Jassen Bowman EA
Jassen Bowman EA

Friday Q&A: Client payment plans for tax resolution fees

It’s one of the most critical questions in the tax resolution industry: To accept or not to accept client payment plans for fees.

I’ve written quite a bit about fee structures and payment arrangements, and this morning Danny sent me an email with several questions pertaining this topic:

How many months do you allow someone to pay? What sort of upfront fee do you collect? Do you use an online auto bill to their credit card? Do you have a written agreement and do you file the agreement?

Let me first start with this: I no longer offer payment plans to clients, and I advise other solo practitioners not to, either. My stance is that if a client wants my help, and cannot pay my full fee up front, then that client does not meet my established criteria for my ideal clients. When you are a solo practitioner in particular, you should set fairly strict criteria regarding the clients you will work with. When it’s only you, you should be far less willing to deal with problem clients, and you don’t have to.

Please note that this entire article really applies to those doing flat-fee client work (aka, value billing). If you are billing hourly against a retainer, then most of this will not apply to you, because these tips are sort of built in to the retainer model.

With that said, if you either choose to accept payment plans from clients, or own a larger firm and are going after the volume angle in order to compete on the playing field with the large national firms (which is perfectly OK, of course), then you should set strict guidelines regarding your fee payment arrangements.

First of all, collect as much of the fee up front as possible. Never go for a series of equal payments over time — always insist on the first payment being significantly larger. The reason for this should be obvious: Tax resolution work is heavily front-loaded in terms of your time commitment to the client. It’s not uncommon for half your billable hours on a tax resolution case to occur within the first week of a client hiring you. Collect enough in the initial payment to cover this work.

Second, whatever payment arrangements you do make, automate it. In other words, set up the payments on automatically recurring ACH drafts or credit card drafts, so that you don’t even have … Continue reading

How I get inbound tax resolution leads with no marketing

In a typical week, I get at least one, and sometimes as many as three or four, people contacting me completely out of the blue that are telling me that they think I’m the best person to help them with their tax problem and wanting to hire me.

These are folks that I’ve never talked to before, never marketed to before, never had any one on one contact with at all. But they’re reaching out to me, with their checkbook open.

How is this possible?

It’s actually quite simple: I took the time to establish myself as an expert.

Never forget that people do business with other people that they know, like, and trust. This is the single most important thing you can ever learn about running a service business. Period.

Establishing yourself as an expert, as the go-to person in your area or specialization, you automatically build credibility. Providing ways for people to get to know you, even if you never actually speak to them, builds on this. Over time, people that know you will get to like you and trust you (assuming you’re likable and trustworthy, of course).

People get to know you via the content that you produce. On my tax firm web sites, I provide a ton of free or extremely low-cost information for people, including how to negotiate their own Installment Agreements and how to draft their penalty abatement applications. I also provide pointers to appropriate IRS resources and other information that can help them.

This material costs me nothing but time in order to create. After the initial creation of a few backlinks to those sites via press releases, articles, or videos I post elsewhere ,I do no further active promotion of those sites, I just let Google and Bing find them on their own and determine whether they are worth including in search results or not. I don’t try to “game” the search engines, and I update the sites far less frequently than the so-called SEO “experts” say that I should.

It also helps that a little over a year ago, I took the time to write a short book and self-publish it on Amazon. That book is now one of the best selling books on Amazon on the subject of settling tax debts. The end of every chapter includes a call to action referring back to my primary practice web site, which offers additional resources. … Continue reading

Cheapest Tax States To Reside In

Choosing to reside in a state with low tax rates can be an effective way to reduce your cost of living, often by a double digit percentage. State taxes come in a variety of forms, including income, sales, real estate, and personal property taxes. All states charge at least one of these taxes, and most charge all four to varying degrees. Your lifestyle will often dictate which type of tax is most critical for consideration when evaluating where to live. In this article, I’m going to present four states that offer different tax benefits for residents.

Alaska
Alaska has the lowest overall tax burden per resident of any state in the Union. Alaska is one of only two states that has neither a state income tax nor a state sales tax. Local municipalities in Alaska are allowed to levy their own local sales taxes, which can be as high as 7.5 percent, although many towns do not levy a sales tax. Alaskan property taxes are on par with the national average. Because of oil revenues to the state, Alaska is the only state that actually pays residents for living there. Alaska Permanent Fund Dividends vary each year, and were $878 per eligible resident in 2012.

New Hampshire
New Hampshire is the other state with no state sales tax and no state tax on ordinary income. The state does levy a tax on dividends and capital gains, so individuals who earn a large portion of their income from these sources should take this into consideration. Local municipalities in New Hampshire do not have sales tax, but New Hampshire’s state and local property taxes are the highest in the United States. Therefore, New Hampshire can be a zero tax state if you are a wage earner and do not own property.

South Dakota
While South Dakota does levy a 4 percent state sales tax, and local municipalities may also levy sales taxes, South Dakota has the second lowest overall tax burden for residents of any state. This is primarily because of the lack of a state income tax, and some of the lowest personal property taxes in the country. However, while real property tax rates exceed New York state’s, low property values statewide keep the actual property tax bills low. South Dakota is one of the most popular residency states for full time RVers that don’t own real estate, and is growing in popularity as a “tax … Continue reading