Last week I moderated an Accounting Today Webinar, sponsored by SurePayroll, on the 2014 Tax Season Toolkit.

The response to the speakers, Chuck McCabe of The Income Tax School and Cathy Mueller of Peoples Income Tax, was enthusiastic, so much so that there wasn’t time to address all of the questions from the audience. For the sake of the smaller, independent tax preparers, here are some of the questions, along with the responses from the speakers.

Question: How do you charge for tax preparation?

We base our fees on the number of forms required rather than the time it takes to prepare the return, since different tax preparers have different levels of productivity. This is fair to the client, and we don’t want the client to think that we charge what the traffic will bear. The fees are calculated as part of the preparer program.

Question: Do you use engagement letters?

We do not use engagement letters. However, our triple guarantee of accuracy, year-round service and satisfaction includes terms that essentially limit our liability. It includes limitations on our responsibility for penalties and interest and for errors that we make, and clearly states that we are not responsible for tax otherwise due from the taxpayer.

Question: What do you mean by “exit interview,” and how important is it?

Once the return is prepared, the exit interview is part of the process to explain to the client what you did to either increase his or her refund or minimize the balance due. It’s the opportunity to express to the client the value in coming to you for having their tax returns prepared, so they understand everything that’s being done and how you helped them. If you don’t tell them how you helped them, they won’t know.

The experience is more important to the taxpayer than the physical piece of paper they get back, so it’s important to give them a positive experience. It also gives you the opportunity to explain your guarantee, your year-round service, and what happens if they get a notice from the IRS. They need to understand that they should let you know immediately if they receive any communication from the IRS or a state agency so you can deal with it. It also gives them piece of mind knowing that you stand behind the work you did.

Question: Can you require your employees to sign an employment agreement?

Of course. If they don’t want to work for you under your terms, you don’t have to hire them.

We believe that it’s really essential to have an employment agreement, among other reasons, to protect against employees who leave from taking clients with them. The most important parts of the agreement are the non-compete, non-solicitation and confidentiality provisions. The agreement should include terms of employment, duties, responsibilities, compensation, terms of employment and various other legal provisions. Remember that what’s legal in one state may not be in another state.

For the non-compete provisions to be enforceable beyond the term of employment, they must be reasonable in terms of not restricting one’s livelihood, distance and duration. In California, non-compete agreements, regardless of reasonableness, are not enforceable beyond the term of employment, but are enforceable during employment.

Question: Can you explain your tax return checking methodology?

Our policy is that every preparer checks one return for everyone that they prepare. It’s important because anyone can make a mistake, and not everyone knows everything about tax preparation. The other benefit is that employees learn from one another. Sometimes someone who is new will see something that experienced preparers gloss over.

Question: What’s the most effective way you’ve increased referrals from current clients?

The vast majority of new clients are referrals, so word of mouth marketing is the most important form for us. The most important thing is to ask for them. People think that you are so busy during tax season that you’re not interested in new clients. We ask our preparers to give each client a “refer a friend” card during the exit interview. The person they give the card to will get a discount when they come in to have their returns prepared, and the client who makes the referral receives $20 for their effort.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access