Here's what I use. It's 2 pages. My practice (what's left of it...I'm slowly retiring) has always been as a CFO/controller, etc. for small businesses, and, as such, I'm at their facilities frequently and probably have a closer personal relationship with them...
Dear [Client name]
Thank you for giving me the opportunity to provide tax services to you. I appreciate your trust in me and look forward to preparing your tax return. Both the IRS and the California Board of Accountancy have regulations regarding tax preparers. This letter contains important information regarding the preparation of your tax return; it outlines the responsibilities that each of us has in this engagement; and it outlines certain policies and procedures of mine that you should be aware of. When you provide me with information and data to start the preparation of your return, you are agreeing to all the terms outlined in this letter.
My fee for preparation of your 2020 Federal and California tax returns is $700. If you have W2s from a second or third state, the fee may increase from $25 to $50 more. The fee is payable upon presentation of the tax return to you, or upon receipt of your Federal refund.
During tax season, my office Hours are 9 a.m. - 6 p.m., Monday - Thursday, and Friday 9 - 1. during the summer and fall, I will make Monday and Friday appointments if I'm around.
I have enclosed a "CheckList" and some schedules that show last year's data to help you gather your paperwork. (Accountants call this an "Organizer.") You might use this organizer:
• as a checklist to make sure you get all of your paperwork; or
• to enter your information here, but you don't need to enter info here if you have your W2s,
1099s, bank statements, etc...
• don't use it if you don't want to...
Please focus on items that we used last year; these have been highlighted in color. Some of the lines in the organizer show last year's amounts for reference only. If you have provided me this information in a spreadsheet in the past, please continue to do so. If you need me to e-mail you last year's spreadsheet, or, if you would like to start sending me your info in a spreadsheet, please let me know.
Please note that the IRS and the US Treasury Department have very strict rules regarding disclosure of Foreign Bank accounts, Foreign assets, and Foreign income. The IRS requires that you disclose: 1) any interest earned from a foreign bank or securities account,
2) if you were an authorized signer for a foreign bank or securities account, or
3) if you had any money in a foreign bank account.
The IRS and the California Franchise Tax Board impose penalties on return preparers such as myself, and on the taxpayer (you), for failure to observe due care in preparing income tax returns. In order to ensure an understanding of our mutual responsibilities I ask all clients for whom I prepare tax returns to confirm the following arrangements.
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{Client name} Page 2 of 2 October 18, 2022
I will use my professional judgement in preparing your returns. In resolving where the law is unclear or where there are conflicts between the IRS's interpretations of the law and other supportable positions, I will explain the various positions that are available. I will adopt whatever position you request on your return so long as it is consistent with Tax rules, regulations, and interpretations. If a taxing authority should later contest the position taken, there may be an assessment of additional tax plus interest and penalties. I have no liability for any such additional tax, interest, penalties or assessments.
I do not audit or otherwise verify the data you submit, although I may ask you to clarify some of it or furnish me with additional data. Whether I am preparing a business, or personal, return for you, my work is not likely to discover fraud, theft, defalcations, or errors or omissions of any kind.
It is your responsibility to provide me with all the information that you have regarding your tax returns. All information that I receive from you is confidential and is subject to disclosure by me only at your request or as compelled by law or for regulatory matters. You understand that any information given to me is not protected under the Internal Revenue Code or any California law; there is no "CPA - client" privilege. Thus, it is subject to disclosure as compelled by law.
Your returns may be selected for examination by the taxing authorities. In the event of an audit, you will be requested to produce documents, records, or other evidence to substantiate the items of income and deduction shown on a tax return. If an examination occurs, I will represent you if you so desire; however, these additional services are not included in my fee for preparation of your returns.
PRIVACY & RETENTION POLICIES
It is my policy to keep records related to this engagement for 7 years for existing clients, and 4 years for clients who no longer use my services. Former clients' records may be destroyed 4 years after the date of preparation of the last tax return without further notice. However, I do not keep any original client records; these are returned to you when the tax return is given to you. 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.
I may consult with you by telephone, fax, and E-mail, as necessary, to answer questions. Communications with you made by telephone, fax, and E-mail will normally not be encrypted.
I am committed to respecting your privacy. I do not disclose any information about my clients to any third party. The only exception to this is Drake Software, Franklin, North Carolina. Drake provides the software that I use to prepare your return, and Drake is the company that actually e-files your return with the IRS, so I electronically transfer your return to them when it is ready for e-filing. I also occasionally get support from them in the preparation of returns, and I may transfer your return data to them while working on an issue. All of Drake's personnel are U.S. based. Furthermore, under Section 54.1 of the California Board of Accountancy Regulations and Section 7216 of the Internal Revenue Code, I am generally prohibited from disclosing client information to non-affiliated third parties except under the following circumstances:
• Complying with a validly issued subpoena or summons;
• Disclosures made in response to an official inquiry from a governmental agency;
• Disclosures made in connection with a proposed sale or merger of my professional practice;
• Other disclosures mandated or permitted under Section 54.1 of the California Board of Accountancy Regulations.
LICENSING & REGULATION
As a CPA, I am licensed by the California Board of Accountancy. The Board may be reached at 916/263-3680 or online at
http://www.cba.ca.gov.
I appreciate this opportunity to serve you. If you have any questions or need any additional information, please call. I look forward to working with you. Thank you.