Note: The following standard engagement letter is used by me in the preparation of individual engagement letters for different clients and is not an offer to provide any services to anyone or everyone who happens to be reading this web document. It is included on my web site for the convenience of those who have a serious interest in my services. If I agree to assist a specific taxpayer, the terms of the specific engagement letter will be modified to fit the requirements of that client.
Engagement Letter for
Tax Return Preparation Services Month 00, 2004 Name Address City, State, Zip Dear __________: Thank you for your interest in my tax return preparation services. In order to minimize any possible misunderstandings as to the scope of the work that you want me to do for you and the payment for such services, this Engagement Letter sets forth our understanding regarding the assignment and constitutes our agreement as to the scope of the services and the fees for such services. Please be sure that this letter does in fact reflect your expectations before returning a signed copy to me with the requested retainer. You have asked me to 1. Help you prepare the forms required for a foreign trust I have joined with three other CPAs who do international tax compliance (preparation) work and we work closely together to assist each other in providing the best possible services for out clients. Each of us has different experiences and strengths with respect to different aspects of international tax law. By signing this engagement letter, you are authorizing me to share your tax information with my colleagues to the extent that I consider that to be in your best interest. In order to do the work described above, it may be necessary to reconstruct the history of any related transactions (such as investments in foreign entities) in order to determine the tax cost (basis) of any applicable assets. If you have a local accountant available, it would probably be less expensive to have him or her do that work. If not, I will attempt to locate a tax accountant who is able and willing to assist you and to work with me in organizing your financial transactions. That may involve my using the services of a CPA in the Kansas City area or using the help of one of the other members of the International Tax Compliance Group mentioned above. By signing this engagement letter, you are authorizing me to share your tax information with other CPAs to secure their help in doing the work as expeditiously and economically as possible. . I limit my tax preparation services on the preparation of forms and returns relating to various cross-border transactions such as investments outside the U.S., employment outside the U.S., returns required by grantors and beneficiaries of a foreign trust, involvement in foreign partnerships or the ownership of an interest in a foreign corporation or international business company. I also assist foreign persons who have tax filing obligations in the U.S. My services rarely require a client to stop using the services of their local tax preparer and I do not seek to do any preparation work for your U.S. tax returns. If you have any unreported income from prior years, I STRONGLY urge you to seek help from a tax attorney who is familiar with taxpayer defense law. Although accountants now have some accountant-client privilege with respect to communications between the client and accountant regarding tax matters, such privilege is very limited. By signing this engagement letter, you are in effect waiving the opportunity for privileged communication by retaining an attorney, who would then retain me (or another accountant) to assist him as required. If amended U.S. income tax returns and state income tax returns are required, I will provide information to your local tax preparer so that he or she can prepare the amended returns. It would be far more costly to have me prepare the amended returns because I would first have to duplicate the original return on my computer system before I could prepare an amended return. In most cases, it would cost you more for me to prepare your prior year returns than you paid to your local tax preparer. Because of the extreme size and complexity of the tax law, and the frequent changes in the tax law, I may need to devote some time to search through various reference sources to find answers to questions about various tax issues that are pertinent to the preparation of your return(s). Before undertaking more than two hours of such research, I will contact you and give you the option to (1) authorize me to continue the research, or (2) to seek help from a person who specializes in that segment of the tax law. I will also provide you with suggestions and contact information regarding any tax professionals who are known to be specialists in the subject area. If assistance is provided by other professionals, you will need to (1) enter into a service agreement with such professional, or (2) provide an advance retainer to me for the full amount of any fee that I may become obligated to pay on your behalf. This agreement includes and incorporates the enclosed Disclaimer Notice which describes the types of services I am not offering to provide and that will not be part of this engagement. The Disclaimer Notice also discusses various matters that could become a source of a misunderstanding relative to your expectations regarding my services. This engagement agreement does not include tax consulting services or comprehensive tax planning services. A separate engagement letter will be provided if such services are requested. In order to provide the assistance you have requested, I will need the following information from you. My work will not commence until that information is provided.
We have agreed that the work you wish me to do for you will be completed no later than __________, 200__ unless we subsequently and mutually agree to extend the completion date. If an extension of time to file is required, you agree that any late payment penalties or interest that may be incurred because of a delayed filing will be your responsibility. My fees and billing procedures are set forth in the enclosed Schedule of Fees , which is a part of this agreement regarding my services on your behalf. Fees will be billed when the returns are completed and mailed to you. You will be responsible for signing the return, for the payment of any taxes and late payment penalties and for the delivery of the returns (with your signature) to the appropriate mailing address of the tax authority. If state income returns are required, it may be necessary for me to spend some time delving into the state tax laws to see if they are different from the federal rules for the returns that I prepare. If that is necessary, I will advise you in advance of beginning any billable work. As described in the enclosed Disclosure Memorandum , I work by myself and do not have any employees to assist me. You can therefore be sure that your work will not be delegated to a less experienced professional but my fees may be higher than if I did have less expensive staff to do some of the work. I charge clients by the hour for the preparation of various tax forms and schedules, plus an hourly fee for any required accounting, data analysis, currency conversion, client specific research or similar work. I also charge by the hour for phone consultations, meetings, reading materials provided to me by a client and correspondance (including email) to or from clients. I strongly urge you to secure the help of a local accountant to organize your information into a format that is suitable for the quickest preparation of a return. I will provide the most accurate and most favorable results that I can, but I can't guarantee that the IRS will agree with my position on every part of your return. If your return is selected for an audit or for verification by the IRS, my services to help respond to their inquiries will constitute a separate engagement and I will charge you for that time. Any estimates provided as to the time required to complete the work you have asked me to do for you is not a guarantee and is not binding. Based on the preparation of similar returns for other clients, I estimate that the time required to prepare the returns for you will result in total fees of from $____ to $_____. I will endeavor to keep the time and fees as low as possible, but the most significant element in the time required to prepare a tax return is the quality and the organization of the data needed to prepare the return. You agree to pay me a retainer of $______. I will bill you for any additional fees on a progress basis. The enclosed Disclosure Statement provides information that might be pertinent to your decision as to whether you wish to retain me as a tax preparer and is therefore enclosed as a part of this agreement. I make every reasonable effort to avoid any errors or omissions in the services or advice that I provide to clients. However, the tax law is voluminous, ambiguous and constantly changing. My liability for any errors or omissions will be limited to a full refund of the fees paid and will not include liability for any consequential damages. Any claim for damages will expire within two years of when the final billing is mailed to you. My liability is also limited to you and any recommendations provided to you may not be used or relied upon by any other parties. Disputes with the IRS regarding the interpretation of the tax law will not consititute an error or ommission if you have been advised of the difference in opinion at the time your return is prepared. Certain types of transactions are required to be disclosed to the IRS and you agree that it will be my decision as to whether a particular transaction is subject to such disclosure. Payment can be made by a check or money order payable to Vernon K. Jacobs. I will provide an invoice for professional services and related costs. If you agree to the terms and conditions for the provision of services as provided in this Engagement Letter, please indicate your acceptance by executing the enclosed copy of this letter below and by returning it with the agreed upon retainer Very truly yours, Vernon K. Jacobs, CPA I agree to and accept the terms and conditions set forth in the foregoing letter. Date _________________ By _____________________________________ Name ________________________________________________
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