Full Disclosure
Volume 12, Number 4
Issue 552
“I always need the complete cooperation of my client with the honest disclosure of important facts.” This sounds like a very simple goal but in application, with a few types of new-to-me clients, it is a very difficult one to attain.
In fairness to 90% of the clients that I accept, I never need to stress cooperation and full-disclosure, much less honesty, but every now and then I just have the devil of the time getting information out of someone who has hired me to prepare their taxes and give tax and accounting advice. The stressful thing is that this frequently happens in audit situations and in “multiple year non-filing” cases and these are the times when I need the best cooperation and not something else. It is sometimes the proverbial “pulling teeth” to get the documents that I need and to get to the facts. In these particular situations, I wear out another of my signature quotes: “if you don’t know, I don’t know.”
I bring a lot of passion and enthusiasm towards getting tax returns filed and difficult tax and accounting matters resolved. This passion works best when it can be applied to bring a job to fruition when others couldn’t. Often, a client with severe problems (like not having filed for several years) has gone to other professionals before coming to me or has “bounced-around” in some way, shape or form. More often than not, when they get to me, they are exhausted and tired of dealing with their situation. I come into these situations like a lightening rod or a rush of warm air, but that is my purpose--to get the job done as quickly and as efficiently as possible.
Most of the time, the reason that they have been bounced-around is that they don’t respond to document requests and questions promptly or completely. I can’t operate very efficiently if basic documents like brokerage statements, W-2s, and mortgage statements aren’t provided. “I can’t prepare the tax returns by mind reading”--that’s another signature quote. And I can’t prepare the returns with as much friendliness and happiness as I want if I am constantly having to explain “why” I am asking for something. Literally, the first ten times are fine but it goes downhill soon thereafter when I have to keep defending myself and my profession.
Over the years, I have found that the most frustrated customers turn out to be the ones that have their information in the most disorganized from. Now, I happen to excel in these particular situations but it is not without cost--both financial and in stress (to both the client and I). Usually, when someone has bounced-around, it is because other professionals have not been able to focus them on the component problems and matters at-hand that are critical to the ultimate completion of the work. If I can quickly turn around written requests for documents and ask my questions in ascending order of difficulty as I gain a new client’s confidence, I can get the entire matter resolved in days instead of weeks or months. I won’t let a bounced-around client “bounce away” from me.
The key to the successful resolution of the most difficult assignments is that I must have the complete confidence of my client delivered to me in a pleasant and professional manner that is NOT adversarial. I often need to state to new clients who have come to me after being “bounced-around” by rivals or by looking for a CPA home that I am not your adversary and that I work for you. This is easier said than simply received; I know that I have to earn it but, please, let’s make it pleasant along the way while we both are happy that we have found each other. A pleasing attitude towards the person that you have hired to help you is worth far more than the money that you will pay to have the situation resolved.
Certain self-employed individuals (mostly tradesmen) with workers pose great risks to themselves. I have started counseling them even more vigorously about independent contractor issues--even at the first meeting--whether or not this is on the beginning agenda. The general “W-2 wage earner” taxpayer would be surprised to learn how many self-employed people purposefully misclassify their workers as independent contractors in order to avoid paying Social Security, Medicare and unemployment taxes. To counsel these self-employed people, I have to ask many questions about the circumstances surrounding the hiring of their workers, and this is difficult at best. I often need to caution, “don’t tell me what you think I want to hear or what you wish the circumstances are; to give you the best advice, you need to be honest about the situation.” This “independent contractor v. employee” issue causes more stress on me as a newly-engaged CPA than any other issue.
Closely behind having to inform people that they are usually misclassifying employees as independent contractors is that I have to have lengthy discussions with S-Corporation owners about the need to take full and fair salaries (subject to employment taxes) as an expense in arriving at their company’s net profit (not subject to employment taxes). New-to-me clients often accuse me of overly questioning them or asking about things that have already been decided a long time ago. I need to stress that this is an obvious issue that has been the subject of recent IRS rulings.
Often, it’s the fact that I “turn out to be right” on many issues that makes long-term clients become even better cheerleaders in the community. It is not unusual for someone to call and tell me about a subsequent event (such as an audit letter, newspaper article or, frankly, their attendance at a cocktail party where they compared notes with a business friend) that justifies (albeit in hindsight) what I went to great lengths to explain and counsel on--especially and usually independent contractor or S-corporation salary issues.
The fact is that professionals need to have confidence that their questions will be answered quickly and with honesty and a “not holding back” attitude. How can I give you excellent representation to prepare written documents that admittedly are often more “art” than “science” if you don’t cooperate completely with me? Furthermore, if you purposefully hold back information from a professional, that sends a sign to them that their risk to help you might not be worth any reward that they may receive in money or through the satisfaction to have successfully applied their craft.
David B. Robinson, CPA
Index of Previous Issues of Tax Fax
