January 1, 2018
E. Daniel Miller, CPA, PC is pleased to provide the professional services described below. This letter confirms our understanding of the terms and objectives of our engagement and the nature and limitations of the services provided. This engagement between you and our firm will be governed by the terms of this letter. You accept the terms of this letter by engaging us to perform tax services for you or by providing information to us to perform tax services for you.
We perform our services in accordance with the Statements on Standards for Tax Services issued by the American Institute of Certified Public Accountants. We will prepare your tax returns based upon information and representations you provide to us. We do not audit or otherwise verify the data you submit to us, although we may ask you to clarify some of the information. We prepare tax returns solely for filing with the Internal Revenue Service (“IRS”) and state and local tax authorities. They are not intended to benefit or influence any third party, either to obtain credit or for any other purpose. As a result, you agree to indemnify and hold our firm and any of its partners, principals, shareholders, officers, directors, members, employees, agents or assigns harmless with respect to any and all claims arising from the use of the tax returns for any purpose other than filing with the IRS and state and local tax authorities regardless of the nature of the claim, including the negligence of any party. You agree that you will not and are not entitled to rely on any advice unless your request and our response are provided in writing.
Client Responsibilities
Documentation
You are responsible for maintaining adequate documentation to substantiate the accuracy and completeness of your tax returns. You should retain all documents that provide evidence and support for reported income, credits, and deductions on your returns as required under tax law. You are responsible for the adequacy of all such documents. You represent that you have such documentation and can produce it, if needed, to respond to any audit or inquiry by taxing authorities. You agree to hold us harmless with respect to any additional taxes, penalties, or interest imposed on you by taxing authorities resulting from the disallowance of tax deductions due to inadequate documentation.
Health Insurance
You are responsible for disclosing all health insurance coverage to us, and you are responsible for providing related forms such as Forms 1095. You are also responsible for disclosing if you do not meet the minimum coverage requirements.
Personal expenditures
Unless we are otherwise advised, you are responsible for confirming that personal expenditures, if any, were and are segregated from business expenditures and expenses such as meals, travel, entertainment, vehicle use, gifts, and related expenses are supported by necessary records required by the IRS and other taxing authorities. At your request, we are available to answer your questions and advise you on the types of supporting records required.
Listed transactions and transactions of interest
You acknowledge your responsibility to inform us of any listed transactions or transactions of interest as designated by the IRS. You agree to hold us harmless with respect to any additional taxes, penalties, or interest imposed on you by taxing authorities resulting from your failure to timely notify us, in writing, of all such transactions in order to facilitate the timely preparation and filing of your tax returns.
U.S. filing obligations related to foreign investments
It is your responsibility to inform us if you directly or indirectly hold any interest or signatory authority in any assets located in a foreign country. This information is used to calculate any applicable foreign tax credits. This data is also used to inform you of any additional filing requirements, which may include Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). Failure to file required forms can result in the imposition of both civil and criminal penalties, which can be significant. These are not tax returns and their preparation is not within the scope of this engagement. If you ask us to prepare these forms, we will confirm this matter in a separate engagement letter and delineate the additional charges for this service.
As part of your federal income tax return, you are required to report the maximum value of specified foreign financial assets, which include financial accounts with foreign institutions and certain other foreign non-account investment assets that exceed certain thresholds. In some but not all cases, this filing obligation may overlap your FBAR filing obligations. You are responsible for informing us of all foreign investments so we can properly advise you as to your FBAR and income tax return filing obligations.
Foreign and other filing obligations
You are responsible for complying with any other country’s income reporting and tax filing requirements. We have no responsibility to discuss these issues with you. If you have specific questions regarding your tax filing obligations, please contact us to schedule an appointment to discuss your concerns.
You are responsible for providing Forms 1099 to certain parties to whom you pay $600 or more in a calendar year. You are also responsible to provide copies of Forms 1099 and the Form 1096 to the IRS. You understand this is your responsibility, and it is your responsibility should it be determined these Forms should have been filed. We can provide this service for you if you provide the necessary information. Please let us know, and we can advise you.
You are responsible for informing us of asset acquisitions and disposals, for Federal and State tax returns and for Business Personal Property tax listings if applicable. You are responsible for informing us of assets sold, if applicable, and the sales amount received for each asset. You have final responsibility for the asset listings, the completeness of the listings, and for all Federal and State tax returns and Business Personal Property tax listings.
Entities Taxed As S Corporations
S Corporation shareholders (members if LLC taxed as an S Corporation), who provide services to the corporation, are required to pay themselves reasonable compensation when circumstances allow. IRS Revenue Ruling 74-44 states that the IRS will re-characterize small business corporation dividends/distributions paid to shareholders as salary when such dividends are paid to the shareholders/members in lieu of reasonable compensation for services. Such a re-characterization can incur payroll taxes that will then be due the IRS. You acknowledge that we have informed you of these rules and obligations. You have final responsibility for complying with these rules.
Ultimate responsibility
You have final responsibility for your income tax returns. Check them carefully for accuracy and completeness.
CPA Firm Responsibilities
We prepare your returns based on your filing status (single, married filing jointly, married filing separately, head of household or qualifying widow
Arguable Positions
We used our judgment to resolve questions in your favor where a tax law is unclear assuming there is reasonable justification for doing so. Whenever we are aware of conflicting interpretations of the law by authorities, we will explain the possible positions that may be taken on your return. We have followed the position(s) you requested, provided they are consistent with our understanding of the current tax code, laws, regulations, and their interpretations. If the IRS or state tax authorities later contest the position taken, there may be an assessment of additional tax, interest, and penalties. We assume no liability, and you hereby release us from any such additional tax, interest, and penalties or other fees and assessments. This engagement does not include responding to inquiries by governmental authorities. If your tax return is selected for examination or audit, we would be pleased to discuss providing assistance to you under the terms of a separate engagement letter for that specific purpose.
Bookkeeping assistance
We may have deemed it necessary to provide you with accounting and bookkeeping assistance solely for the purpose of preparing the income tax returns. Additional charges that apply for such services are reflected in the payment authorization provided (unless otherwise agreed upon).
Management responsibilities
E. Daniel Miller, CPA, PC, in its sole professional judgment, reserves the right to refuse to take any action that could be construed as making management decisions or performing management functions on your behalf. However, we may provide advice and recommendations to assist management in performing its functions and making decisions. You agree that you are responsible for all management decisions and functions concerning this engagement.
Errors, fraud, or theft
Our engagement does not include any procedures designed to discover errors, fraud, or theft. Therefore, this engagement cannot be relied upon to disclose such matters.
Tax planning services
Our engagement does not include tax planning services, which are available as a separate engagement. During the course of preparing the tax returns identified above, we may bring to your attention certain available tax saving strategies for you to consider as a possible means of reducing your income taxes in subsequent tax years. However, we have no responsibility to enact such recommendations nor take any action with respect to any such recommendations, as the responsibility for implementation remains with you, the taxpayer.
Government inquiries
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 we assist you in responding to such inquiry. If you ask us to represent you, we will confirm this in a separate engagement letter and delineate how additional charges for this service will be calculated.
Third-party verification requests
We will not respond to requests from banks, mortgage brokers or others for verification of any information reported on these tax returns.
Timing of the Engagement
If your return is electronically filed, our services will conclude upon the earlier of the filing and acceptance of your 2017 tax returns by the appropriate taxing authorities or one year from the execution date of this letter. You will be required to verify and sign a completed series Form 8879, IRS e-file Signature Authorization, and state equivalent authorization form if applicable before your returns can be filed electronically. You are responsible for reviewing the accuracy of all tax returns and any accompanying schedules and statements prior to filing. If your return is to be filed by mail, our services will be concluded upon the earlier of delivery to you of your 2017 tax returns for your review and filing with the appropriate taxing authorities or one year from the execution date of this letter.
Extensions of Time to File Tax Returns; Penalties and Interest Charges
The original filing due dates for your federal tax returns are March 15, 2018 for Corporate and partnership Federal and state tax returns and April 17, 2018 for Individual tax returns. It may be 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. 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. All taxes owed are due by the original filing due date. There is no extension of time to pay tax due. Additionally, extensions may affect your liability for penalties and interest or compliance with government or other deadlines, and interest and penalties may apply until the tax is paid.
Penalties and Interest Charges
Federal, state, and local taxing authorities impose various penalties and interest charges for non-compliance with tax law, including, for example, failure to file or late filing of returns, and underpayment of taxes. You remain responsible for the payment of all taxes, penalties, and interest charges imposed by taxing authorities. We rely on the accuracy and completeness of the information you provide to us in connection with the preparation of your tax returns. Failure to disclose, or inadequate disclosure of income or tax positions, can result in the imposition of penalties and interest charges. If penalties and interest appear to be due, then we may have estimated such amounts and included them in the tax due that we have conveyed to you. If so, there may be variances in the penalties and interest calculations based upon the independent calculation of the government(s), and as such, a bill for balance due (or a credit on account) may be issued to you by the government(s).
Fees and Billings
The balance of fees is due upon completion of the tax return, and payment is required prior to providing your tax returns to you. Our fees are based upon the complexity of the work to be performed and our professional time to complete the work. Additionally, this fee is dependent upon the availability, quality, and completeness of the records you provided. You agree you have delivered all records necessary, and those requested by our staff, to complete this engagement.
In the event your records were not submitted in a timely manner, or were incomplete or unusable, we reserve the right to charge additional fees and expenses for services required to correct the problem. If this occurred, any additional fees will be reflected on your invoice.
If payment is not received by the due date, or your payment is rejected, you may be assessed interest charges of 10% per month (minimum of $35) on the unpaid balance. We reserve the right to suspend or terminate our work due to non-payment of fees.
You agree that in the event your tax return is not filed, and/or payment of tax is not received, by the due date of the tax return, we will not be responsible for your failure to meet government and other filing deadlines, for any penalties or interest that may be assessed against you resulting from your failure to meet the deadlines, and for any other damages (including, but not limited to consequential, indirect, lost profits, or punitive damages) incurred by you as a result of the late filing or non-filing of the tax returns.
Electronic Data Communication and Storage and Use of Third Party Service Provider
In the interest of facilitating our services to you, we may have communicated by facsimile transmission, sent data over the Internet, sent data via text, stored electronic data via computer software applications hosted remotely on the Internet, or allowed access to data through third-party vendors’ secured portals or clouds. Electronic data that is confidential to you and/or your company may have been transmitted or stored using these methods. We may have used third-party service providers to store or transmit this data, such as providers of tax return preparation software. In using these data communication and storage methods, our firm employs measures designed to maintain data security. We use reasonable efforts to keep such communications and data access secure in accordance with our obligations under applicable laws and professional standards. We also require all of our third-party vendors to do the same. You recognize and accept that we have no control over unauthorized interception or breach of communications or data once it has been sent or has been subject to unauthorized access, notwithstanding all reasonable security measures employed by us or our third-party vendors. You consent to our use of these electronic devices and applications and submission of confidential client information to third-party service providers during this engagement. Work papers and other documents created by us are our property and will remain in our control. Our records retention policy requires we return to you all original records and documents you have given us at the conclusion of the engagement unless otherwise agreed upon. Your records are the primary records for your operations and comprise the backup and support for your financial reports and tax returns. Our records and files (hard-copy, electronic, software) are our property and are not a substitute for your own records
We utilize third party vendor software to allow a secure web based means of providing files to our clients. Clients have their own folder accessible via the Internet. You will typically have access to these documents wherever you have Internet access. You are responsible for downloading and retaining these documents as part of your own record keeping. You realize we are not responsible for keeping these records. Items in each client’s folder are subject to deletion based on length of time and termination of service among other potential factors. If your folder contents have expired (regardless of whether you have downloaded your information), and/or you need additional copies, we can provide these additional copies to you for a fee of $25 per tax return.
The software we use to perform any accounting and/or tax preparation is ours. If you decide you would like an electronic copy of a general ledger or software file (if applicable), you agree we are not under obligation to do so, and that doing so may require you pay an additional fee. Catastrophic events or physical deterioration may result in our firm’s records being unavailable before the expiration of our retention period. Our email list is a primary means of communication with our clients, and your agreement with this letter allows us to place you on that list if you are not already. You will have the option to unsubscribe via those emails if you choose.
Termination and Other Terms
Any claim arising out of this engagement letter shall be commenced within one year of the delivery of the work product to you (whether electronically or otherwise), regardless of any longer period of time for commencing such claims as may be set by law. We reserve the right to withdraw from the engagement without rendering services for any reason, including but not limited to, if documents requested in the organizer or by our office are not timely provided to our firm. Further, we reserve the right to withdraw from this engagement without completing the returns if you fail to comply with the terms of this engagement letter, if you disagree with our recommendations regarding tax return filing and reporting obligations, tax return positions to be taken or disclosures to be made in the returns, or if we determine professional standards require our withdrawal for any other reason.
At the completion of our engagement, the original source documents will be returned to you. Work papers and other documents created by us are our property. Such original work papers will remain in our control, and copies are not to be distributed without our prior written consent.
Again, you accept the terms of this letter by engaging us to perform tax services for you or by providing information to us to perform tax services for you. If any portion of this engagement letter is deemed invalid or unenforceable, said finding shall not invalidate the remainder of the terms set forth in this engagement letter.
We appreciate the opportunity to be of service to you!
Very truly yours,
E. Daniel Miller, CPA
E. Daniel Miller, CPA, PC