When taxpayers elect to use a refund transfer product, and then the refund is offset by the IRS or garnished for any reason before being funded, most preparers count those prep fees as lost, since they weren’t paid by the bank product. However, that’s not the case and those fees can and should still be collected.

Each professional tax software and refund transfer bank offers reporting to see which clients have funded, and which clients are still unpaid. This is a good time of year to reach out to those clients who have not funded and find out if there is anything that can be done to rectify the situation. Some clients may have gotten a letter from the IRS that scared them and they never reported it, which can be fixed easily and allow the refund to come in which means the prep fees come in as well. Also, if the taxpayer purchased audit assistance then they can contact their audit protection company and they will have specialists that can walk the taxpayer through the case.

It’s also prudent to keep in touch with clients around this time since scammers are very active when they know that the IRS will be sending letters. Often times they will copy the format of correspondence which can be difficult to identify. Ian Gardner, of Sigma Tax Pro reminds preparers that, “You are the one they trust with their taxes and they should know you’re not just there for them one month a year, but even after the season is over.” By making yourself available, clients are more likely to use the knowledge and training of a professional to prevent unwanted scams.

Another reason to attempt to get unfunded clients funded is to raise the preparers funding rate, which is a calculation used by refund transfer banks to determine eligibility for certain programs. In addition to funding rate, banks also consider the amount of prep fees earned by an office, which is increased when additional returns are funded. These programs include pre-season loans, in-season fee assistance, and taxpayer refund advances.

Sigma Tax Pro provides a full range of essential services for tax pros. This includes industry leading software solutions as well as technical support, tax preparation support and client retention strategies. Sigma Tax Pro specializes in helping tax preparation firms expand their businesses, open new offices and increase their client base.

About Sigma Tax Pro

Sigma Tax Pro provides a full range of essential tax software services for tax professionals. This includes industry leading professional tax software solutions as well as technical support, tax preparation support and client retention strategies. Sigma Tax Pro specializes in helping tax preparation firms expand their businesses, open new offices and increase their client base.