8 Ways to Help Tax Clients Who Owe But Can’t Pay by the April 15 Deadline

can't pay by tax deadline

Clients who owe tax but can’t pay by the April 15th deadline are not the only people who can suffer pain from this unpleasant reality–these clients also present major challenges for the tax professionals who serve them.

Tax professionals who don’t use effective strategies to help these clients may experience highly undesirable results, such as:

  • Clients won’t let us finish the tax return and go to the next client needing our help.  We burn time that we don’t have. By burning up our time, they burn up our money by monopolizing our highest-earning hours.
  • Clients won’t pay the tax professional for the service rendered.  “I’ll come back later”–often, they don’t.
  • Clients may “panic pay” tax due and do something dumb (e.g., drain 401K to pay tax bill), compounding the problem and even potentially blaming the tax professional for the problem getting worse.

Here below are 8 strategies tax professionals can potentially use to navigate these treacherous waters.

Hopefully a few of these strategies can make your deadline performance even stronger. The “two-headed monster” goal, as always, is to 1) provide excellent service to clients while also 2) enjoying excellent earning power for yourself.

Keep in mind that these are only suggestions from your fellow tax professionals, stuff that has worked for your peers and might work for you, and you always should make all of your own decisions about which strategies work best for your clients and you.

  1. Consider setting “scary” expectations at start of tax preparation process. For example, “Rough numbers here, you’re looking at $30,000 tax due,” and allow the client to absorb a truly painful number. This way, the eventual reality (after you’ve really “gone to work” for the client) won’t look as bad, making you look better.
  2. For clients who aren’t able to accept the results, rapidly move into “extension filing mode” and let the client know “we can work on this later when we have more time to strategize.” Now is not the time to play a game of “20 Questions.”
  3. Whenever possible, get yourself (the tax professional) paid now for any work you’ve already done. For example, if a return is done but you’re still filing an extension, get paid now for the full tax prep work that has been done up until this point.
  4. Know the minimum installment agreement payment off the top of your head. General rule of thumb would be to divide the balance due by 72 months (6 years) to arrive at the likely minimum monthly payment.
  5. For clients who want or need an installment agreement, have them go online and do it themselves. Send them the link from the IRS website (rather than submitting Form 9465 with the tax return, which, for many clients, causes them to mistakenly assume that you are responsible for their installment agreement).
  6. Recommend that clients pay off the state first and entirely, especially in states where state tax collectors are extremely aggressive, such as CA and NY.
  7. Empathize with client’s negative emotions–stress, distress, etc.–while simultaneously refusing to make someone else’s problem your problem. Over the long-term, clients best benefit when we treat them like the adults they are, and allow them to take responsibility for their own lives.
  8. For clients who wish to reduce the amount of tax that they owe, offer tax planning service, and set an appointment to review options for tax reduction in the upcoming year.

    Special thanks to Daren Gress at Gress Tax Service, owner/operator of one of the best tax preparation and consulting offices in Orange, California, for sharing his wisdom in this area.

    Thanks also to all Pronto Tax School Dream Team Members who participated in this discussion, which was part of our “Mastery Mondays” Mentor Support Sessions, which occur each Monday as part of our Dream Team Membership Program.

    To evaluate Membership in the Dream Team Program, click here to see what we do for our Dream Team Members and what all is included with a Pronto Tax School Dream Team Membership.

    It’s almost April 15th, let’s enjoy the ride, and let’s enjoy the process of doing our very best for every client we serve.

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