Tax Resolution cases, due to 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 where I got a client about eight months ago. When I had my initial consultation, they were a perfect candidate for an Offer-In-Compromise (OIC). They had a payroll tax situation, and now we're eight months into the case. I told him, at our 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. As I'm putting the package together with all the source documents several months later, I realize the client doesn’t qualify for an OIC”.

After he 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. I also learned this lesson the hard way and I want to save you from making the same mistake.

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 cheat sheet that gives you all the information you need to know that is requested on the formal IRS Form 433-A in order to diagnose the case. After you review the information, you give your prescription to the problem and quote the fee via an 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 the date that mini-433A and explain to them if there is a change in the information they gave you, that affects the outcome of their case. If an issue comes up eight months from now and the client is unhappy, you can produce the mini-433A that 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. This what you used to quote fees.  If the client left out information, or that information changed it affects what he does and does not qualify for.  He cannot be upset at what you told him eight months prior, because your diagnosis was based on the information he 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, HE provided he will not be asking for a refund. Also, had Mike managed the client’s expectations throughout the pendency of the case he wouldn’t have to have this uncomfortable conversation.

You must take every opportunity you have throughout those eight months to talk to the client.  I have a 14 Touch Point Client Assurance System, where you give the client case status updates every 28 days. Every time you contact the client, you are managing their expectations. Even if your contact is only to let them know you are still in a holding pattern with the IRS.  This lets them know that you have not forgotten about their case.  In doing so you have met the most basic expectation that you will keep them informed of what is going on with their case. Don't wait for eight months to go by and say, "Hey Joe, you don't qualify for an offer because of X, Y and Z." If the client experiences radio silence from you for months at a time and you only check in to deliver bad news, they are going to wonder why they are the paying you and what are you doing to resolve their case.  Once you can produce a dated and signed mini-433A from your initial meeting, use that to have an intelligent, informative discussion with your client about why they don't qualify for an OIC and what their options are to resolve their case now.

Another reason why it is important to go through the mini 433A and get the client’s date and signature is because the information a client gives you in the initial consultation may be accurate at that time but can change over time. They may have disclosed everything about their financial situation and given you a complete picture of all their assets, but that information, though correct at the time, can change.  For example, a client tells you that the value of his home is $200,000 and he has a mortgage of $160,000 on it. Eight months pass and the new value of the house is $275,000 due to the current state of the real estate market.  He still has the same outstanding mortgage of $160,000, but because of the increase in the equity of his real property he is no longer a candidate for an OIC. Now because you have in writing his representations to you eight months ago, that said the house was only worth $200,000, you can show that it was not your error but that the information had changed.  The increase in his home’s value is what changed his 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 that if the information changes so will the diagnosis and outcome of the case.  Remember to fill out the mini-433A and get the client’s signature.  Doing so will help you manage your client’s expectations and set the tone for a good working relationship.

For more information about how to manage client relationships as well as information on sales, marketing, and everything you need to know about running a lucrative tax resolution business keep following the blog and our social media posts.