Roz Marketing - March April 2020


Charging for Additional Services for Tax Resolution

Question: What do you do after you’ve been retained on a flat fee and discover there’s additional work to be performed that wasn’t included in your original engagement letter? Answer: Cases can be sold in one or two phases. If you sell in phases, phase one includes transcript investigation, and phase two includes compliance and the permanent resolution, such as an offer in compromise (OIC), installment agreement, penalty abatement, or currently not collectible status. When you have a client who has two years of unfiled returns and you’ve taken them through a mini 433-A in your consultation and determined they’re a great offer in compromise candidate, you should get retained for the entire case right then and there on a flat fee basis. However, what do you do when you discover while you’re working the case and analyzing the transcripts, “Hey wait a minute here, there’s another three years of unfiled returns?” That’s an additional three years of unfiled returns that you haven’t been contracted for that must be done prior to the submission of the OIC. Well that’s an “additional service fee” that you need to be paid. When you use my recommended engagement letter, you’re covered for this. You need to go back to the taxpayer and inform them that these three years of unfiled returns need to be prepared and filed before you can prepare, submit, and negotiate the OIC you’ve been retained for. The way to do this correctly is to include in your engagement letters a paragraph that states your flat fee is predicated upon the representations at the time and what the taxpayer told you. And if additional services are required to permanently resolve your taxpayer’s problem, additional fees are appropriate and will be added to a revised engagement letter. I did this for 16 years, and this additional service piece represented millions of dollars in extra income. Said another way, about 30% of our total revenue was comprised of additional service request fees. So, don’t be bashful. Don’t be shy to go back to your client to request payment for additional services you haven’t been

contracted for initially. If you don’t know how to approach the client when it comes to requesting additional services, use this transcript: “We were contracted to do two years of tax prep for 2014 and 2015 and do your offer in compromise. After we got your tax transcripts and records of account from the IRS, it’s apparent that there are another three years that haven’t been filed, so we need to get those returns filed because we can’t do the offer in compromise until you’re in full legal filing compliance, and those three years are going to result in X amount of additional tax liability, penalties, and interest. And what we’ll do is we’ll include the fees for this in your remaining future recurring payments. We’ll spread that over the six payments that you’re paying us or the four payments or the eight payments, etc.” If you say it this way, it’s not a big deal for your client, and you’ll be getting paid for the extra work you’re going to do. Make sure your engagement letter agreement has a paragraph permitting you to go back for additional services. Use my engagement letter that’s found in the “Easy Template Library” on the membership site. You don’t want to be caught with scope creep because you’ve boxed yourself in on a flat fee. Flat fees are great. That’s what you need to do, but you need to cover yourself with a paragraph in your engagement letter agreement that lets you go back and get paid for additional services.

–Michael Rozbruch

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