Fees: Fear vs Freedom

Economists generally define a recession as two or more consecutive quarters of GDP contraction.

We won’t know for six months, and I’m not a gambling man, but I feel pretty certain that later this year we’ll be saying, “Yes, that was a recession.”

The prospect of a recession seems to be causing some fear within the ranks of tax professionals.

Fear that they won’t be able to collect from existing clients, thus impacting their own ability to pay the rent, make payroll, or feed their families.

Fear that their own tax practice may go the way of the dodo bird.

Some tax pros are, as a result, heavily discounting their tax prep fees in order to keep people coming in the door. Some are waiving up front fee requirements on representation engagements. Some accountants are intentionally delaying invoicing their clients for work performed, on the misguided assumption that those clients just can’t pay all of a sudden.

These reactions to the pandemic and pending recession are based on fear, and they are the absolute wrong reaction. I’m not going to mince words: If these are the types of actions you’re taking with your fees right now, STOP IT.

Instead of viewing the recession from a perspective of fear, I want to encourage you to view this as an opportunity. Yes, opportunity.

Back in 2008, I was in Chapter 7 bankruptcy and homeless as a result of the Great Recession. By shear dumb luck (or maybe divine intent, depending on what you believe), I ended up taking a job at a tax resolution firm because I needed a job, and they needed a Jassen.

I had never even heard of “tax resolution”, and I didn’t previously come from a tax or accounting background.

But entering the tax profession turned out to be the best financial move of my entire life.

See, during the Great Recession, the number of people with a tax debt spiked. This is common during a recession, and I guarantee it’s going to happen again this summer.

This created a Golden Age of tax resolution from 2008 through 2010, one that I never thought would be repeated.

But in all … Continue reading

IRS People First Initiative: Collections Response to COVID-19 Crisis

This week, the IRS launched the “People First Initiative” to help taxpayers with Collections issues that are being impacted by the coronavirus pandemic.

On this webinar, we will discuss:
• What non-filers need to know.
• How the IRS is handling IA payments during this time.
• Impact on OIC processing.
• Handling of liens, levies, and CSEDs during this economic crisis.

We will be presenting a live CPE webinar on Friday, March 27 to discuss these important changes to Collection processing. For complete details and to register, please visit:

https://attendee.gotowebinar.com/register/283369841045960971

 … Continue reading

5 Ways to Help Your Clients Right Now During the COVID-19 Crisis

For millions of Americans, their tax professional is the only financial or business-oriented adviser in their life. Even if you don’t offer financial planning or advisory services, you are very likely the de facto financial services professional for many of your clients.

As such, here are five practical ways in which you can be a hero to your clients right now…

1. Remind them to “stay the course”.

We’re hearing the words “unprecedented” and “uncertain” thrown around a lot right now in relation to both the COVID-19 pandemic and the ensuing market volatility and pending recession. The problem that I have with those words is that they simply aren’t true. Both pandemics (2009, 1968, 1957, 1918, etc.) and recessions (2008, 2001, 1990, 1981, 1974, 1970, 1960, 1958, 1953, etc., etc.) are fairly common occurrences, even in modern times. Coronavirus is not the first pandemic, and this won’t be the last recession.

There is also always going to be volatility in the markets. Do folks forget the February 2018 bond drawdowns? Or the 20% decline in the stock market in the 4th quarter of 2018?

People do forget these things.

Yes, the recent stock market decline was extremely rapid (but let’s face it, valuations were overbid anyway and needed a correction).

But some people are saying that “this time is different”, and that the economy will never recover. Well, they said that during ever prior recession, also. This too shall pass.

Right now, you need to be communicating these facts to your clients, in an effort to help ease the pain and panic.

More than anything, you need to stress to your clients to NOT panic sell their investments. We’re seeing way too many people doing this, and all they’re doing is locking in their losses. Panic selling stocks and bonds is literally the stupidest financial move a person can make right now. They should just be leaving those accounts alone, doing nothing with them.

In fact, for your clients that can, they should continue making their normal monthly investment contributions. Why? Dollar cost averaging, that’s why. More shares for fewer bucks.

Do some research on staying the course. Write a series of emails to your client/prospect email list (you have one, right?). Communicate to them the importance of doing nothing. Yes, doing nothing. In the infamous words of Vanguard founder Jack Bogle, “Don’t just do something, stand there!”. … Continue reading