Terms & Conditions
Terms and Conditions of Tax Return Preparation
(Individual Returns)
The purpose of this addendum to our engagement letter is to:
• Describe the scope and limitations of our engagement.
• Establish an understanding of your responsibilities.
• Establish an understanding of our responsibilities.
• Indicate when our services begin and conclude.
• Discuss our fees and expenses, our method of billing, our payment terms, and consequences of nonpayment.
• Explanation of circumstances under which we may withdraw or terminate the engagement without completing the work.
Scope of Engagement
We will prepare the returns described in our engagement letter. We will not prepare any tax returns except those identified in the engagement letter without your written authorization to do so. We will not audit or otherwise verify the data you submit to us, although we may ask you to clarify some of the information.
If you have asked us to rely on information provided by a third party in preparing this return, please be advised that the professional standards do not require, and we necessarily cannot, verify the information provided by third parties and consequently disclaim any responsibility for the same.
In most circumstances, we are required to file your federal tax return and potentially one or more of your state tax returns electronically. It is your responsibility to timely return the signed e-file authorization form. Electronic filing of your return will not affect your responsibility to review and sign the return before it is submitted. If you have questions or concerns about the electronic filing process, or the information needed to effectuate that process, please contact us.
The Bank Secrecy Act and the Foreign Account Tax Compliance Act requires certain foreign reporting including the annual reporting of financial interests in or signature authority over foreign financial account, including a bank account, brokerage account, mutual fund, or other type of financial account (including authority comparable to signature authority). Failure to file the Form FinCEN 114 (FBAR) can result in the imposition of both civil and criminal penalties, which can be significant. You may also be required to report any foreign financial assets (Form 8938), including some of the same items reported on an FBAR, on your tax return if the market value of your specified foreign assets exceeds $50,000 during the year. In addition, certain taxpayers related to foreign corporations may be required to file Form 5471, Information Returns of U.S. Persons with Respect to Certain Foreign Corporations. Significant penalties are imposed on taxpayers for failure to file any of the above-mentioned Forms. The FBAR and related foreign information reporting are not tax returns, and preparation of same is not within the scope of this engagement. If you have any foreign accounts, assets, or the authority to sign on foreign accounts, please bring these matters to our attention. If you have any questions regarding these filing obligations or wish to engage us to prepare such reports or returns, please contact us to discuss these matters.
Your Responsibilities
We will provide you with an income tax organizer to help you gather and document the information we will need to prepare your income tax returns. It is your responsibility to complete the tax organizer on a timely basis to assist us in preparation of your returns in a timely, efficient, and accurate manner. We will not verify the information you give us; however, we may ask for additional clarification of some information. If you anticipate that you will not be able to provide your complete tax information to us 30 Days prior to the initial filing deadlines, please let us know, as it may be necessary to extend the filing dates of your returns and/or modify our fees. If you have any questions regarding specific filing deadlines, please do not hesitate to contact us.
You are responsible for determining your state or local tax filing obligations with any state or local tax authorities, including, but not limited to income, franchise, sales, use and property taxes. If upon reading the completed tax organizer, it comes to our attention that you may have an obligation to file additional income tax returns, we will notify you of this in writing and l ask you to contact us. If you ask us to prepare these returns, we will confirm this in a letter and detail the additional charges for this service.
The Internal Revenue Code requires that you have adequate documentation to support all items of income or deduction reported on your income. tax return. You should retain all documents that provide evidence and support for your reported income and deductions on your returns. You are responsible for the adequacy and accuracy of all such documents. Contact us if you have any questions regarding this requirement. At your request, we are available to answer your questions and advise you on the types of records required. You may need to provide these documents to a taxing authority to substantiate the accuracy and completeness of the returns.
As an example of the type of documentation required, the Internal Revenue Service (hereby referred to as, the Service) requires that a contemporaneous written acknowledgement letter be received from charities before any charitable contribution deductions over $250 can be taken. In general, the letter must provide the amount of cash and or a description of the property donated and must provide a statement regarding whether the donee organization provided any goods or services in consideration, in whole or in part, for any of the donation. If any such goods or services were provided by the charity the letter must describe them and provide a good faith· estimate of the value of the goods or services, or if such goods or services consist solely of intangible religious benefits, a statement to that effect. The letter must be received from the charity by the earlier of the filing of the tax return or the due date of the tax return. If a donation is audited by the Service, they will request a copy of the letter and will disallow the contribution deduction if it does not provide all o-f the necessary information or if it was not received from the charity by the time deadline provided in the regulation.
All statements, records, schedules, working papers, or memoranda prepared by us during our engagement shall remain the exclusive property of our accounting firm. We recommend that you retain all pertinent information provided to us for the preparation of your tax return. We are not responsible for keeping copies of your information.
It may become necessary to apply for an extension of the filing deadline if there are unresolved tax issues or delays in processing or if we do not receive all the necessary information from you on a timely basis. If you are unable to. complete and return the tax organizer with other required documentation to allow for the timely preparation of your tax returns, you must contact us and request that we apply for an extension on your behalf. Applying for an extension of time to file may extend the time available for a government agency to undertake an audit of your return or may extend the statute of limitations. Additionally, extensions may affect your liability for penalties or interest or compliance with government or other deadlines. We are available to discuss this matter wi.th you at your request at our regular hourly fee should the need arise.
You have final responsibility for your income tax returns. Check them carefully for accuracy before you sign them.
Our Responsibilities
We will prepare your returns based on your filing status (single, married filing jointly, married filing separately, head of household or qualifying widow[er] with dependent child) as reflected in your income tax returns for the last year. If your marital status has changed, you want to change your filing status, or you have questions about your filing status, please contact us immediately.
We will use our professional judgment to resolve questions in your favor where a tax law is unclear if there is reasonable justification for doing so. Whenever we are aware that a possibly applicable tax law is unclear or that there are conflicting interpretations of the law by authorities (e.g., tax agencies and courts), we will explain the possible positions that may be taken on your return(s). We will follow whatever position you request; provided, it is consistent with the applicable law, regulations and interpretations that have been promulgated. You agree to advise· us if you wish disclosure to be made in the return(s) regarding your position, or if you desire us to identify or perform further research with respect to any material tax issue for the purpose of ascertaining whether, in. our opinion, there is substantial authority for the position proposed to be taken on such issue in your return(s). If the IRS or other taxing authority should later contest the position taken, there may be an assessment of additional tax, interest, and penalties. You agree that we shall assume no liability for any such additional tax, interest, and penalties or other fees and assessments.
Our work in connection with your income tax returns does not include any procedures designed to discover fraud, thefts, or other irregularities, should any exist.
Our engagement does not include tax planning services, which are available as a separate engagement. During the course of preparing your tax returns, we may bring to your attention certain available tax saving strategies (such as the use of itemized deductions or tax-deferred retirement accounts) for you to consider as possible means of reducing your income taxes in subsequent tax years. However, we have no responsibility to do so, and will take no action with respect to any such recommendations, as the responsibility for implementation remains with you, the taxpayer.
This engagement does not include responding to inquiries by any governmental agency or tax authority. If your tax return is selected for examination or audit, you may request that we assist you in responding to such inquiry. In that event, we will be pleased to discuss providing assistance to you under the terms of a separate engagement letter for that specific purpose.
Timing of our Engagement
We expect to begin the preparation of your returns upon receipt of the completed tax organizer and all documents requested either in the organizer or by our office. Our services will conclude upon delivery to you of your tax returns for your review and filing with the appropriate taxing authorities. In any event, however, our engagement will last no longer than one year from the date we begin work on your returns.
Penalties
Federal, state, and local taxing authorities impose various penalties and interest charges for noncompliance with tax law, including for example, failure to file or late filing of tax returns and underpayment of taxes. You as the taxpayer remain responsible for the payment of all taxes, penalties and interest charges imposed by taxing authorities.
Federal law imposes a penalty equal to 20% of the underpayment of tax where taxpayers make a substantial understatement of their tax liability. An individual has a substantial understatement if the understatement for the year exceeds the greater of 10% of the tax liability or $5,000. A taxpayer may qualify for the substantial authority exception by showing that he or she reasonably believes that the tax treatment of an item is more likely than not the proper tax treatment if:
• The taxpayer analyzes the pertinent facts and authorities ,and, in reliance on that analysis, reasonably concludes in good faith that there is a greater than 50% likelihood that the tax treatment of the item will be upheld if challenged by the IRS; or the taxpayer reasonably relies in good faith on the opinion of a professional tax advisor’s conclusion that there is substantial authority on the tax treatment of an item.
• The relevant facts affecting the item’s tax treatment were adequately disclosed on Form 8275 or 8275-R, attached to the return and there was reasonable basis for the position.
You agree to advise us if you wish to disclose a tax treatment(s) on your return. You may request our assistance to identify or perform further research to ascertain if there is “substantial authority” for the position proposed to be taken on the tax items in your returns. If you so request, we would be pleased to discuss providing this additional service to you under the terms of a separate engagement letter.
You also agree to hold our firm and any of its partners, principals, shareholders, officers, directors, members, employees, agents or assigns harmless for any and all actual and consequential damages (including, but not limited to, taxes, penalties, interest, and attorney fees and costs) that you incur as a result of including such disclosures with your filed tax returns regardless of the nature of the claim, including the negligence of any party.
Federal law also imposes substantial penalties on taxpayers and preparers for failure to disclose “reportable transactions.” Reportable transactions are potentially abusive transactions identified y the IRS whose primary purpose is tax avoidance. You agree to advise us of any reportable transactions identified under tax law and regulations. You agree that it is solely your decision to disclose any reportable transactions in the returns that we prepare for you. You agree to pay all fees arid expenses incurred if y9u do not permit us to complete the returns.
The Tax Cut and Jobs Act of 2017 added additional penalties and thresholds related to the new Section 199A deduction. If this deduction is taken on your return, the accuracy related penalty under Code Section 6662 is reduced so that it applies to any understatement that exceeds the greater of $5,000 or 5% of the tax required to be shown on the return. Normally, this would be 10% as referenced in paragraphs above.
Fees and Billings
Our professional fee for the services outlined above will be based on our standard hourly rates plus out-of-pocket expenses. We reserve the right to make adjustments to these standard rates, both upward and downward, to reflect the complexity of issues or efficiency generated by staff expertise, or other resources required in rendering these services. Our fees are dependent on the availability, quality, and completeness of your records. You agree that you will deliver all records requested by our staff to complete this engagement on a timely basis. In the event your records are not submitted in a timely manner, or they are incomplete or unusable, we reserve the right to charge additional Fees and expenses for services required to correct the problem. If this occurs, we will contact you to discuss the matter and the anticipated delay in completing our engagement prior to rendering further services.
We will bill you upon conclusion of our engagement and may issue interim billings as the work progresses. Our invoices are due and payable within 30 days. Interest will be charged at a rate of 5% per month on balances in excess of 30 days. Work may be suspended if your account becomes 90 days or more overdue and will not be resumed until your account is paid in full. If we elect to suspend or terminate our work for nonpayment, you will be obligated to compensate us for all time expended and to reimburse us for all of our out-of-pocket expenditures. In the event our work is suspended or terminated as a result of nonpayment, you also agree that we will not be responsible for your failure to meet deadlines or for penalties or interest that may be assessed against you from your failure to meet such deadlines and for any other damages (including consequential damages) incurred as a result of the suspension or termination of our work.
The Tax Cuts and Jobs Act (‘TCJA”) was passed into law on December 22, 2017, and many of its provisions have gone into effect for years beginning in 2018. TCJA was the most comprehensive tax reform in over 30 years. Many new statutes have been enacted into law and. a significant portion of the previous tax law was altered. Certain of these changes may necessitate additional calculations be performed to determine taxable income, deductions, or limitations on deductions. Accordingly, given that fees were generally based on rules under previous tax law, if additional calculations, research, and analysis are necessary beyond the previous scope of your tax preparation fees, additional charges may be incurred due to the increase in time necessary to produce an accurate tax return.
Termination and Other Terms
Enrolled Agents, like all providers of personal financial services, are now required by law to inform their clients of their policies regarding privacy of client information. EAs have been and continue to be bound by professional standards of confidentiality that are even more stringent than those required by law. Therefore, we have always protected your right to privacy.
We collect nonpublic personal information about you that is provided to us by you or obtained by us with your authorization. For current and former clients, we do not disclose any nonpublic personal information obtained in the course of our practice except as required or permitted by law. Permitted disclosures include providing information to our employees, and with your prior approval, to unrelated third parties who need to know that information to assist us in providing services to you. In all such situations, we stress the confidential nature of information being shared.
In the interest of facilitating our services to your Company, we may communicate with you by facsimile transmission or email transmission. Such communications may include information that is confidential to your Company and/or you. While we will use our best efforts to keep such communications secure in accordance with our obligations under applicable laws and professional standards, you recognize and accept that we have no control over the unauthorized interception of these communications once they have been sent, and you consent to our use of these electronic devices. Therefore, we specifically disclaim and waive any liability or responsibility whatsoever for interception or unintentional disclosure of emails transmitted by us or in connection with the performance of this engagement. In that regard, you agree that we shall have no liability for any loss or damage to any person or entity resulting from the use of email transmissions, including any consequential, incidental, direct, indirect, or special damages, such as loss of revenues or anticipated profits or disclosure or communication of confidential or proprietary information. Communications by email are authorized unless written objection is provided to us prior to any such communication.
In the interest of enhancing our availability to meet your professional service needs while maintaining service quality and timeliness, we may use a third-party subcontractor to assist us in the preparation of your tax returns. This subcontractor has established procedures and controls designed to protect client confidentiality and maintain data security. As the paid preparer of your tax returns, our firm remains responsible for exercising reasonable care in preparing your tax return, and your tax return will be subjected to our firm’s normal quality control procedures. If you have any questions or concerns about this arrangement, please contact our office.
We retain records relating to professional services that we provide so that we are better able to assist you with your professional needs and, in some cases, to comply with professional guidelines. In order to guard your nonpublic personal information, we maintain physical, electronic and procedural safeguards that comply with our professional standards.
No third parties are intended to benefit from this engagement or to rely on its product. It is agreed and understood that you will remain solely responsible for any tax, penalties or interest resulting from any adverse determination by the Internal Revenue Service, state or local taxing authorities, or a court of law. We assume no continuing obligation to notify you of changes in the tax law.
We reserve the right to withdraw from our engagement without completing the returns if you fail to comply with the terms of our engagement letter or these terms and conditions. Our withdrawal from the engagement does not relieve you of your fee obligations.
If a dispute arises out of or relates to this engagement letter, or the breach thereof, and if the dispute cannot be settled through negotiation, the parties agree first to try in good faith to settle the dispute by mediation administered by the American Arbitration Association under the Dispute Resolution Rules for Professional Accounting and Related Services Disputes before resorting to arbitration, litigation, or some other dispute-resolution procedure. The costs of any mediation proceedings shall be shared equally by all parties.
It is our policy to keep records related to this engagement for a period of time as defined in our Record Retention Policy. However, Blue Marlin Accounting does not keep any original client records, so we will return those to you at the completion of the services rendered under this engagement. When records are returned to you, it is your responsibility to retain, and protect your records for possible future use, including potential examination by any government or regulatory agencies.
By your signature on this engagement letter, you acknowledge that you understand we will destroy our records related to this engagement upon the expiration of the designated period.
Any claim arising out of this Agreement shall be commenced within one year of the delivery of the work product to you. Any action not brought within that one-year time period shall be barred despite any other limitations period set forth by either case law or statute. Our liability for all claims, damages, and costs of the Corporation arising from this engagement is limited to the total amount of fees paid for this engagement.
We appreciate the opportunity to be of service to you. We believe the foregoing correctly sets forth our understanding, but if you have any questions, please let us know. If you find the arrangements acceptable, please date and sign the enclosed engagement letter and return it to us to acknowledge your agreement with these Terms and Conditions of Tax Return Preparation.
