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Engagement Letter


Yardley CPA

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Mine is very simple and short..

Thank you for choosing our firm! This letter contains the terms of our agreement.

We will prepare your federal 1040 and Maryland 502 for [Federal - Year of return] based on information you provide. Our work will not include procedures to discover irregularities or inaccuracies in the information you provide, but we may ask for clarification or additional information, to prepare as accurate and complete returns, as possible.

It is your responsibility to provide all necessary information related to income and deductions, and to respond to our inquiries in a timely manner, so we are able to complete your returns by the due dates.

You are responsible for maintaining appropriate records, such as official tax documents, receipts, substantiation for income and deductions, and purchase and sales information for assets.  This letter also confirms that all the information you have given us pertaining to your income, deductions and other information regarding your tax returns is true, correct and complete.

It is your responsibility to review your returns before they are filed to determine that all income and deductions have been correctly reported. Filing your returns by the due dates is your responsibility.

If your returns are later selected for review or audit by taxing authorities, we will be glad to assist or represent you if you desire.  Our fees for preparing your returns do not include time that might be necessary to assist you during a taxing authority review or audit.

Our fees for preparation of your returns are based upon our standard billing rates plus out-of-pocket expenses.  Our invoices are due and payable upon presentation.

If this letter accurately summarizes your understanding of our agreement, please sign and date in below and return it to us.

Thank you again! We truly appreciate your business.

 

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Well, yeah, I've got one, but it's more like a CYA letter (sorta like the one abovethan an engagement letter.  Here goes - if you don't like it, feel free to complain. .                                                                                                                                                                                                                                                        

 

Taxpayers' fee to Black Bart Boondoggles, EA-LLC (Preparer) is for income tax preparation service ONLY; which is made on a professional "best efforts" basis with no guarantee of specific results.  The fee does NOT cover the following: IRS or state audits and resulting liability/ bookkeeping and accounting/ balancing checkbooks/ legal advice/ compilations, audits, reviews/ financial planning/ risk analysis/ matching of income, books, and records to bank statements/ checking of Taxpayers' figures for accuracy and completeness/ discovery of fraud or irregularities/ consultations/ stock market advice/ any other unspecified service.  Preparer is not required to anticipate or notify Taxpayers of any possible consequences of current tax treatment on future taxes or matters affecting Taxpayers.  Income tax returns are prepared from information furnished by the Taxpayers without verification and the Taxpayers certify that they either have or can secure documentation of all income and expense items claimed. Taxpayers release the Preparer and his employees from all liability for their preparation of and/or advice about this tax return and any related matters.

I have read, understood, and agree to the above terms of service. The following facts and circumstances for tax year              are true, correct, and complete to the best of my knowledge and belief.

 

 

 

 

 

Signed ___________________________________________________          Date ____________________

 

P.S.  Now, I know the last sentence of that first paragraph is twistin' the knife a dab, or may even be a damned outrage, but what the hey; you cain't be too careful nowadays.

Regards, BB :D

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The CPA journal did an article on engagement letters many years ago (I received it off of a forum like this in about 2005) that said engagement letters are almost completely useless as a legal liability tool in court. Their goal is to dissuade clients from taking action like Black Bart's letter tries to achieve. I have one similar to Abby's but honestly I don't think it'll do much in an actual court case.

 

As the journal of accountancy article linked above mentions, you need a very extensive letter that is highly personalized to offer any real help. You can't just write a single letter, give it to every person to sign and think you've done much. Of course, that's exactly what I do.

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2 hours ago, Abby Normal said:

The problem is getting sued and then having your lawyer tell you that you should have had different wording in your letter. I've seen letters from big firms that are 9 or more pages long.

The trouble with a nine-page letter is that the judge will sympathize with the guy who says "Nobody could read that amount of legal mumbo-jumbo."  That's the reason the life insurance companies no longer get only a signature on your four-page life insurance policy app; they make you go through the list of illnesses and initial each one - thereby nailing it down that you don't have each dread disease listed.  I agree with Roberts that mine is a blatant attempt to avoid liability, but even if the judge doesn't like it he can't hardly go along with a client's claim that my paragraph was too much to read.  I think he'd have to ask "Did you read this? It's fairly straightforward."

Still, it's a horse race either way.  A lawyer once told me "A million-dollar insurance policy is best.  Litigants will sue you, your wife, kids, and anyone possibly or remotely involved." 

:D Ha! A couple used to come in every year-hubby never said a word (no hello-no nothin'-stared at the floor). Wife handled all talk-everything.  One year they itemized and I got the med records; he'd been a diagnosed schizophrenic for years. Then (comes the dawn) I remembered that every year she slid the engagement letter across the desk for him to sign. 

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On ‎01‎/‎18‎/‎2019 at 3:27 PM, Roberts said:

The CPA journal did an article on engagement letters many years ago (I received it off of a forum like this in about 2005) that said engagement letters are almost completely useless as a legal liability tool in court. Their goal is to dissuade clients from taking action like Black Bart's letter tries to achieve. I have one similar to Abby's but honestly I don't think it'll do much in an actual court case.

 

As the journal of accountancy article linked above mentions, you need a very extensive letter that is highly personalized to offer any real help. You can't just write a single letter, give it to every person to sign and think you've done much. Of course, that's exactly what I do.

I use the engagement letter because it keeps the IRS out of my hair.  The IRS dislikes Engagement letters more than any one else.  The Engagement letter clearly puts it on the taxpayer, and not on ME for their fraud.  Or for their inability to give me info in a timely manner, or why I did year X, but no year Y and Z (when they didn't send me anything) or why state W was not filed for them.

I use the engagement letter EVERY Year so that you can say that you didn't read it one year, but EVERY year for 10 years?

I use the Engagement letter to satisfy a "block" that gets checked somewhere.  Even if I never get sued.  But if I do, it get checked.  It DOES limit my legal liability.  I may pay, but it might help save as well.

I use the Engagement Letter to establish the parameters of MY STAFF and MY behavior going forward.  Not the clients.  If I do not like what the client is doing, I fire them.  And then I do not have a problem anymore.

Rich

 

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I use the engagement letter every year for every engagement for a couple of reasons.  All those mentioned by Rich.  I am a member of the AICPA and insured by their affiliate.  There is a significant premium discount for using them.  Several years ago I called for advice about a potential claim (didn't happen, though).  When I forwarded the signed engagement letter, I was assured then that all was covered.  It was a great relief.  If any potential client looks askance at the requirement to sign said letter, we part ways.

We need to know the expectations of each other and who, exactly, is responsible for what.  I am still amazed at the number of folks who seem to have lost or misplaced prior year tax returns.  I actually wonder if they have a clue as to the location of the supporting documents.  More than once I have been asked about a W-2 or other document for a prior year.  Yes, I do, in fact, have a copy.  Where is theirs (she asked rhetorically)?

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