Help please with difficult client situation

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#1
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Finished 2022 "initial" 1065 for new client.

Saw a W2 in the docs for 2021 from the LLC.

Mentioned that we should file 2021 before proceeding with 2022 - awaiting all financials (nothing provided).

OK, the client said - I'll get you the docs.

No docs.

A partner is impatient and wants it done now.

"No", I said. "We should complete 2021 first and it will be a few weeks from when I get the financials".

Client disengages, saying the partner's tax preparer will prepare the 1065 tax returns.

I send bill.

Client comes back, politely apologizes for the back and forth, and says, "OK, you do it, but once 2021/2022 is complete, if her tax guy can look it over before filing is all she requests. "

That's where it stands right now, and I'm not sure how to reply. I know how this goes now with "another tax preparer's input" and I don't like it.

I don't know whether to explain that once the tax return is finalized, I will charge a fee to redo it, and I will need updated financials? Or do I just cut my losses and tell them to take a hike (too bad, it's a $1200 bill for work I already completed for which I will be taking a loss)?

Client also wants me to do the 2021 1065, his 2022 personal tax return, and the 2021 amendment.

How would you proceed, and how would you explain it to the client?


EDIT: Tough spot. I just want to say, "no, I won't work with her tax preparer", but I don't know how to say it.
Last edited by ItDepends on 22-Mar-2023 8:04pm, edited 2 times in total.
 

#2
CP Hay  
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Tell them that you require payment up front before you provide the tax return.
 

#3
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Agreed, thank you.


But you know what, now that I think about it, I don't want to work with a deep pocketed partner with an onery CPA.

This is what I am thinking....


Dear client,

After careful consideration, it has been determined that we will not be able to meet your newly mentioned tax preparation needs and requirements for XXX LLC. We will modify the invoice and take a loss on the production thus far with the exception of our fee for the extension (already provided).

This concludes our engagement between ItDepends and XXX LLC and we thank you for your consideration.
 

#4
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If you want to walk, I understand where you're coming from. I think you have to take a loss on the entire $1,200. That'll be the "cost" to walk away without negative reviews and complaints. I don't think it'll be worth the hassle to try to collect the full or partial amount without filing the return.

However, I think you might have an opportunity to make it work. What I'd do is call the amenable partner. Make sure he's alone and not near the other partner. I'd want to clearly discuss and convey:

--That if he wants to stay on as a 1065 client, that I'm only willing to interface with him, not his partner. All communication will go through him.
--That my firm is a public accounting practice. I serve many clients and have a first-in, first-out prep protocol. Clients are not able to dictate when a return will be completed by, especially if I'm still waiting on documents to be uploaded. But, I'm willing to be flexible and happy to help expedite things for extraordinary circumstances (at my discretion), and a rush fee will be charged.
--My fee does not include any back and forth with a third-party during the review process, and answering the third party's questions, or explaining the returns or tax positions taken will be billed in addition to the return fee. Rework may also necessitate an additional fee at my discretion.
 

#5
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You also need to advise on the per partner per month FTF penalty for 2021. That's not going to be cheap.
 

#6
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I would request payment of the current invoice, plus a retainer for ongoing work in the future.
If they want to work with you, make them jump through some hurdles, or at least have some skin in the game as they seemed to want to disengage already once.

If you don't like the arrangement, just cut them loose and let the reviewing CPA do the returns.

The client might not be reasonable, but the other tax preparer might be.
It's never fun to have your work checked by someone else, but it doesn't always have to be a bad experience.
(You might end up bonding over the unreasonable-ness of the other preparers client in the end.)
 

#7
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I am viewing this from the other perspective--the CPA that would be reviewing your work. If it were my client, I would tell them you either need to trust your tax preparer or find a new one. No review nonsense, I certainly wouldn't even if I could bill heftily for it.
 

#8
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CornerstoneCPA wrote:I am viewing this from the other perspective--the CPA that would be reviewing your work. If it were my client, I would tell them you either need to trust your tax preparer or find a new one. No review nonsense, I certainly wouldn't even if I could bill heftily for it.


Agree with this.
I have one very special client who has a relationship with another CPA and likes us both to opine on filing dynamics. We do this in planning, not in preparation. I prepare three of their entity returns. The other CPA does one. Most notably, however, the other CPA and myself have a longstanding relationship, high trust and respect, and communicate very well and directly (not through the client).
That is the only premise under which I would entertain such an arrangement.
~Captcook
 

#9
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I politely disengaged form everything and took a loss on the production.

I know how this goes most of the time and I refuse to expose myself to these difficulties.

The loss was a small price to pay, and I will have to be more strict in vetting. In hindsight, I should have seen it coming as I could smell the potential issue.

I saw $1200 for a simple 1065 with ready-to-go financials and got greedy. He also works with a good client of ours and was referred.

My fault.
 

#10
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ItDepends wrote:He also works with a good client of ours and was referred.


Being a referral from an existing client or external partner always change the dynamics of a difficult situation, and not for the better I've found.
 


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