This agreement is to confirm our understanding of the terms and objectives of our tax services engagement and to clarify the nature and extent of the services we will provide. In order to ensure an understanding of our mutual responsibilities, we ask all clients for whom returns are prepared to confirm the following arrangements.
We will prepare your federal and state (if applicable) income tax returns from the information you furnish us. In addition, as necessary we will perform the required tangible tax returns. We will perform any bookkeeping necessary for preparation of the income tax return. You represent that the information you are supplying to us is accurate and complete to the best of your knowledge and you have disclosed to us all relevant facts affecting the returns. We will not verify the information you give us; however we may ask for additional clarification of some information.
It is your responsibility to provide all the information required for the preparation of complete and accurate returns. You are responsible for maintaining an adequate and efficient accounting system for the proper recording of transactions in the books of accounts, for the safeguarding of assets, and for the substantial accuracy of the financial records. You should retain all the documents, canceled checks, and other data that form the basis of income and deductions. These may be necessary to prove the accuracy and completeness of the returns to a taxing authority. You have the final responsibility for your income tax returns and, therefore, you should review them carefully before you sign them.
Our work in connection with the preparation of your income tax return does not include any procedures designed to discover defalcations or other irregularities, should any exist. We will not audit or otherwise verify the data you submit. Accordingly, our engagement cannot be relied upon to disclose errors, fraud, or other illegal acts that may exist. However, it may be necessary to ask you for clarification of some of the information you provide, and will inform you of any material errors, fraud, or other illegal acts that come to our attention.
If we discover information that affects your prior-year tax returns, we make you aware of the facts. However, we cannot be responsible for identifying all items that may affect prior-year returns. If you become aware of such information during the year, please contact us to discuss the best resolution of the issue.
We will use professional judgment in resolving questions where the tax law is unclear, or when conflicts exist between the taxing authorities’ interpretations of the law and other supportable positions. Unless otherwise instructed by you, we will resolve such questions in your favor whenever possible.
Most state income tax returns prepared by CPA Partners, LLC are required to be filed electronically. A recently passed federal law requires that all individual federal returns prepared by CPA Partners for the year 2010 and forward, and corporate federal returns for the year 2012 and forward, be electronically filed. As part of the electronic filing process, we will be sending you your copy of your tax return along with a form you must sign approving the electronic submission of your return. The approval form must be signed and returned to us before we may electronically file your return.
If you qualify, and you would like your tax paid of refund deposited electronically, please enclose a voided check for the bank account to which you will want the transaction to occur.
Pursuant to new standards prescribed in IRS Circular 230 and IRC 6694, we are precluded from signing a tax return unless we have reasonable belief that a tax position taken on the return will have a more likely than not probability of being sustained on its merit unless we disclose this tax position on a separate attachment to the tax return. However, under no circumstances will we sign a tax return with a tax position for which there is no reasonable basis.
It is important for you to know that the law imposes a penalty if a taxpayer makes a substantial understatement of tax liability. For individual taxpayers, a substantial understatement is when thte understatement for the year exceeds 10% of the tax required to be shown on the return and greater than $5,000. The penalty is 20% of the tax underpayment. It may be necessary to make certain disclosures in the return to avoid exposures to penalties. We will discuss tax positions that may increase the risk of exposure to penalties and any recommended tax return disclosures with you before completing the preparation of the return.
You should also know that IRS audit procedures almost always include questions on bartering transactions and on deductions that require strict documentation such as travel and entertainment expenses for business usage of autos, computers, and cell phones. In preparing your returns, we rely on your representations that we have been informed of all bartering transactions and that you understand and have complied with the documentation requirements for your expenses and deductions. If you have questions about these issues, please contact us.
Certain communications involving tax advice between you and our firm may be privileged and not subject to disclosure to the IRS. By disclosing the contents of those communications to anyone, or by turning over information about these communications to the government, you may be waiving this privilege. To protect this right to privileged communication, please consult with us or your attorney prior to disclosing any information about our tax advice.
Without disclosure in the return itself of the specific position taken on a given issue, we must have a reasonable belief that it is more likely than not the position will be held to be the correct position upon examination by taxing authorities. IF we do not have reasonable belief, we must be satisfied that there is at least a reasonable basis for the position, and in such a case the position must be formally disclosed on Form 8275 or 8275-R, which form would be filed as part of the return. If we do not believe there is a reasonable basis for the position, either the position cannot be taken or we cannot sign the return. In order for us to make these determinations we must rely on the accuracy and completeness of the relevant information you provide us, and, in the event we and/or you are assessed penalties due to our reliance on your inaccurate, incomplete, or misleading information you supplied to us (with or without your knowledge or intent), you will indemnify us, defend us, and hold us harmless as to those penalties.
You are responsible for making all management decisions and performing all management functions, and for designating an individual who possesses suitable skill, knowledge, or experience to oversee the tax services we provide. In addition, you are responsible for evaluating the adequacy and results of the tax services performed and accepting responsibility for such services.
It is our policy to retain engagement documentation for a period of three years for existing clients, after which time we will commence the process of destroying the contents of our engagement files. To the extent we accumulate any of your original records during the engagement; those documents will be returned to you promptly upon completion of the engagement. The balance of our engagement file, other than a copy of your income tax return, which we will provide to you at the conclusion of the engagement, is our property, and we will provide copies of such documents at our discretion and compensated for any time and costs associated with the effort.
If the income tax returns we are to prepare in connection with this engagement are joint returns, and because you will each sign those returns, each of you are clients. You acknowledge that there is no expectation of privacy from the other concerning of our services in connection with this engagement, and we are at liberty to share with either of you, without the prior consent of the other, any and all documents and other information concerning preparation of your returns.
In the event we are required to respond to a subpoena, court order or other legal process for the production of the documents and/or testimony relative to information we obtained and/or prepared during the course of this engagement, you agree to compensate us for the time expend in connection with such response, and to reimburse us for all of our out-of-pocket costs incurred in that regard.
If your tax returns are subsequently selected for examination by the taxing authorities, please be aware that you have certain rights in connection with any tax examination. Our tax return preparation fee does not include our representation on y our behalf at any tax examination. In the event of such government tax examination or inquiry we will be available upon request to represent you or respond to such inquiry. At that time, we will provide you a subsequent engagement letter to clarify the nature and extend of services we will provide regarding the tax examination or inquiry response and will render additional invoices for these services and expenses incurred.
We may also provide you with interim and year-end planning services on issues that you specifically bring to our attention in writing. Our ability to provide you with the appropriate guidance on such issues will be entirely dependent on the timeliness, accuracy, and completeness of the relevant information bearing on the issue which we will rely on you to provide us.
Although we may orally discuss tax planning issues with you from time to time, such discussions will not constitute advise upon which we intend for you for you to rely on for any purpose. Rather, any advice upon which we intend for you to rely, and upon which you will rely, will be embodied in a written report or correspondence form us to you, and any such writing will supersede any prior oral representations between parties on the issue.
This engagement agreement is contractual in nature, and includes all of the relevant terms that will govern the engagement for which it has been prepared. The terms of this agreement supersede any prior oral or written representations or communications by or between the parties. Any material changes or additions to the terms set forth in this agreement will only become effective if evidence by a written amendment to this agreement, signed by all parties.
Our fees for these services are based upon the amount of time required at a standard billing rates pulus out-of-pocket expenses. All invoices are due and payable upon presentation. A 1-1/2% monthly interest charge (18% per annum) will be added to the balances unpaid after invoice date.
By signing the engagement letter you are accepting personal financial responsibility for payment. If it becomes necessary to resort to any attorney or to other legal action for collection or enforcement of any terms contained herein, the client shall be responsible for any attorney’s fees or court costs and other expenditures attributable thereto.
If there are any issues you do not understand or there are other tax returns you expect us to prepare, please contact us in writing.
Please print and retain a copy for your records.
We want to express our appreciation for this opportunity to work with you. If you have any questions or need any additional information, please do not hesitate to call.
