Tax Preparation Engagement Letter
Thank you for choosing Jorge Perazzo CPA Accountancy Corporation to assist you with the preparation of your current tax year returns. To minimize the possibility of a misunderstanding between us, this letter confirms the terms of our engagement with you and outlines the nature and extent of the services we will provide.
We will prepare your 2023 federal and state income tax returns. from information you furnish to us. We have or will furnish you with a tax organizer that will help you to gather and organize the necessary information required for the preparation of your individual tax returns. Providing us with the completed tax organizer will help to ensure that you are not overlooking important information that may be necessary for complete and accurate returns, as well as may help to minimize our fees.
How We Prepare Returns
To maximize the quality of our work and make the best use of your time, we require that clients submit to us all tax paperwork no less than 3 business days prior to their appointments. During your appointment, we will review the returns already prepared, and based on any discussion, change, add or modify the information already entered. This allows for the meeting time to be more about the results and discussions can focus on matters that are important to you.
Appointments can be in person, virtual, or over the phone. If no appointment is set, we will send you a draft for you to review and approve before finalizing it.
Providing Us All The Information
You are confirming that you will furnish us with all the information required for preparing the returns. This includes but is not limited to providing us with the information necessary to identify (1) all states and foreign countries in which you "do business" or derive income (directly or indirectly), and (2) the extent of business operations in each relevant state and/or country, and whether you have signature authority in any foreign bank account that requires disclosure under FBAR rules. The reporting requirements for those having foreign financial interests has changed and been greatly expanded over the last few years. By your signature below, you accept responsibility for informing us if you believe that you may have foreign reporting requirements. If you and/or your entity have a financial interest in, or signature authority over, any foreign accounts, you may be subject to certain filing requirements with the U.S. Department of the Treasury, in addition to the Internal Revenue Service (TRS). Filing requirements may also apply to taxpayers that have direct or indirect control over a foreign or domestic entity with foreign financial accounts, even if the taxpayer does not have foreign accounts). Failure to timely file the appropriate forms with the U.S. Department of the Treasury and the IRS may result in substantial civil and/or criminal penalties. By your signature below, you agree to provide us with complete and accurate information regarding any foreign accounts that you and/or your entity may have had a direct or indirect interest in, or signature authority over, during the above referenced tax year. Call us with any questions you may have with respect to the foreign financial interests reporting requirements.
We will not audit or verify the data you submit, although we may ask you to clarify it, or furnish us with additional data. It is your responsibility to maintain, in your records, the documentation necessary to support the data used in preparing your tax returns, including but not limited to the auto, travel, entertainment, and related expenses and the required documents to support charitable contributions. Those documents may be necessary to prove the accuracy and completeness of the returns to a taxing authority. If you have any questions as to the type of records required, please ask us for advice in that regard.
We will use our professional judgment in preparing your returns. We will use our professional judgement and expertise to assist you given the guidance as currently law is promulgated at the time services are provided. Occasionally, subsequent tax law developments issued by the applicable tax authorities may affect the information we have previously provided, and these effects may be material. 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. In accordance with our professional standards, we will follow whatever position you request, if it is consistent with the codes, regulations, and interpretations that have been promulgated.
If a taxing authority should later contest the position taken, there may be an assessment of additional tax plus interest and penalties. We assume no liability for any such additional penalties or assessments. In the event, however, that you ask us to take a tax position that in our professional judgment will not meet the applicable laws and standards as promulgated, we reserve the right to stop work and shall not be liable to you for any damages that occur as a result of ceasing to render services.
The law provides for a penalty to be imposed where a taxpayer makes a substantial understatement of their tax liability. Taxpayers may seek to avoid all or part of the penalty by showing (1) that they acted in good faith and there was reasonable cause for the understatement, (2) that the understatement was based on substantial authority, or (3) that the relevant facts affecting the item's tax treatment was disclosed on the return. You agree to advise us if you wish disclosure to be made in your returns or if you desire us to identify or perform further research with respect to any material tax issues for the purpose of ascertaining whether in, my opinion, there is "substantial authority" for the position proposed to be taken on such issue in your returns.
In our relationship, we are often an advisor, not an advocate, about investment advice. we will advise you on the tax implications, if any, of specific matters you bring to my attention. From time to time during our relationship, you may seek our advice about potential investments. we are not an investment advisor. Accordingly, we suggest that you seek the advice of qualified investment advisors appropriate to each investment being considered. Unless otherwise specifically agreed to in a separate engagement letter or in a written addendum or amendment to this letter signed by both parties, we will not advise you regarding the economic viability or consequences of an investment or whether you should or should not make a particular investment.
Taxing authorities now require us to electronically file all federal and state individual income tax returns (e-filing). However, you do have the right to "opt out" of the e-filing program. Please contact us regarding your right to “opt out” of the e-filing program. After you have reviewed the returns, you must provide us with a signed authorization indicating that you have reviewed the return and that, to the best of your knowledge, you feel it is correct. we cannot transmit the returns to the taxing authorities until we have the signed authorization. Therefore, if you have not provided us with your signed authorization by the due date of the return, we will place your return on extension.
Finally, please note that although my firm will use our best efforts to ensure that your returns are successfully transmitted to the appropriate taxing authorities, we will not be financially responsible for electronic transmission or other errors arising after your return has been successfully submitted from my office. By your signature below, you understand and agree that you are responsible for the accuracy and completeness of the records, documents, explanations, and other information provided to us for purposes of this engagement. You have the final responsibility for the income tax returns; therefore, you should review them carefully before you sign the e-file authorization forms, or sign and submit your returns directly to the appropriate taxing authorities (in the event you “opt-out” of the e-filing program).
You agree that my office is not responsible for a taxing authority's disallowance of deductions or inadequately supported documentation, nor for resulting taxes, penalties, and interest. Federal law has extended the attorney-client privilege to some, but not all, communications between a client and the client’s CPA. The privilege applies only to non-criminal tax matters that are before the IRS or brought by or against the U.S. Government in a federal court. The communications must be made in connection with tax advice. Communications solely concerning the preparation of a tax return will not be privileged. In addition, your confidentiality privilege can be inadvertently waived if you discuss the contents of any privileged communication with a third party, such as a lending institution, a friend, or a business associate. We recommend that you contact us before releasing any privileged information to a third party. If we are asked to disclose any privileged communication, unless we are required to disclose the communication by law, we will not provide such disclosure until you have had an opportunity to argue that the communication is privileged. You agree to pay all reasonable expenses that we incur (which includes our time), including legal fees, that are a result of attempts to protect any communication as privileged.
Our Fees and Price Increases
As you may be aware, inflation and the cost of doing business have been on the rise recently. Unfortunately, this has affected our operations as an accounting firm, and we are faced with the need to increase our prices. We understand that any price increase can be a burden, but we want to assure you that we have done everything in our power to keep it as minimal as possible. We value your business and believe that the quality of our services justifies the adjustment.
Please note that this price increase will be effective with the upcoming tax season 2024 effective January 1, 2024. Our price increase will be no less than 4% in most cases and our minimum tax return price will be $495. In some cases, the increase to our minimum tax return price may be more than 4%. If you have any questions or concerns about this change, please do not hesitate to contact us.
Expedite Fee Policy
We work on returns in the order we receive the information that is substantially complete, therefore, we must receive all information to prepare your returns in a timely manner. Effective January 1, 2024, we will be implementing an Expedite Fee of $350 for client's who send in substantially all of their tax information after the required cut-off dates. The cut-off date is one (1) week prior to the due date of the return, including extensions or government mandated due date changes. This fee is in addition to your normal tax preparation fee. For 2024, the first due date is April 15th, 2024. If you do not wish to go on extension, we will need to receive your paperwork no later than Monday, April 8th. You can always choose to go on extension in lieu of the expedite fee. We will check in with you about this at that time. The extended due date is October 15th, 2024. If you go on extension, your paperwork must be received by Tuesday, October 8st, 2024.
If you are unable to meet the specified deadlines dates, we cannot guarantee that your returns will be completed before the deadline. If we are unable to complete your returns by the deadline, this letter will serve as confirmation that you want us to file an extension and we will do so. You should keep in mind that this would be an extension of time to file the return; however, any tax estimated to be due would need to be paid with the extension request. We assume no liability for late filing or late payment penalties.
We will return all original and/or originally sent records to you at the end of this engagement. It is our policy to retain work papers and files related to this engagement for at least 7 years after which the files will be destroyed (or deleted from our electronic document system). 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 below, you acknowledge and agree that we are free to dispose of our records as enumerated above.
Our fees for our services are based on our standard rates (subject to certain minimum fees) and includes computer charges and de-minimus out-of-pocket expenses (like postage). Payment for service is due when rendered. Interim billings may be submitted as work progresses and expenses are incurred. If we have not received payment within 15 days of my invoice, we reserve the right to cease work until your account is brought current. You acknowledge and agree that in the event we stop work or withdraw from this engagement because of your failure to pay on a timely basis we will not be liable for any damages that occur as a result of my ceasing to render services. In some instances, an advance payment or retainer may be required. Any outstanding fees are due before your returns can be filed. We are responsible for preparing only the returns listed above.
Our fees do not include responding to inquiries or examination by taxing authorities. However, we am available to represent you. Should it become necessary for us to assist in the assembly of your records, there will be an additional charge. Any such additional charges will be at the rate of $95 to $350 per hour depending on staff assigned to the job and level of professional expertise required.
Privacy and Confidentiality of Your Information
I/we may from time to time and depending on the circumstances and nature of the services we are providing, share your confidential information with your permission with or through, third party service providers (e-mail for example), some of whom may be cloud based, but we remain committed to maintaining the confidentiality and security of your information. Although we will use my best efforts to make the sharing of your information to such third parties secure from unauthorized access, no completely secure system for electronic data transfer has yet been devised. As such, by your signature below, you understand that my office makes no warranty, expressed or implied, on the security of electronic data transfers. In connection with this engagement, we may communicate with you or others via email transmission. We take reasonable measures to secure your confidential information in our email transmissions. However, as emails can be intercepted and read, disclosed, or otherwise used or communicated by an unintended third party, or may not be delivered to each of the parties to whom they are directed and only to such parties, we cannot guarantee or warrant those emails from us will be properly delivered to and read only by the addressee. Therefore, we specifically disclaim and waive any liability or responsibility whatsoever for interception or unintentional disclosure or communication of email transmissions, or for the unauthorized use or failed delivery of emails transmitted by us 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 sales or anticipated profits, or disclosure or communication of confidential or proprietary information.
Other Legal Disclosures
In recognition of the relative risks and benefits of this agreement to both the client and the accounting firm, the client and the accounting firm have discussed and have agreed on the fair allocation of risk between them. As such, the client agrees, to the fullest extent permitted by law, to limit the liability of the accounting firms to the client for any and all claims, losses, costs, and damages of any nature whatsoever, so that the total aggregate liability of the accounting firm to the client shall not exceed the accounting firm's total fee for services rendered under this agreement.
If any dispute arises among the parties hereto, the parties agree first to try in good faith to settle the dispute by mediation administered by the American Arbitration Association under its Rules for Professional Accounting and Related Services Disputes before resorting to litigation. Costs of any mediation proceeding shall be shared equally by all parties.
Client and accountant both agree that any dispute over fees charged by the accountant to the client will be submitted for resolution by arbitration in accordance with the applicable rules for resolving professional accounting and related services disputes of the American Arbitration Association, except that under all circumstances the arbitrator must follow the laws of California. Such arbitration shall be binding and final.
IN AGREEING TO ARBITRATION, WE BOTH ACKNOWLEDGE THAT IN THE EVENT OF A DISPUTE OVER FEES CHARGED BY THE ACCOUNTANT, EACH OF US IS GIVING UP THE RIGHT TO HAVE THE DISPUTE DECIDED IN A COURT OF LAW BEFORE A JUDGE OR JURY AND INSTEAD WE ARE ACCEPTING THE USE OF ARBITRATION FOR RESOLUTION.
The prevailing party shall be entitled to an award of reasonable attorneys’ fees and costs incurred in connection with the arbitration of the dispute in an amount to be determined by the arbitrator.
If the above fairly sets forth your understanding, please respond using the contact form below this letter and it will email us a notification of your acceptance. Please note that you are affirming to us your understanding of, and agreement to, the terms and conditions of this engagement letter by any one of the following actions: returning your signed engagement letter to us; returning your income tax information to us for use in the preparation of your returns; the submission of the tax returns we have prepared for you to the taxing authorities; or the payment of my return preparation fees. we are pleased to have you as a client and look forward to a long and mutually satisfying relationship.
Thank you for the opportunity to be of service. If you have any questions, contact our office at 661.593.7373.
Jorge Perazzo CPA Accountancy Corporation
By completing your name and email below, you agree to the terms and conditions of this engagement letter. You may print a copy of this page for your records. Thank you for your business.