PRACTICE CORNER FROM THE
Do You Make This Mistake in Your Initial Consultations?
Tax resolution cases, due to the IRS’s workload, can take up to 12 months or longer to resolve. A lot of things can change regarding the taxpayer’s financial situation during this time versus when you first saw the client. Recently, I had a coaching call with one of my Platinum Mastermind Members. He said, “Mike, I have this situation with a client who retained me. When I had my initial consultation, they were a perfect candidate for an offer in compromise (OIC). They had a payroll tax situation, and I told him at our initial
If the client left out information, or that information significantly changed, it affects what they qualify for. They cannot be upset at what you told them months prior because your diagnosis was based on the information they provided at the time. The date and signature on the mini-433A proves what he told you at the time you diagnosed the case. When the client realizes your work and diagnosis were based on information they provided, they won’t ask for a refund. For example, a client comes in for their initial
meeting the range of the settlement he could expect based on the information he represented to me and my historical experience with cases such as his. But now, we’re eight months into the case, and as I’m putting the package together with all the source documents, I realize the client doesn’t qualify for an OIC.” After my member made that realization, he had to have a very uncomfortable conversation with the client. The client got upset and asked for a refund. All this could have been avoided.
consultation and tells you the value of their home is $200,000, and they have a mortgage of $160,000. Eight months pass, and the new value of the house is now $275,000. They still have the same outstanding mortgage of $160,000, but because of the increase in the
equity of their real property, they are no longer a candidate for an OIC. Because you have in writing their representations to you eight months earlier that said the house was only worth $200,000, you can show it was not your error but that the information had changed. The increase in the home’s value is what changed their eligibility for an OIC. You produce the dated and signed mini-433A and review that with the client, which formed the basis of your initial diagnosis. That signed and dated document helps you manage your client’s expectations. It gives them the responsibility of providing you with accurate information to properly diagnose the case and lets them know if the information changes, so will the diagnosis and outcome of the case. Remember when you fill out the mini-433A, always get the client’s signature and have them date it. Doing this one thing will help you manage your client’s expectations and set the tone for a good working relationship.
The way to avoid finding yourself in a similar situation starts with the initial consultation. During that meeting, you fill out what I call a “mini-
433A.” It’s a one-page sheet that gives you all the information you need to know that is requested on the formal IRS Form 433-A to diagnose the case. After you review the information, you give your prescription to solve the problem and quote the fee that goes into the engagement letter. A lot of practitioners do take the client through the mini- 433A, but often, they leave out one important step. You need to get the client to sign and date that mini-433A and explain to them if there is a change in the information that they just represented to you, during the pendency of their case, it will most likely affect the outcome of their case. If an issue comes up months later, and the client is unhappy, you can produce the mini-433A the client dated and signed. This is what the client represented to you at the initial consultation. This is what you used to diagnose the case and quote fees.
–Michael Rozbruch
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