Mining Tax Clients for New Business Opportunities


Any CPA who does personal income tax returns can relate to the frustration of waiting for clients to open envelopes and organize data during the tax return informational interview. Don’t let this time go to waste.


For many firms, the largest volume of clients is in tax return services. Using the tax return interview to gather information is one of the most effective ways to provide benefits to your clients while increasing revenues. Keep in mind, however, your obligations under IRC § 7216 (see sidebar, “Use Consent Under § 7216,” below).



Inform clients of your capabilities in a way that makes them confident that you are there to help, not simply to make a sale.


Start by looking at the previous year’s return and any notes you took when it was prepared. Jot down whether the client is nearing retirement; thinking of starting a business; has children who will be starting college; has stock options; has a will; or might be receiving an inheritance in the future. Then prepare a brief meeting agenda—it doesn’t have to consist of more than three or four bullet points. When you meet with the client for the tax return interview, bring these up and ask if there are any changes or whether the client wants to discuss these issues now or later.


Jot down notes for a follow-up. At a minimum you can use the notes when you prepare for next year’s meeting. If the client requires special expertise, you can recommend other professionals in your firm to perform additional consultations.



At the meeting it is important to initiate conversations that will make clients comfortable sharing what is on their mind. Listening is a strategic strength. Find out their interests and long-term goals, not just financial goals. When clients describe a problem or something bothering them, they usually don’t fully describe what they mean. Don’t be afraid to seek clarification. Most important, show empathy and offer to help.


Provide introductions and referrals. What friends and associates do you have in common? You likely have more useful information at your fingertips than you realize. A callback or e-mail to pass on information creates a bond that you might be able to use later to help them or yourself.


Share services you perform in the client’s field. If the client works for a small manufacturer, distributor or advertising agency, let him or her know that you have other clients who are small manufacturers, distributors or advertising agencies. Tell him or her about your consulting services in those areas, including cost control, inventory control or exploiting bank finance opportunities.


If the client works in a closely held family business, tell him or her about your expertise in advising families in succession planning or training younger family members in basic business techniques; how you can help the owner develop exit strategies, including preparing the business for sale; or how you can perform due diligence if the owner is thinking of expanding by buying a competitor or entering a new market.


If the client is a higher-level executive, tell him or her how you can help with employment contracts or obtaining top-level perks, such as stock options or restricted stock.


Discuss saving and investing goals. When you see the client’s interest and dividend 1099s, determine why he or she chose those investments, and based on those responses, mention possible alternatives, including tax-exempt bonds, annuities or preferred stocks. Discuss goals, such as how concerned the client is about educational funding for his or her children or grandchildren, as well as the client’s own retirement and financial security when he or she no longer works.


If the client is supporting a relative, has the client made adequate arrangements if the client dies prematurely? Does the client have the right documents, such as a will, trusts, and guardianship payment or “allowance” arrangements?


When was the last time the client reviewed his or her IRA and 401(k), 403(b), pension, and similar plan beneficiary designations, if ever? In some cases, doing so could be more important than having a will. You could be the right person for the client to speak to or the catalyst to have these items put in order, so the client can accomplish what he or she really wants.


You can help charitable clients make sure that adequate funds are left to their favorite organizations in the right manner or make them aware of alternative or better ways of making current contributions.


If clients are over- or underwithholding taxes, you can help them adjust these amounts. Also, you can review the underlying circumstances causing those situations and, perhaps, beneficially alter them.


Clients with household employees and nannies can be walked through the proper requirements for reporting their wages.



A checklist can enhance any routine client meeting (see Exhibit 1). (Click here to download the checklist in Microsoft Word.)


Besides making clients aware of their needs, the checklist presents you as the professional who can help them in a wide range of services—not just tax preparation and compliance. It also signals to the client that you are looking for additional business and allows you to mention that, if he or she has friends or associates in similar circumstances, referrals would be appreciated.


After you’ve gone over the checklist with the client, give him or her the original and keep a photocopy for your records. Then follow up with the client after tax season to set up a meeting in the summer—or sooner for more urgent matters. Some issues can be life-altering and should be approached diligently and responsibly.


Calling an issue to the client’s attention could be a great service regardless of whether you gain revenue from it. In the end, it is the client’s choice to accept or reject additional services. However, many times awareness leads to action.



These opportunities can come from anyone in the firm. Therefore, it is important for each staff member to know how to identify additional client needs, how the firm can help, and where leads should be directed for follow-up. A matrix such as the one in Exhibit 2, customized for your firm, can be a useful tool for staff. Staff also need to be aware of situations where the client might need assistance outside the firm’s capabilities. (Click here to download an expanded version of this list.)


You cannot develop a cross-selling culture with a single seminar or lunch-and-learn session. You will need to continually take time to instruct staff on specific types of opportunities and emphasize the importance of properly identifying and responding to them.


An effective way to instill this client service attitude is to make staff aware of situations on client accounts they work on. Share with them how the firm can approach or solve the clients’ issues and bring staff into meetings with clients where these issues will be raised or discussed.



The following are possible approaches to bring a new level of service to clients you’ve identified for follow-up:


Hold a post-tax season info-sharing meeting. Hold a post-tax season staff and partner meeting to share and strategize how to follow up on leads discovered during tax preparation. This is another way to develop additional client services and identify who should approach the client and teach staff. In some cases, offering a new service will be more important to your long-range strategy for serving multiple clients than the immediacy of a single client need that has driven the discussion.


Upgrade key tax clients. Some of your tax preparation clients could be upgraded to include pre-year-end planning and projections services. There’s nothing like some advance tax liability minimization planning to get clients excited—and prompt them to tell their friends—about having a good CPA. This should increase billings and help your client be better organized when it’s time to prepare his or her return.


Invite tax clients to an annual financial planning seminar. Hand clients personal invitations or extra handouts from past or forthcoming seminars. This is much more effective than mailing invitations alone months later. This raises awareness of your (or your firm’s) expertise and gives clients some useful guidance. Even if you don’t put on a seminar or develop your own material, many inexpensive financial planning booklets can prominently feature your firm’s name. Booklets are also available on myriad other topics. Making these available to clients can instantly upgrade your image.


Invite tax clients for a fiscal fitness checkup. There’s only so much you can do during a tax return interview, so consider asking the client for a follow-up meeting. Tell the client that you are reviewing his or her financial situation and that you feel a high-value, low-cost consultation would be a helpful way to examine his or her allocation and goals to make sure they match up. Quote a fixed amount for a 90-minute meeting.


THE 1/20th RULE

The 1/20th rule sets your goal to upgrade the top 5% of your tax clients to additional services. These should always be services clients need, not scenarios contrived solely to create additional work for you.


You will have to call far more than 1/20th of your clients to get meetings with 5% of them, but it will be worth the effort. Also, even if a client declines the additional services, they now know your full capabilities and will make you their first call if they decide to address these issues. Also, you can use their declines to solicit referrals. Asking for referrals is the most effective way to get referrals.



  • Click here to download a Microsoft Word version of Exhibit 1, Additional Services Checklist for Clients
  • Click here to download an exanded Microsoft Excel version of Exhibit 2, Matrix to Track Cross-Selling Opportunities



Use Consent Under § 7216

IRS rules effective Jan. 1, 2009, outline tax return preparers’ duties to safeguard taxpayer information from unauthorized disclosure or use. IRC § 7216 imposes criminal penalties on the unauthorized use of taxpayer information.


The requirements are closely tailored to the type of information, the party using it, and whether that party is inside or outside the United States. Anytime you consider using tax return information for a purpose other than preparing a tax return, you should review your firm’s client consent forms and ensure that the forms cover the type of use you are considering and that they are up to date.


For additional information prepared by the AICPA Tax Section, visit Also, check the IRS website for information and updates at


Source: “Disclosure Consent Under § 7216,” JofA, Oct. 2009, page 22.





  Share, don’t sell. Inform clients of your capabilities in a way that makes them confident that you are there to help, not simply to make a sale.


  Promote cross selling. Continually take time to instruct staff on specific types of opportunities and emphasize the importance of properly identifying and responding to them.


  Follow-up tactics to consider include: Hold a post-tax season info-sharing meeting within your firm; upgrade key tax clients to pre-year-end planning and projections services; invite tax clients to an annual financial planning seminar; and invite tax clients for a fiscal fitness checkup.


  Upgrade 1/20th of your tax clients to additional services. These should always be services clients need, not scenarios contrived solely to create additional work for you. Realize that you will have to call far more than 1/20th of your clients to get meetings with 5% of them.


Edward Mendlowitz ( is a partner with WithumSmith+Brown in New Brunswick, N.J.


To comment on this article or to suggest an idea for another article, contact Matthew G. Lamoreaux, senior editor, at or 919-402-4435.





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