Trying not to be impolite with this client

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#1
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Client is mostly an OK client of many years, and is likely not hiding income, but often becomes difficult when dealing with my staff and ends up in a contest with them over.... nothing, really.

Client has a sole prop for some contracting and some royalties.

Us (for the 2nd time we are asking this year - and every year):

The P&L you provided does not indicate your total self employment income, I see you had one 1099-NEC for $109,672.00 was this the only income you had in 2022 outside of the royalties?


Him (as usual):

I’m not sure how to add up my self employment income. I have many 1099s, including interest, royalties, 1099G, 1099Q, and my son’s income (w2). I uploaded all those files.


So, we probably have the correct number, but we don't really know for sure if he has cash or other income for his contracting work (though admittedly unlikely).

Here on the 31st of March, I really don't have the patience to get into a "match" with him over nothing. This back and forth is nonsense and he is stressing our my staff.

Simple and polite way to tell him to give us the verification we need?

Dear XXXX

Not all income that a taxpayer receives will always be on a 1099. We have a responsibility to make sure that we report all of your contracting income specifically and appropriately and we have no way to know if you have received cash income or income from self employment that is not on a 1099.

For us to proceed, we please need you to verify that all of your contracting/self employment income (other than your royalties) is listed on just the one 1099 you have provided us and that there is no other contracting/self employment income (other than your royalties).

You mentioned that you are not sure how to add this up, so allow me to provide more guidance. All we really need to know/verify is how much you received for your services as a contractor and for other self employment activity (other than your royalties). The correct amount is very likely listed on the 1099NEC you received, but we must know affirmatively if you had other income for your services that does not appear on a tax document (and if the 1099 is correct).

To avoid this back and forth, we would appreciate it in the future if you would be willing provide this number on your profit and loss report or our P&L worksheet that we provide.



What do you think?

And do you fire him after tax season?
Last edited by ItDepends on 31-Mar-2023 1:28pm, edited 1 time in total.
 

#2
Frankly  
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You're assuming he has a bookkeeping system, or notebook, or receipt book or such in place to keep track of what he bills out and what he is paid. If he doesn't keep track of his income there is no point asking him to verify the 1099. Maybe ask if he got any income from anyone other than the one 1099 payer and if in the affirmative, guesstimate how much additional.
 

#3
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I thought we did that twice already this year (and also done in prior years).

Also, we had a client recently who was outraged at a corrected 1099 after they filed. They insisted that, because we didn't tell them to track and report all income regardless of what is on the 1099, that we should pay their penalties and amend their tax returns for free.

I admit that this is recency bias and I'm not really worried about this here at all.

What I really want is for him to tell us how much income he has so we can file an accurate tax return that includes all of his income.

And I'm wondering if I should get rid of him because I feel like he doesn't have any additional income and that he knows it, but he just wants to be "right" or something weird like that and it is wasting time.
 

#4
sjrcpa  
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I go for simple.
How much contracting income did you have in 2022 other than the $109,672.00 on the 1099-NEC from ABC Co?

It might be zero if he's a so called independent contractor (who really should be an employee) for only the one compoany.
 

#5
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I, too, bristle when clients say things in such a way to shift their responsibility to you.
"Umm...I'm not sure what amount was. What should it be?"
If they seem reasonably trustworthy (I don't have any clients who aren't...anymore), I'm comfortable with them confirming that the 1099 reported income was all their income. If it wasn't, it's on them to give me a more accurate number.
~Captcook
 

#6
CathysTaxes  
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CaptCook wrote:I, too, bristle when clients say things in such a way to shift their responsibility to you.
"Umm...I'm not sure what amount was. What should it be?"
If they seem reasonably trustworthy (I don't have any clients who aren't...anymore), I'm comfortable with them confirming that the 1099 reported income was all their income. If it wasn't, it's on them to give me a more accurate number.

What should it be? Well if you don't keep track of the amounts received then we'll take the 1099 amount and multiply by 5. Then see if he starts being evasive and starts stuttering. Tell him you're preparing his return not his business Accounting. At that point, Tell him after the 18th to send his receipts, invoices and bank statements and inform him of your rate.
Cathy
CathysTaxes
 

#7
AlexCPA  
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Lately I've been responding to clients with haikus and it's been a tremendous time saver.

What is your income?
I need it to file taxes.
Don't irritate me.
Even more of my antics may be found on YouTube:
https://www.youtube.com/channel/UCXDitB ... sMwfO19h7A
 

#8
sjrcpa  
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I love it!
 

#9
smtcpa  
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This is the way. Your proposed response even made my eyes glaze over. Keep it simple.

sjrcpa wrote:I go for simple.
How much contracting income did you have in 2022 other than the $109,672.00 on the 1099-NEC from ABC Co?

It might be zero if he's a so called independent contractor (who really should be an employee) for only the one compoany.
 

#10
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ItDepends wrote:Us (for the 2nd time we are asking this year - and every year):

The P&L you provided does not indicate your total self employment income, I see you had one 1099-NEC for $109,672.00 was this the only income you had in 2022 outside of the royalties?

Him (as usual):

I’m not sure how to add up my self employment income. I have many 1099s, including interest, royalties, 1099G, 1099Q, and my son’s income (w2). I uploaded all those files.


A client giving a response like that would make it difficult for me to trust any information he provided except third-party information returns.

Our job is made much harder by an unsophisticated client that doesn't understand basic terminology or their responsibility to provide accurate and usable data to us.

I know it gets said too much sometimes, especially when it's someone else's client...."fire him"...but you need to make a decision whether this client and others like him are worth the headache and additional risk. And if they are, that you're being compensated for that additional headache and risk.
 


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