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Tax Engagement Letter


Terms & Conditions of Tax Return Engagement Letter

We appreciate the opportunity to work with you. To minimize the possibility of a misunderstanding between us, we are setting forth pertinent information about the services we will perform for you. This engagement letter 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 letter supersede any prior oral or written representations or commitments by or between the parties.  Any material changes or additions to the terms set forth in this letter will only become effective if evidenced by a written amendment to this letter, signed by all of the parties.

Why do we ask you to sign an engagement letter?  Basically, it is considered “best practices”.  American Institute of CPAs (AICPA) proposed professional standards require documentation of all client engagements, preferably in writing. Engagement letters can meet these standards by providing advanced documentation of services to be performed, assessment of fees, responsibilities of both CPA and client, and limitations of information delivered.  The AICPA has recommended the use of engagement letters which are signed by the client for all services we perform and has in the past few years begun to add this as a requirement to new standards issued.  There are several provisions by the IRS requiring disclosures to you and your acknowledgement of your responsibilities. Also our insurance carrier insists that we have them.

We will prepare your federal return (and as appropriate the related state income tax returns) from information that you will provide to us.  If you have taxable activity in a state other than Texas you are responsible for providing our firm with all information necessary to prepare any additional applicable state(s) income tax returns as well as informing us of the applicable states. If you would like us to investigate to determine each state where you have an income tax filing requirement please inform us.  This engagement letter does not cover the preparation of any financial statements, which, if we are to provide, will be covered under a separate engagement letter.

Certain individuals may be required to electronically file Form 114, Report of Foreign Bank and Financial Accounts (FBAR) with the U.S. Department of the Treasury.  If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding certain thresholds, the Bank Secrecy Act may require you to report the account yearly to the Department of Treasury.  United States persons are required to file an FBAR if 1) the United States person had a financial interest in or signature authority over at least one financial account located outside of the United States and 2) the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.  Failure to comply with the filing requirements may result in significant civil and criminal penalties. Unless otherwise specifically agreed in writing, we will not prepare, file, or provide assistance with this form. If you would like us to prepare Form 114, please notify us in writing.

We will provide you, upon request, worksheets (a Tax Organizer) to guide you in gathering the necessary information or you may submit your information to us in your own format (including giving us the “tax documents” and your notes relative to other information). The tax organizer we prepare may help you gather your pertinent information and help keep you from overlooking items.  Note, we do not require that you write any information on the tax organizer.  Many clients simply use it as a checklist to confirm they have assembled everything they will be giving to us.

We request that you send us either the original or a copy of the following tax documents: W-2s, K-1s, 1099s, 1098s, 1095s, receipts and similar items which you have received and are marked “important tax document” such as mortgage statements.  We ask that you summarize your charitable contributions but we do not need you to bring us all of the letters from the organizations.  If you received any document that you are not sure is relevant to preparing your tax return, bring it to us to review.

We rely on you to provide us with all the information we will need to accurately prepare your tax return. In case the IRS requests verification in the future, you should retain all the documents, canceled checks and other data that form the basis of income and deductions shown on your tax return for at least four years. These may be necessary to prove the accuracy and completeness of the returns to a taxing authority.  We will not audit or otherwise verify the data you submit, although it may be necessary to request clarification of some of the information. We are not responsible for the disallowance of doubtful deductions or inadequately supported documentation, nor for resulting taxes, penalties and interest. We will make copies of most items that you send to us for the preparation of your return. It is our policy to retain engagement documentation for a period of five years, after which time we will commence the process of destroying the contents of our engagement files.  By the seventh year, we expect to have all files purged and shredded.

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.  We are able to provide duplicated copies at a later date (up to 5 years of the date of the return).

You have the final responsibility for the income tax returns and, therefore, you should carefully review them before you sign and file them.  If you have questions about items reported on your return, please ask for clarification.  The law provides various penalties that may be imposed when taxpayers understate their tax liability. If you would like information on the amount or the circumstances of these penalties, please contact us.

It is well established that the taxpayer has no obligation to pay more taxes than are legally owed, and we have a duty to assist you in achieving that result.  We strive to get you all the deductions to which you are entitled. Since your return is unique to your particular circumstances, we cannot guarantee the outcome or whether you will view it as good or bad. As a CPA firm, we are subject to a wide array of rules and regulations by the IRS and professional organizations.  We have the responsibility to be an advocate for you, the taxpayer, with respect to any position while we at the same time determine and comply with the rules and regulations set by the IRS.  Among the requirements are that we maintain continuing education and that we exercise due diligence in adhering to the rules and regulations.  We are expected to promote and protect your interests, identifying appropriate tax deductions and accurate, factual information necessary for compliance and tax filing purposes. Our firm’s philosophy is to provide quality tax services for a reasonable price. To ensure the quality of our work we attend various seminars and classes and keep an extensive research library as well as numerous newsletters to keep up with the ever changing rules.

The timeliness of your cooperation is essential to our ability to complete this engagement.  We must receive all information to prepare your return by March 20 to ensure that your return will be completed by April 15. If we have not received all of your information by March 20 and your return is not completed by April 15, it may be necessary for us to pursue an extension of the due date of your return(s).  If an extension of the time is required, any tax due with these returns must be paid with that extension.  Any amounts not paid by the filing deadline may be subject to interest and late payment penalties.  If you are planning to make an IRA contribution, it must be made by April 15.  If you are subject to making quarterly estimated tax payments, you are responsible for making estimated tax payments for the current tax year even if you have extended your tax return.  If you need us to help you determine how much your estimated tax payments should be, please let us know.

Our work in connection with the preparation of your income tax returns does not include any procedures designed to discover defalcations or other irregularities, should any exist. However, should we find any irregularities or unusual items we will bring them to your attention.

If we discover any errors or omissions on a prior year return, we will bring them to your attention.

Since January 1, 2012, any tax return preparer who prepares and files eleven (11) or more individual tax returns during a calendar year must file all returns electronically. A few returns will have to be mailed because IRS limitation in their electronic filing protocol.  We have found several benefits to you as the taxpayer to our filing the returns electronically and will discuss those with you if requested.  You understand that the IRS mandates that we file your income tax returns electronically, which we do through a secured third party filing service.  You may opt out of electronic filing if you notify us in writing to do so.

From time to time during our relationship, you may seek our advice with regard to potential investments. Jerry Love CPA, LLC is not an investment advisor.  You may engage Jerry Love Financial Services, LLC in writing by separate agreement specifically for that purpose.  Accordingly, as your tax preparer Jerry Love CPA, LLC will not advise you regarding the economic viability or consequences of an investment or whether you should or should not make a particular investment.

Our fees for this engagement are not contingent on the results of our services.  Rather, our fees for this engagement will be based on our standard rates.  In addition, you agree to reimburse us for any of our out-of-pocket costs incurred in connection with the performance of our services.  Generally, we would estimate our fee for the current year will be similar to your prior year fee with increases in line with inflation unless the requirements of your return has changed substantially (whether an increase or decrease in time required).  However, due to new complexity mandated by Congress and the IRS, the fees for this year will be larger than the rate of inflation.  You may ask us for an estimate and we will make our best effort to good faith estimate of the increase for your return.  Invoices unpaid 45 days past the billing date may be deemed delinquent.

Our fee does not include responding to inquires or examination by taxing authorities.  We will also provide you with interim and year-end tax planning services on issues that you specifically bring to our attention in writing.  We are available to provide these services and our fees for such services are at our standard rates and would be covered under a separate engagement letter.

While we do not expect there to be any problems whatsoever with our relationship, misunderstandings can occur.  If there is an unresolved issue between us regarding the services performed or any other issue related to this agreement and our services, we mutually agree to first sit down face to face and discuss the matter in an effort to find a win/win solution.  However, in the event that is not possible we mutually agree that any dispute that may arise regarding the meaning, performance or enforcement of this engagement or any prior engagement that we have performed for you, will be submitted to mediation, and that the parties will engage in the mediation process in good faith once a written request to mediate has been given by any party to the engagement.  Any mediation initiated as a result of this engagement shall be administered within Taylor County of Texas by the Center for Conflict Resolution at Abilene Christian University according to its mediation rules and will be considered final and binding upon all parties.  The results of any such mediation shall be binding only upon agreement of each party to be bound.  Each party shall bear its own costs and expenses and an equal share of the mediation and administrative fees.  Any mediation arising out of this engagement must be asserted within two years from the date the tax return was signed by you.  Notwithstanding anything contained herein, both accountant and client agree that regardless of where the client is domiciled and regardless of where this Agreement is physically signed, this Agreement shall have been deemed to have been entered into at Accountant’s office located in Taylor County, Texas, USA, and Taylor County, Texas, USA, shall be the exclusive jurisdiction for resolving disputes related to this Agreement. This Agreement shall be interpreted and governed in accordance with the Laws of Texas.

Notwithstanding the foregoing, the maximum liability due from Jerry Love CPA LLC relating to services rendered under this letter (regardless of form of action, whether in contract, negligence or otherwise) shall be limited to 150% (one hundred fifty percent) the fees received by Jerry Love CPA LLC for this engagement excluding any pass through fees or other expenses charged.

If the income tax returns we are to prepare in connection with this engagement are joint returns, and because both spouses will be required to sign those returns, then both spouses are our client.  Therefore, both spouses acknowledge that there is no expectation of privacy from your spouse concerning 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.

If this firm does not receive from you the original of this letter, in fully executed form, but receives from you supporting documentation requested therein, then such receipt by this firm shall be deemed to evidence your acceptance of all of the terms set forth above.  If, however, this firm receives from you no response to this letter, then this office will not proceed to provide you with any professional services.


Jerry Love CPA, LLC, 3305 North 3rd Street, Suite 304, Abilene, TX 79603
Phone: 325.437.5683 | Fax: 325.437.7197 | Email: jerry@jerrylovecpa.com
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