14 Jan 3 Rules for Asking Great Tax Return Questions
Asking clients great questions is central to Ruthlessly Efficient Workflow Management (R.E.W.). Great client questions can save hundreds of hours of time during tax season and prevent projects from falling behind schedule. Here’s an example of questions done badly.
We sponsored a table at a local group’s presentation. The group’s event coordinator asked me this question.
“What are the names of the people, who will be sitting at your table?”
I responded with the names, and the next day, he replied, “What are the company names as well?”
So why in the hell didn’t he ask me for that with his first question? Now we’ve had two e-mail exchanges when only one was necessary. I’ve been inconvenienced, and since I’m the most important person in the word (to me), I’m not happy. He’s a banker by profession. So we can’t expect much, but he looks like an idiot to a referral source – me.
CPA, accounting, and tax firms frustrate clients this way all the time. There are three rules for asking clients great questions.
Rule #1: Ask for what you really want – all of it. Here’s a perfect example from a newbie tax preparer.
“Did you pay any personal property taxes in 2014?”
What’s wrong with this question? He asked a yes / no question when he really wants the amount of personal property taxes paid. Here’s a slightly better way to ask this question – although only slightly better.
“Did you pay any personal property taxes in 2014? If yes, how much?”
This sounds perfectly reasonable in that he asks for the amount and recognizes that the answer might be zero. What’s wrong with this wording? Many, if not most, clients won’t read past the first sentence. This wording will still elicit many yes / no answers. Here’s a far better way to ask.
“How much in personal property taxes did you pay in 2014, if any?”
We ask for exactly what we want in the beginning of the question, still recognizing that the answer may be zero.
Rule #2: Can the jargon. Write like a normal human being, not a CPA moonlighting as a lawyer.
Here’s a common question newbies ask.
“What was the adjusted basis of the Ford stock you sold in March 2014?”
Do clients know the meaning of “basis,” let alone why you would adjust it? Is the Pope a Baptist? Absolutely not. I still didn’t know the meaning of adjusted basis five years after starting my practice. You could argue I still don’t. Let’s try this again without the jargon.
“How much did you pay for, and when did you buy, the 100 shares of Ford stock you sold in March 2014?”
If you provide the page from the 1099-B showing the stock sale, you get extra credit. This way the client knows that he actually sold stock, and won’t waste your time telling you that he never owned Ford stock, which he certainly will tell you otherwise.
Rule #3: Explain why you need information.
For deductions and income, this is mostly unnecessary. Clients like deductions, after all, and reluctantly understand that they have to claim income. However, we explain “why” when we ask for information and suspect a client may offer some pushback. When we ask corporate tax clients for items like bank statements and credit card statements, we use the following wording.
“Please provide the December 2014 bank account statement for your business checking account. We need this to prepare a balance sheet, which is a required part of a corporate tax return.”
This wording prevents a client from asking if the information is really necessary and saves you a round of additional questions.
On March 28th, drafting perfect tax return questions is a dream. Before tax season weighs you down, standardize the questions you commonly ask. Before we used Clarity Practice Management, we put our standard questions in a shared Word document. That works, even if a little inconvenient.
CPM gives us a list of standard questions by project type which we can select by just clicking on the desired questions in the list. We created the list out of tax season. No more endlessly typing the same question or copying and pasting into e-mail messages. Your CPA, accounting, or tax practice management system should be able to do the same.
Standardizing the asking of excellent questions can save your firm hundreds of hours and speed your project turnaround, which will delight your clients. Not to mention the very real benefit of preserving your sanity during tax season.
Thanks for reading!
Frank Stitely, CPA, CVA
Clarity Practice Management