ACCT 542 California State Northridge Tax Consulting Services Case Study

Assume you quoted a very reasonable fee and payment arrangement in exchange for likely settling the IRS’s $100,000 tax debt for $5,000 to $10,000 in a lump sum settlement payment.

Assume you also gently informed Jane of Jim’s tax problem and she took it well and was eager
to help him resolve his problem by providing him with up to $10,000 from her savings to settle
his debt.

Assume you also provided great advice on how to minimize the chance of an audit on Jim’s 2019
corporate tax return, and how to set a salary so as to avoid audit issues with the IRS in the future
with respect to his corporate tax return.

Assume you felt you bonded with them like you never bonded before with any other prospective
clients, and that Jane was eager to get started, but Jim said: “thank you so much; here is the $225.

we owe you for your time; you’ve given us a lot to think about and we need time to absorb it,
and look at our options about what you advised; we will be back in touch early next week with
our decision.” Two weeks pass. You try to follow up by e-mail and leave voice mail messages,
but you are being ignored by Jim.

1) What could have gone wrong? Did you do something wrong from a tactical or strategic point
of view? What was it, if anything?

2) What could you have done differently to potentially avoid this result?
3) Did you provide a valuable service at the meeting? If so, how can we measure the value?

4) Do you feel like you provided way more value than the $225 you collected? Why,
specifically?

5) Do you measure the value you provided based on your time invested and your hourly rate, or
based on the likely result you can achieve for the client?

6) Can you, and should you, measure the value you can provide based on the client’s perception
of the value of your work you will provide?

7) In this case, which specific problems identified by Jim would provide the highest value to him
if you performed those tasks or solved those problems?

8) How valuable, measured in low, medium or high, is your ability to deliver the bad news to
Jane of Jim’s $100,000 pre-marital tax liability?

9) How valuable is your ability to manage her reaction so that she deals with it well and the
relationship is not materially affected in a bad way?

10) What could have been the result if Jane was informed of Jim’s tax problem by a CPA that
did not have the same level of people skills, compassion and empathy that you exhibited to
achieve the positive outcome with Jane? Could the marriage have been in trouble?

11) How much would Jim “pay” today to avoid a breakdown of the marriage? Is it fair for you
to measure your services value that way? Is it ethical?

12) If it doesn’t seem right to put a dollar value on that, should we at least explore with Jim the
possibility that severe turmoil can be caused in the marriage? Should we consider outside help
of a marriage and family therapist? If so, why?

13) Do you think you and Jim could have come to an agreement on fees before you informed
Jane of the tax issues (and provided the huge value of helping them maintain favorable marital
relations)? If so, what will you do next time you have to agree upon fees and there is a lot of
value you can deliver to a client’s situation?