remember who you’re dealing with.
by jassen bowman
tax resolution systems
let’s put this right out in the open: your livelihood in the tax resolution business is coming from individuals and businesses that owe money to the government, and, more than likely, are behind on payments to other creditors, also.
more on tax resolution: checklists for tax resolution sales | quoting tax resolution fees | 12 rules for phone calls | don’t ignore your existing leads | the ins and outs of hiring and firing | market to your ideal clients | one-step vs. two-step marketing | tax resolution: a lucrative opportunity
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in order to protect yourself and your firm, it is important to have client payment procedures in place and enforce them so that you don’t do a bunch of work for free or become just another creditor that the taxpayer owes money to.
here are some suggestions for payment policies.
- don’t offer to split the fee up into installments. the prospect needs to ask for this. if you can, always be sure you get paid your full service fee up front.
- require certified funds or a credit card for the first payment. you don’t want the first payment from a new client to be a bounced check.
- have a signed payment schedule, with the dates and amounts of all fee payments, in place before starting work.
- limit the time over which you will spread payments. most tax cases take 60 to 120 days to resolve, so limit your payment spread to 30 days or 60 days.
- limit the time between installment payments if you split your fee up. i suggest requiring weekly or biweekly payments. never allow a client to only make payments monthly.
- some industries have a higher default rate than others, such as child care facilities, restaurants, and small trucking and construction companies. you may want to always require certified funds or payment in full up front for industries with common cash flow issues.
- if a client requests that you move a payment date, be leery of doing so, and be cautious about how far out you move the payment date.
- note: it is not uncommon to have to move a payment date to you in order to accommodate the taxpayer being able to make a federal tax deposit. it is obviously unethical to make your client miss a federal tax deposit just to pay you, so be slightly sympathetic toward this issue.
- if a check ever bounces, stop work on the case and contact the taxpayer to arrange for delivery of certified funds.
- do not take on additional work for the client that will incur additional charges if they have any outstanding payment issues with you already.
sample service agreement/engagement letter
service agreements and engagement letters can take a wide variety of forms. this short service agreement covers many of the main points you want covered in your contract, and is short enough to fit onto one page. if you currently do not have a service agreement for use in providing tax resolution services, start with this to begin with, but consult with your attorney about other provisions you may wish to add. this particular service agreement is based on providing services on a flat-fee basis.
services provided:
- _____________________________________________________ (hereafter client) engages _________ for the purpose of negotiating a formal tax resolution with the internal revenue service.
- client understands that the consulting fees to be paid to _________________________ are for representation specifically for the irs liability related to the one company, individual or couple that is the client.
- specific services to be rendered in relation to this agreement include the following:
- obtain irs account transcripts and verify accuracy of irs account records.
- analysis of client’s financial condition to determine eligibility for irs resolution programs.
- negotiate a formal resolution plan for resolution of the tax liability referenced in 2 above.
- file appeals on all proposed irs collections actions for which appeals rights exist.
fee schedule:
___________ provides services on a flat-fee basis, regardless of the amount of tax liability or tax type.
full service representation: negotiation of an installment agreement (payment plan), currently not collectible (cnc) status, or an offer in compromise (reduced settlement). fee per person/entity: $4950.
trust fund recovery penalty representation: full service representation as above, per person: $1950.
lien negotiations: application for lien withdrawal, subordination or release. per application: $950.
levy and wage garnishment releases: negotiation of irs levy release, either at start of services or any time during representation, if caused by client failing to meet established deadlines for materials or not making federal tax deposits or filing currently due returns on time, which are critical to resolution. per release: $950.
important considerations:
- __________ does not make any claims or assurances regarding the final outcome of the proposed tax resolution process with the irs.
- the resolution of tax obligations for additional individuals or business entities, and additional types of services such as tax return preparation, bookkeeping and negotiation of lien and levy releases require additional fees as per the above fee schedule.
- client is expected to be an active participant in the resolution of their tax liability. ________ will require access to detailed financial information similar in nature to what you would expect to provide a bank for a loan application. providing this and other information in a timely manner when requested is crucial to the successful resolution of your tax matters.
- if needed for the convenience of client, full service representation fees may be broken into two equal payments to be made no more than 30 days apart. fees for other services must be paid in advance.
- any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the american arbitration association under its commercial arbitration rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.
this agreement is entered into on ___________ ___ 2018 by the undersigned:
sample payment authorization form
date: _____________________________________________
client name: _____________________________________________
name on account/card: _____________________________________________
billing address: _____________________________________________
city, state, zip: _____________________________________________
best telephone number: _____________________________________________
payment schedule
payment date payment amount
for ach/echeck payments:
bank name: _____________________________________________
ach routing number: _____________________________________________
ach account number: _____________________________________________
type of account: [ ] checking [ ] savings
for credit/debit card payments:
card number: _____________________________________________
expiration date: _____________________________________________
ccv code (3 or 4 digit code on back of card): ___________________________
by signing this form, i authorize _________ to process the payment amounts indicated on the appropriate date per the payment schedule. i acknowledge that ach/echeck payments will be processed as electronic debit transactions against my checking account. this authority will remain in effect until revoked in writing by the undersigned account holder. i understand that any payment schedule changes, nsf, credit card failure or chargeback transactions will incur a $25 fee per incident and may result in the stoppage of work by __________________________.
_____________________________________ _______________
signature title date