Today, we embark on a mission—a mission to fortify your practice, protect your interests, and ensure you receive the compensation you deserve. As General Patton once inspired his troops in WWII, I am here to galvanize you, the valiant tax professionals, to stand firm in the face of challenges and emerge victorious in your IRS representation cases.
The Battle Plan: Document Everything
In the trenches of tax representation, one of the most formidable adversaries we face is the dreaded “But you didn’t tell me that” client. These clients, whether through selective memory or genuine misunderstanding, can pose a significant threat to your practice. The solution? Documentation.
- Reduce to Writing: After every significant discussion, reduce it to writing. Send an email summarizing the main points, decisions, and actions required. This not only serves as a reminder to the client but also as a protective shield for you.
- Certified Mail: For critical communications, send letters via certified mail. Even if the client doesn’t claim the certified mail, the regular mail will reach them. Keep the returned certified mail unopened as evidence.
- Client Acknowledgment: Always request a reply from the client acknowledging receipt of your communication. This can be an email, a signed letter, or a duplicate copy of the letter they sign and date.
Strategic Communication: Clarity and Precision
To prevent misunderstandings, clarity and precision in communication are paramount. When advising clients on actions like making payments to the IRS while you wait for returns to be prepared, a Form 433-A to be compiled, or Appeals to respond, be explicit. Explain the consequences of changes in their financial situation, such as winning the lottery or receiving a raise, and how these could affect their resolution status such as dropping out of Currently Not Collectible or adding a new liability can kill their Installment Agreement or Offer-in-Compromise.
The Art of Getting Paid: Ensuring Fair Compensation
In this battle, your time and expertise are your greatest assets. Ensure you are compensated fairly for your services.
- Engagement Letters and Retainers: Always use engagement letters and require retainers up front before starting any work. This applies to any type of professional work you do for a client. For tax return preparation, a retainer of at least 50% is advisable. For IRS representation cases, secure a retainer of $3,000 to $5,000 for exams.
- Value-Based Flat Fees: For collections cases, consider a value-based flat fee structure. Collect 100% of the fee upfront to ensure commitment from the client.
- Documentation of Earned Fees: Clearly outline in your engagement letters that fees are considered earned upon receipt and there are no refunds. Keep detailed records of your work to justify fees if questioned.
Training Your Team: Firm but Fair
Your team is your support system. Train them to be firm yet fair when discussing fees and retainers with clients. They must understand the importance of securing payment to protect the practice and maintain cash flow. Oh, and I would assume they want to continue to get paid as well.
- Handling Objections: Equip your team to handle objections gracefully. Explain the necessity of retainers and the value of your services. Push to don’t push to hard. You will have a handful of clients that will balk at paying a retainer. If they are really good clients, this is acceptable for 2 or 3 clients. Any more than this and you risk having a large accounts receivable you have to chase. Goal is to not have any accounts receivable.
- Opportunity Cost: Emphasize the concept of opportunity cost. Time spent on non-paying clients is time lost on potentially lucrative projects.
Charging What You’re Worth: Know Your Value
As tax professionals, you have invested time, money, and effort into getting and keeping your license, continuing education and tools necessary for your tax practice. Charge accordingly. The national average for tax preparation is higher than many professionals charge for most of their services. If you are in a high-cost area, adjust your fees to reflect the local economy.
- Avoid Undervaluing Services: Charging too little undermines your expertise. Clients who value your services will understand the cost.
- Continuous Fee Review: Regularly review and adjust your fees to keep pace with inflation, cost of living, and the value you provide.
Marching Forward with Confidence
As we march forward, remember that you are not just tax professionals; you are warriors in the financial battlefield. Arm yourselves with documentation, demand fair compensation, and charge what you are worth. By doing so, you not only protect your practice but also ensure its growth and sustainability. Let this be your rallying cry: Stand firm, document diligently, and get paid what you deserve. Together, we will conquer the challenges of IRS representation and emerge victorious. Onward, tax professionals, to success and prosperity!
If you have any questions, please reach out to us.
I would love to hear your thoughts, challenges, and successes in writing your very own book.
Have a GREAT day,
Cordially,
Dan
Dan Henn, CPA, CTR™
Managing Member
Tax Pro Academy, LLC
P.S. Want to learn more about the Tax Resolution Academy®, go to https://community.taxresolutionacademy.com.
P.P.S. Check out our CPE classes here! Click the link to Follow our page and you will be notified when we release new classes.
Listen to the IRS Whisperer Podcast for a better discussion on this topic.
Ep 8 S 2 Get Friggin’ Paid and how to deal with the “But you didn’t tell me that!” Client
