Disengaged Client has Questions

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#1
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I have a message to call a prior "problem" client whom I disengaged with.

Reasons were because I didn't trust him, didn't like him, he has a volatile temperament, and because his ethics and opinions about his taxes and the tax code were not a good fit fore me.

I didn't give him any reasons.

He wants to ask questions about "how I filed certain things" on his previous tax returns (probably his business losses, etc)

Do I:

1) Tell him he is not my client anymore, that our engagement ended when we reviewed, signed, and filed his tax returns. So I am no longer available to help him and he should ask his current tax preparer or engage with another professional to review his prior returns and get answers about them? (this will create an argument in where I will have to explain that I charge for my time but since his is not my client I will not be helping him, even for a fee - he will likely lose his temper).

2) Let him tell me his questions and then get back to him so I have time to think about if and how I wish to answer them?

3) Try to carefully answer his questions on the fly to avoid confrontation?

I'm OK with it, but the problem with number 3 is that how often do I take these calls form him? I have the feeling it will not be just one call.

WDYD?
 

#2
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I'd set a limit to the call up front. For example, "I have a hard stop in 20 min, but I wanted to get back to you. What questions do you have?" Be clear this is a courtesy call and not a new engagement. It was determined earlier we aren't a good fit and that hasn't changed. Use that call to gather information and clarify his questions. In 20 min, if the call continues, ask him to send you any remaining questions via email and set a timeline for that..."Please send me any other questions you have by end of day Monday." If he asks a question about something you need to look at more carefully, say just that and "I'll respond via email."
Whatever timeline you establish with him via phone, stick to that.
That's a hard spot, but above is what I'd do.

Via email, you can respond to what you want to respond to and inform him that it is the responsibility of his current professional to handle the remainder.
~Captcook
 

#3
KoiCPA  
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I try to be helpful in offloading even the unpleasant clients. I've actually received referrals both from people I fired, and from the accountants they left me for!

In this case, I would suggest that you should speak directly to the new tax preparer or at least ensure that the new preparer is on the line during the call. Emphasize the fact that purpose of the call is to ensure that returns can be prepared in a way that is consistent with prior tax positions. You can tell a fellow preparer things in technical language that a laymen isn't going to understand - no point in having the ex-client pay a game of telephone between two accountants.

Besides that, having the new preparer on the line should be an incentive for the ex client to be on their best behavior. And an incentive to keep it short, because at least someone on the line is billing for their time.

If you can't get the new preparer involved, my strategy would still be the same - take the call and focus on what's required for future returns to be consistent. Avoid re-litigating the past otherwise. What if games and alternative tax positions are no longer part of your job and aren't relevant to what you actually did file.
 

#4
Beagle  
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Difficult client turns into difficult ex-client.
 

#5
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How detailed is the copy of the returns that you gave him? Is there any further paperwork that you might provide to him so that you can say something like “The returns speak for themselves.”
 

#6
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ItDepends wrote:Reasons were because I didn't trust him, didn't like him, he has a volatile temperament, and because his ethics and opinions about his taxes and the tax code were not a good fit fore me.

....

I have the feeling it will not be just one call.

WDYD?


It sounds like you don't want to spend any time interacting with a past problem client. There's nothing wrong with that.

"The return PDFs I provided to you should have everything your new tax professional needs to onboard you into their practice. Please tell them to contact me if they have any questions. I'm happy to respond to all ordinary and reasonable questions, to be determined at my sole discretion. Please note there will be substantial delay in responses for questions sent in proximity to statutory deadlines. Thank you again for your support and best of luck moving forward."
 

#7
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Client:

My CPA wants me to ask you how you arrived at my property's fair market value for 2021. I gave him a copy of the document I got back from you the other day, as well as the link to my property's information on the county's website. Still, he wants me to ask you, says he needs this information, and keeps reminding me how important it is.

Me:

Please tell your new CPA that the closing document that you provided to us shows a purchase price of $795,000.

From there, we went to the county property website to find a ratio of "land to property" value for your property specifically. In applying this ratio, we came up with a land value of $509,000 and a depreciable building value of $286,000 (the sum of those equals $795,000).

Of course, I'm sure your new CPA is aware that you cannot depreciate land, so that is how we came up with a depreciable value of $286,000.

I'm sure that your CPA is also aware that the depreciable value for a rental is either the "cost of the property" or "the fair market value at the time it was put into service as a rental property" - whichever is LESS - and since we estimated the FMV to be greater than the purchase price - we used the purchase price.

I hope this is helpful,
ItDepends

Client:

This is embarrassing as well as frustrating and confusing.

My 2022 CPA continues asking me about the house's FMV in 2021. I've told him everything you've told me, but he insists I need to determine the ratio/percentage you used to determine the house's value. He's determined to ensure he doesn't have to submit an amendment and scolded me for not knowing all this information.

He said he basically would like to know the website you used to determine the ratio.




Me: (I have not responded yet)


?

I understand that it is frustrating to receive potentially conflicting advice from two professionals. 

The return PDFs I provided to you should have everything your new tax professional needs to onboard you into their practice, but I provided details of how we determined the depreciation anyway.

I have carefully reviewed the 2021 cost basis and depreciation taken on your rental and I find that, according to the information you provided to me, it was prepared in accordance with the tax code and in line with IRS/state audit requirements and tax court cases.

If your current tax preparer thinks this has been done in error, please have him or her provide what they think is the correct cost basis and his or her sources to calculate that basis so I can provide further analysis as to any lack of accuracy.

?
 

#8
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ItDepends wrote:If your current tax preparer thinks this has been done in error, please have him or her provide what they think is the correct cost basis and his or her sources to calculate that basis so I can provide further analysis as to any lack of accuracy.


I wouldn't include this. Presumably you're no longer being paid for time spent on this former client's behalf. "Further analysis" goes beyond what is ordinary and reasonable under the circumstances.

You've provided concise and helpful responses to the questions, even though they were partially restated. Asked and answered. I would convey that in a polite and professional manner, and state the county website can be found via a simple internet search. Then go radio silent for all additional questions that are not ordinary nor reasonable.
 

#9
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ManVsTax wrote:
ItDepends wrote:If your current tax preparer thinks this has been done in error, please have him or her provide what they think is the correct cost basis and his or her sources to calculate that basis so I can provide further analysis as to any lack of accuracy.


I wouldn't include this. Presumably you're no longer being paid for time spent on this former client's behalf. "Further analysis" goes beyond what is ordinary and reasonable under the circumstances.

You've provided concise and helpful responses to the questions, even though they were partially restated. Asked and answered. I would convey that in a polite and professional manner, and state the county website can be found via a simple internet search. Then go radio silent for all additional questions that are not ordinary nor reasonable.


Agreed.
There is nothing the new preparer needs to provide to you or that you want them to provide to you. They have decided to beat a dead horse. To extend the analogy, don't go giving that horse CPR. It won't change anything. The question has been asked and answered.
~Captcook
 

#10
KoiCPA  
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"I used ratios from the county website" is as good an answer to this as any new preparer could possibly hope for. In fact, I'm a little surprised the new preparer hasn't already discovered your source and method by looking at the county site for himself - it's the first thing I check when new clients own real estate.

I agree with the others that you definitely should not evaluate the new CPA's position.
 

#11
Joan TB  
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He said he basically would like to know the website you used to determine the ratio.


Rather than your generic "I used the county's website", you might want to be more specific. **url?? **actual link??

For example, In Texas it would be the XYZ County Central Appraisal District's website, but your situation may mean the XYZ County Tax Assessor's website.

Other than that, I don't think you owe him anything more.
 

#12
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Joan TB wrote:Rather than your generic "I used the county's website", you might want to be more specific. **url?? **actual link??


It's a teach a man to fish vs give a man a fish kind of thing.

Since we're all fishermen and fisherwomen here, this is very handy for the state of GA: https://dor.georgia.gov/property-records-online

It contains a direct link for each county's property assessment website. Handy to bookmark if you deal with clients who regularly invest in GA situs property.
 

#13
CathysTaxes  
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Shouldn't a tax pro have these links or know where to find them? A quick way is to look up the property in Zillow. They have a link to the property tax website.

I personally would ignore this question.
Cathy
CathysTaxes
 

#14
Joan TB  
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Cathy - just so you know, in Texas the property tax website is NOT where you see value. You use the County's Appraisal District website. But yes, I agree that a tax pro should know where to find this information, as surely he has needed it before, unless it is OUT of his home state. I know I have had a bit of difficulty finding value info in other states, just because I didn't know where to look.
 

#15
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CathysTaxes wrote:Shouldn't a tax pro have these links or know where to find them?


Yes, but I've experienced quite the difficulty in trying to find these sites at times and some states/counties don't have a fully searchable online system.
In WA state, each county maintains their own. There is one excellent platform that about five that I'm aware of use, but the other five counties I search a few times a year each have their own system.
~Captcook
 

#16
wel  
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Did you make a printout / screenshot of the tax assessors site that was used for the allocation of building / land (and include it in your tax workpapers for the year that the property was placed in service)?

If so, I'd send them a copy of that page with the math to support the allocation.

If not, then a link to the assessor's website may not be very useful - as there's a good chance that the assessed values have changed during the time that you calculated the allocation and now. I've also seen the level of detail provided by these sites change to where they only provide the assessed value, without the detail for land/structures.

It seems likely that the new preparer doesn't know what they're doing, and thinks that being difficult with the client will make them appear to be more competent than they are.
 

#17
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Before you start providing supporting workpapers, I think you should run the situation by your E&O insurer. Even if you did the allocation in a reasonably accurate and common manner, a blind pig can still find an acorn once in a while.
 


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