Big Mistake Tax Pros Make – Taking on every client that walks in the door

Big Mistake Tax Pros Make – Taking on every client that walks in the door

I was on a webinar as a panelist for the TaxProMarketer when my good friend Nate Hagerty asked me what the biggest mistake tax professionals make. Of course, I told him one when he asked me the  question and then offered a few more during the hour and twenty minutes we were on the Zoom webinar. Below is another mistake tax pros make in their practice (of course there are many others). See the post from July 23, 2023 “Including IRS representation work in tax prep fees for clients”.

Yes, I know it seems like it is hard to get people to call, email or knock on your door. When someone is ready to buy, we are eager to make them a client. But you should not work with everyone that is willing to work with you.

Look for the warning signs.

– You ask them to get you some form, document, or piece of information before your meeting with you and they have some excuse

– You mention your fees and they say “Can you do it for less? My prior guy charged me less than that.”

– They are complaining about the prior tax preparer and you look at what they did, and there is not much you would do differently

– They are in the process of suing their prior tax pro or filed a complaint with the state or IRS

– They are talking to you and have used 3 different preparers in the last 4 years

– They made an appointment with you and were 15 minutes late and make you go over the allotted time (especially when it is late in the day or on a weekend day)

– They schedule an appointment and either missed it or rescheduled at the last minute (2 or 3 times). I personally have a 2 strikes and you are out rule.

I could go on with many more. I hope you get the point. Working with these clients are only going to cause you stress, pain and suffering. If you have had a tax practice for any amount of time, I am sure you have enough of these kinds of people on your list. Why do you need another? Just because they can pay you what you ask?!

Oh, and if by chance you see any … Continue reading

IRS Announces End of Revenue Officer Surprise Visits (for the most part)

The IRS announced on July 24, 2023 a new policy change regarding Revenue Officers

As part of a larger transformation effort, the Internal Revenue Service today announced a major policy change that will end most unannounced visits to taxpayers by agency revenue officers to reduce public confusion and enhance overall safety measures for taxpayers and employees.

The change reverses a decades-long practice by IRS revenue officers, the unarmed agency employees whose duties include visiting households and businesses to help taxpayers resolve their account balances by collecting unpaid taxes and unfiled tax returns. Effective immediately, unannounced visits will end except in a few unique circumstances and will be replaced with mailed letters to schedule meetings.

IRS Commissioner Danny Werfel announced the change as part of a larger effort to transform IRS operations following passage of the Inflation Reduction Act last year and the creation of the new IRS Strategic Operating Plan in April.

“We are taking a fresh look at how the IRS operates to better serve taxpayers and the nation, and making this change is a common-sense step,” Werfel said. “Changing this long-standing procedure will increase confidence in our tax administration work and improve overall safety for taxpayers and IRS employees.”

The National Treasury Employees Union (NTEU) supports the policy change.

“NTEU welcomes the IRS decision to halt unannounced visits by IRS Field Collection employees,” said Tony Reardon, National President of the National Treasury Employees Union “The safety of IRS employees is of paramount importance and this decision will help protect those whose jobs have only grown more dangerous in recent years because of false, inflammatory rhetoric about the agency and its workforce. We applaud Commissioner Werfel’s quick action after hearing the safety concerns raised by NTEU leaders and IRS Field Collection employees who faced dangerous situations that put their safety at risk. We look forward to working with the IRS on this and other actions to protect the safety of all IRS employees.”

Werfel also noted that there have been increased security concerns in recent years on multiple fronts. The growth in scam artists bombarding taxpayers has increased confusion about home visits by IRS revenue officers. Sometimes scam artists appear at the door posing as IRS agents, creating confusion for not just the taxpayers living there but local law-enforcement.

For IRS revenue officers, these unannounced visits to homes and businesses presented risks. Revenue officers routinely faced hazards and uncertainty making unannounced visits to attempt … Continue reading

Big Mistake Tax Pros Make – including IRS representation work in tax prep fees for clients.

A while ago, I was a guest speaker on a webinar with my good friend Nate Hagerty at TaxProMarketer.com. They were talking about using Google Ads to generate tax resolution leads and some promising statistics they had generated for some of their tax pro clients. The cool thing was this was specifically on tax resolution keywords.

Nate asked me what were some of the biggest mistakes tax resolution tax pros make. So, I thought I would share what I talked about and a few others mistakes we make (yes, I have made many of these myself. School of hard knocks is what they call it).

Big Mistake Tax Pros Make

Probably one of the biggest mistakes I see tax pros make is that they include tax resolution work (calling the IRS for transcripts, setting up an installment agreement (IA), or preparing financial forms) in with the tax prep fee for clients.

Most tax professionals don’t enough for tax prep let alone include additional services like IRS collections work. Same goes for exam/audit related work. Many practitioners get a CP2000 or correspondence exam notice from their clients and they will include it with the current year tax prep. Meaning you need to charge extra for these services (unless it can be determined that somehow the notice was due to your error).

DON’T DO IT! These services are way too valuable. In most cases, the collections or exam work is way more valuable than the tax prep.  I charge $750 base fee for a 1040, $750 as a minimum for handling an IRS notice reply and $500 for a Guaranteed IA (GIA) (they owe less than $10k). The last national average I saw for a 1040 was about $280 and $540 for a business return. Most tax pros charge $25-100 for a GIA, if they charge anything at all.

First, these projects take extra time to deal with and second, they are separate engagements. If you do an engagement letter for a 1040, I bet if you look at the language used, it does not cover notice reply or any other representation work. That means you can (and should) charge separately for this extra work.

All the best,

Dan

Dan Henn, CPA, CTR™, NTPI Fellow
Managing Member
Tax Pro Academy, LLC… Continue reading