Action Item: Issue document deadline to all extension clients

Most of the frustration stemming from tax clients that procrastinate can be eliminated via proactive client management.

Simply put, you set the rules of the engagement, not the client. If the client doesn’t want to do business with you on YOUR terms, then you encourage them to take their business elsewhere.

One of the most important client management systems to have in place is one that addresses tax return preparation clients that are on extension. Just because the IRS says Oct. 15 is the extension deadline, doesn’t mean it needs to be¬†your extension deadline. In order to make your life easier and more enjoyable, I’d encourage you to make your own extension deadline much shorter, such as mid-summer. In fact, there are some tax firm owners that refuse to do returns on extension at all. You can do that, too.

Action Steps

  1. Determine your firm’s own extension deadline, one that will bring greater peace, joy, and harmony to your own world.
  2. Compile both email and postal mail addresses of all clients with a filed 7004 or 4868 that you haven’t filed a return for.
  3. Send both email and snail mail.
  4. In the message, thank them for being a client, and let them know that you need to have ALL documents for completing their tax return into your office by X time on Y date. For example, all documents must be in your possession by noon on June 1, otherwise you will NOT be able to complete their tax return for them.
  5. If you do choose to accept documents after that date and complete the return, specify in the letter that such services will incur an additional surcharge, a “Rush Processing Fee”, if you will, of a significant amount. $200 to $500 is a pretty typical such surcharge for a 1040 around the country.
  6. Repeat this process about two weeks before your self-imposed deadline, with a “second notice” email/letter.
  7. Relax, let the work come in as it may, and instead of stressing out during extension season, spend the time focusing on more lucrative work, such as tax planning and advisory.

If clients don’t get information to you on time, it’s not your problem. There is no legitimate reason (other than a very large surcharge) to bend over backwards, lose sleep, stress out, and tick off your family just to get a return done for somebody that doesn’t respect your time and professionalism. Tens of thousands of tax professionals already set these deadlines and rush processing charges, and it makes your life better and your business more profitable.

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