  
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I also think that if I stand my ground with the engagement agreement (prices, retainer, proof that he is not lying about the trust) [b]that he will fire me[/b], which would be the best result. Or filing his taxes and charging him by the hour. That's not so bad.


Well if you are lucky he may fire you and you accomplished what you wanted. BUT if you are unlucky he will pay you what you quoted by the hour and you got a problem client for a long long time! Do you want to roll the dice? Can you see the downside for you?

Make a clean break so that you can sleep better 8-)
 


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