I am sure we all have a “wish list” for clients – a list of things we wish they would do. Here is mine -
(1) I wish that when a client
receives a letter or notice from the Internal Revenue Service, or a state tax
authority, about a tax return I prepared they would put it in the mail to me,
fax it to me, or include it as an attachment in an email to me IMMEDIATELY.
I still have some clients who insist
on trying to call me first to tell me that they got a notice from the IRS. This
is a total waste of time. My telephone answering machine is turned off during
the “regular” year – it is only on during the tax filing season (January 15 to
April 15).
And what would happen if they did
manage to reach me by telephone? They would tell me that they got a notice from
the IRS or the NJ Division of Taxation or whoever and I would tell them to
mail, fax or email it to me!
Here is an example. A client tried
repeatedly to call me with no success. So he told his mother to try to call me,
which she did for a week or so, again without success. The mother mailed me a
note saying that her son was trying to get in touch with me. I mailed a note to
the son, along with a self-addressed envelope, telling him to mail me the
notice.
The notice, which was from the NJ
Division of Taxation, was dated October 1st. I received the notice in the mail
from the client, finally, on November 10th. Look at how much time was wasted!
And I do have clients who just pay
the balance due on the notice without consulting with me first. I only learn about the notice when the client
sends me his or her “stuff” at tax time.
Now I have to try to get the money they erroneously paid back from the
IRS or the state.
I have found, as I am sure you have
also, that more often than not a notice from the IRS or a state tax agency is
wrong – and even more so with state notices.
(2) I wish clients would keep track
of the cost basis of all their investments and give the information to me at
tax time when they have sold investments.
Or at the very least tell - not ask
– their brokers to provide them with – or send directly to me - a detailed
Profit and Loss Statement showing dates of purchase and cost basis for every
investment sold during the tax year.
Some clients do it right. They set
up a file folder for each investment at purchase and put the original purchase
confirmation in the file.
If dividends are reinvested they put
the annual DRP statements in the file each year. If the investment spins-off or
merges or whatever they put any related correspondence, notices and statements
in the file.
If they purchase real estate they
put the Closing/Settlement Statement in the file along with any receipts for
expenses involved in the purchase that were not paid through the closing. They
also place any receipts for capital improvements in the file each year.
If they receive an investment
(including real estate) by gift they ask the giver to provide them with the
cost basis of the investment gifted. If they inherit an investment (including
real estate) they ask the Executor of the estate to provide them with the
market value or appraised value on the date of death that was used in filing
the federal estate, if required, and/or state inheritance tax return or filing.
When the investment is sold they put
the sale confirmation, or Closing Statement, in the file and give me the file
folder with their tax “stuff”.
To be honest, I would prefer a Profit
and Loss Statement from the broker, to save me the time of actually determining
the gain or loss on each investment. However, the individual file folder system
discussed above would provide more complete and accurate information.
While the new 1099-B reporting
requirements have been a big help, the mandatory cost basis reporting only
applies to relatively recently purchased securities.
(3) I wish clients would provide me
with specific numbers for deductions they are claiming – instead of telling me
“claim the maximum” or “whatever I am allowed” or “same as last year”.
The maximum is what you actually
paid. You are allowed what you actually paid. It is very rare that an expense
or number of miles driven for an activity is exactly the same as it was the
previous year.
I need clients to tell me “$1023.50”
or “$20.00 per week for 50 weeks” or “4638 miles”!
Each year I include in my January
client mailing worksheets that apply to specific clients’ individual situations
– for medical expenses, charitable contributions, rental income and expenses,
employee business expenses, etc. I wish clients would fill them out completely
and accurately – or provide me with a detailed listing of deductions in any
other format.
When clients do not give me the
proper information and I have to email or write them, this wastes valuable time
and delays the completion of the return.
I want to make sure my clients take
advantage of all the deductions and credits to which they are entitled – but I
can only do this if I am given complete and accurate information.
(4) I wish clients would make and
keep a photocopy of all their Form W-2s for the year before sending me their
“stuff” – as I clearly instruct in my annual January client mailing.
Each year during the season I get
two or three frantic calls or emails asking me to fax photocopies of the W-2s
to a bank, Mortgage Company or to the client. This is not a big thing, but
anything that takes time away from actual 1040 preparation is bad.
(5) My invoices all clearly state
“payment due upon receipt”. This means once the client receives the invoice and
not “30 days net”. I wish my clients would sit down and write my check, and put
it in the mail, as soon as they have finished reviewing the finished returns
This is only the beginnings of my
client “wish list”. I could probably fill several more posts - and may just do
that.
So what is on your client “wish
list”?
BTW – as you are reading this I am
in Washington DC attending the annual NATP National Conference. I will post about the conference next Monday.
TAFN
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