Tax Season Found Money with Jeffrey Schneider

Jeffrey has a tax and accounting service, but he also has a separate company that helps taxpayers with tax resolution and solving their IRS problems.

[3:40] When Michael presented the Audit Protection Plan, the first thing that Jeffrey thought was “free money.”

[4:30] Michael originally got into the tax audit protection business when he was running his tax resolution business. He was running a separate business of his own selling audit protection plans that generated over $9 million in revenue over three years. It was an opt-in plan at first.

[5:30] In an opt-in plan, you have to choose to take the option to join the program. With an opt-out plan, you are telling the client they are enrolled and they have to choose to opt out. The way that Jeffrey structures his audit protection is opt-out.

[6:45] Since implementing the plan in 2017, Jeffrey offers the plan to every single client but his practice is a bit atypical. About 80% of the people that turned it down were over the age of 75. He still has a very high acceptance rate for his clients and the program has generated over five figures every single year so far. The retention for the program has been over 96%.

[9:40] Jeffrey made more money this tax season than in the past because of two factors. The first is that he has raised his fees across the board and the second is that many of his clients are self employed in some form and those clients are automatically enrolled in the Gold plan.

[10:50] The Audit Protection Plan covers three major things: responding to notices after you file the return, audit representation in the event of a full-blown audit, and tax identity theft. It’s also customizable and has three tiers of membership.

[13:40] When Jeffrey sends out the engagement letter, he includes a nicely designed brochure that explains the plan and conveys its benefits. He positions it as a cheap insurance plan. The brochure is also present in his waiting room and conference room so new clients always see it. Since it’s automatically included on the invoice, he has had an average 90% acceptance rate.

[15:50] The Audit Protection Plan system includes all the documents you need to implement the plan in your tax resolution business.

[17:25] You’re charging them on the invoice but it’s not mandatory. If they opt out, the charge is removed. People make mistakes, and the plan is an easy way for your clients to protect themselves from small but costly errors. The plan is also easily adjusted to whatever your existing fees are. The more you charge for your services, the more you can charge for the Audit Protection Plan.

[22:45] For the first two years, Jeffrey kept the plan priced at exactly what Michael recommended, but he raised his prices until people complained. The value of the plan still far exceeds the expense for the client.

[24:00] You make so much more money by having the plan in place than not having the plan and then charging people separately. Before the plan, Jeffrey would often work for free providing similar services but he tracked his accounts very carefully. The costs involved in handling the services were not even close to the amount of revenue generated by offering the protection plan.

[27:15] You are not splitting the proceeds of the plan with anyone, unlike many out of the box tax software programs.

[28:05] Jeffrey is going to make about $12,000 net revenue off the 110 tax returns he will do this year. Imagine how much you could make if you had a business that processed 200 or 300 tax returns.

[30:30] Jeffrey’s Gold plan includes a couple of extra features beyond what Michael recommends, including additional schedules and expedited response times.

[31:30] The people who don’t want the plan are required to sign a client disclosure form that explains they will pay the hourly rate for any work done outside the scope of the return. Jeffrey is getting paid 100% of the time whenever he does any work outside the preparation of a return. He also includes that in his engagement letter.

[33:45] If there is any place where it is particularly hard to sell the protection plan, Florida would be it. Jeffrey has found tremendous success with the Audit Protection Plan, even so. It’s a simple program that’s easy to implement and very effective, even in a difficult market.

[38:50] Jeffrey is probably in one of the toughest markets in terms of professional fees. If he can implement this system, then you can too. You’re clients want you to protect them. Notices and identity theft are the main selling points for Jeffrey’s business.

Mentioned in this episode:
SFS Tax Problem Solutions
Free Online Master Class
Michael Rozbruch's Tax & Business Solutions Academy