Correcting Client Behavior?

Do you ever bother to explain to clients when they are behaving poorly?

Or do you just bill/disengage accordingly....

A "semi-PITA" new client's wife asked for a bit of support with her 2022 trust taxes (in addition to their other tax returns). I spend about 30 min to an hour emailing her about it - explaining what needs to be done, the deadline to do it so I can file an extension, etc.

She dragged her feet and missed my deadline, and then just said, "we'll handle it".

He's "kind of" a PITA too.

Billing for the email for the trust will likely come across as petty, and damage the relationship. I just assume fire them than argue about it.

I feel like responding to the recent trust disengagement like:

"It was unfortunate that you ignored my requests and then disengaged for services after I provided support in the midst of tax season. This creates a loss and thus an arrangement between us that might not be sustainable. I humbly request that you only seek my advice for work in which you will follow through."

Do you bother with something like that?

Do you bill and then "get into it" with them? (they will fight it)

Do you ever feel bad when you take on a new client for just one year, and then drop them right after filing with no explanation, feedback, or warning?

WDYD?

(EDIT: Haven't decided yet as far as keep or fire. Probably won't keep given the fact that I "can't bill them"...or that I have to)

Other than the trust, are they still going to be clients, or have you not yet made up your mind? If they're going, just kill them with kindness. If there is a chance they might stay, I am a great believer in booting their backsides. I reckon if I could handle 22 footballers, I can handle a couple of clients.

Now, my Scots gruffness might not work for you. You might consider the old saying attributed to many statesmen over the years "Diplomacy is the art of letting the other side have it your own way."

I think the time to set the boundary was before you spent the time emailing back and forth. "We need to file a 1041. Here is the engagement letter. Please sign, date, and return to me, and then we'll get started."

But you are where you are. I'd let it go. Yes, billing for that will come across as petty. Just move on.

I would bill. I'm not in agreement that it's petty. Our time is how we make money. I would not send the explanation you typed up though.

"I'm sorry to hear that we couldn't make it work. Unfortunately, I've already dedicated meaningful time to the trust returns as we had mutual agreement that I was going to prepare them. I will be sending an invoice that reflects my time spent on this matter up to the time you notified me that you changed your mind. Please let me know if you have any questions."

The title of this discussion indicates this client wronged you. And now you are on the defensive.

Try resetting your frame of mind. The client asked you for professional advice. You provided it. This helped them. You will bill them for this. That's all this is.

The client did not violate anything by doing their own filings on this matter. That is well within their prerogative to do. We don't have to do everything for them.

If a client asks me something about their daughter's tax return that does not mean they need to now bring me that tax return to prepare. I will answer their questions, and bill it, if appropriate.

Speaking of warnings, and a totally separate situation/client that in the original post, I want to ask about this.

The taxpayer is great with his income taxes, but the spouse is un-responsive and every one of her sales tax filings are late.

When these filings are late, a few things happen that take extra time and there is also the stress of declined tax clearances, other licensing, constantly needing reminders, and lost of revenue (for the client). I just can't bill enough to cover the stress it causes our staff that handles this.

Options are to:

1) Fire the client with no warning
2) Continue services at a loss and with a stressed out staff
3) Triple the bill
4) Attempt to correct the behavior


Option 4:

Because of the extra work and risk associated with late Hawaii GE tax filings, we generally do not offer services for late filings.

To avoid a disengagement of our GE Tax filing services, we ask that you make Hawaii GE Tax compliance more of a priority and that you respond in a timely manner that allows for on-time filing.

I like the 4th option better than the others, but chastising the client in this manner feels yucky to me, so I wanted to know what you thought or how you would handle.

Option 3 might look like:

Because of the extra work and risk associated with late Hawaii GE tax filings, our fee to file late GE Tax returns is $300 per filing.

To avoid these higher GE Tax filing service fees and the consequences of late filings, we suggest prioritizing on-time filings going forward.

Is this an option? "5) Require that the client provide direct access to bank accounts and/or point of sale records."

I have a few clients who would never, ever get me their sales tax information on time if it was up to them to send it.

With one, I got a login to their POS. Now I can download the sales info and make a timely filing. If it turns out there are discrepancies between the final books and the POS (happens 2-3 times a year) I do an amendment at that time and bill separately for the amendment.

With another client, we arranged to have him write the job location in the memo of the checks his customers use to pay him. We have a login to his bank account so that we can download the statements and the check images. (He's landscape construction and a typical sales tax month is two or three $10,000 checks).

If you can't arrange a way for you to take charge of the information like this, then I would rather disengage entirely. As you say, you can't even bill enough for the stress and disruption to workflow.

Do you ever bother to explain to clients when they are behaving poorly?

Or do you just bill/disengage accordingly....

A "semi-PITA" new client's wife asked for a bit of support with her 2022 trust taxes (in addition to their other tax returns). I spend about 30 min to an hour emailing her about it - explaining what needs to be done, the deadline to do it so I can file an extension, etc.

She dragged her feet and missed my deadline, and then just said, "we'll handle it".

He's "kind of" a PITA too.

Billing for the email for the trust will likely come across as petty, and damage the relationship. I just assume fire them than argue about it.

I feel like responding to the recent trust disengagement like:

"It was unfortunate that you ignored my requests and then disengaged for services after I provided support in the midst of tax season. This creates a loss and thus an arrangement between us that might not be sustainable. I humbly request that you only seek my advice for work in which you will follow through."

Do you bother with something like that?

Do you bill and then "get into it" with them? (they will fight it)

Do you ever feel bad when you take on a new client for just one year, and then drop them right after filing with no explanation, feedback, or warning?

WDYD?

(EDIT: Haven't decided yet as far as keep or fire. Probably won't keep given the fact that I "can't bill them"...or that I have to)

Based on what I hear in the E mail…just disengage. Your time and nergy is not infinite.

My experience is clients will push boundaries if left able to which includes interpreting some of your services as pro bono. I could see this especially since husband is already a client. Going to mirror JAD and say that best practice would be to define the engagement from the beginning unless your intentions were to help her as a value-add to the husband. Doesn't sound like it as he is also PITA client.

I would follow MVT thoughts on billing for the time spent so far. If they don't pay, you'd be no worse off than deciding not to bill in the first place. There is a possibility that they'd pay the bill (might be remote, but still something). If they don't pay, it will be easy enough on you to justify a disengagement. You mention they will fight it, but you could try to rephrase their argument that helps put in perspective that they would want/deserve to get paid for working just as you do. If they do pay, you can perform an analysis if they are truly worth keeping as a client. Don't focus on just the revenue, but all aspects including your peace of mind.

For your second situation, best thing IMO is to bill appropriately. You could add language to the sales tax/general excise engagement letters, if not done already, stating the issues mentioned warrant increase in fees. Otherwise, inform client that their billing for those engagements are based on hourly rate down to .25 hour so they get the point that they need to help themselves avoid a potential large bill. You mentioned you can't bill enough, but I encourage you to try for a little longer. If it doesn't pan out, then just disengage from the sales tax/general excise filings and see if TP will continue with the income tax engagement.