Pinnacle Business Solutions L.L.P.
Individual Tax Engagement Letter
CITY, STATE ZIP:
Subject: Preparation of Your Individual Tax Returns
Dear CLIENT NAME:
Thank you for selecting Pinnacle Business Solutions to assist you with your tax affairs. This letter confirms the terms of our engagement with you and the nature and extent of services we will provide.
We will prepare the 2018 federal and all state income tax returns you request using information you provide to us. We may ask for clarification of some items, but we will not audit or otherwise verify the data you submit. We’ve enclosed an “Organizer” to help you gather the information required for a complete return. If you use the Organizer, it will help you avoid overlooking important information and contribute to efficient preparation of your returns. That helps keep the cost of our services as low as possible.
It is your responsibility to provide information required for preparation of complete and accurate returns. You should keep all documents, canceled checks and other data that support your reported income and deductions. They may be necessary to prove accuracy and completeness of the returns to a taxing authority. You are responsible for the returns, so you should review them carefully before you sign them.
Unless we are otherwise advised, you are responsible for confirming that personal expenses, if any, are segregated from business expenses 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.
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, or property taxes. You agree that we have no responsibility to research these obligations or to inform you of them. If upon review of the information you have provided us and other information that comes to our attention, we believe you may have an obligation to file additional tax returns, we will notify you of this in writing and ask you to contact us. If you ask us to prepare these returns, we will confirm this in a separate engagement letter and delineate the additional charges for this service.
We will prepare the above referenced tax returns solely for filing with the Internal Revenue Service (“IRS”) and state and local tax authorities as identified above. Our work is not intended to benefit or influence any third party, either to obtain credit or for any other purpose.
You agree to indemnify and hold our firm and its partners, principals, shareholders, officers, directors, members, employees, agents or assigns (collectively, “firm,” “we,” “us,” or “our”) 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.
Our work will not include any procedures to discover defalcations or other irregularities. The only accounting or analysis work we will do is that which is necessary for preparation of your income tax returns.
We will use 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 that an applicable tax law is unclear or there are conflicting interpretations of the law by authorities, we will explain the possible positions that may be taken on your return. We will follow the position you request, provided it is 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 for and you hereby release us from any such additional tax, interest, and penalties or other fees and assessments.
Penalties of as much as $100,000 can be imposed on you for failing to disclose participation in “reportable transactions,” that is, certain arrangement the IRS has identified as potentially abusive. We will insist that all such transactions be properly disclosed. See Appendix A for a schedule of listed transactions.
The IRS and many states impose penalties for substantial understatement of tax. To avoid the substantial understatement penalty, you must have substantial authority to support the tax treatment of the item challenged by the IRS or adequate disclosure of the item. A completed IRS Form 8275 or 8275-R, which discloses all relevant facts, may be required to be attached to your tax return to meet the adequate disclosure requirement. A disclosed tax position that meets the reasonable basis standard must have some authority supporting the position and be more than just arguable.
Your returns may be selected for audit by a taxing authority. Any proposed adjustments are subject to appeal. In the event of a tax examination, we can arrange to be available to represent you. Such representation will be a separate engagement for which an engagement letter will be provided to you. Fees and expenses for defending the returns will be invoiced in accordance with terms we agree on for that engagement.
We require an advance payment of 50% of our estimated fee before beginning our work. Please submit your payment with your trial balance and other supporting data. We will contact you via the e-mail address you provide (or mailing address, if no valid e-mail address is provided) to advise you when the returns are completed and available for filing. You agree that the advance payment is fully earned as of the date we provide you with this notice. Payment of the remaining balance will be due within 7 business days of the date of our e-mail or letter. Once we have verified receipt of your valid payment, we will either provide you with the completed returns for filing or file the returns electronically on your behalf.
Our professional fee for the services outlined above will be estimated at $xxx. This fee is based upon the complexity of the work to be performed and our professional time to complete the work. Additionally, this fee depends upon 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 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 be offering a new service this year at no additional charge to you, it is called “Intuit Link”. Intuit Link will allow you to more efficiently communicate with us via the Intuit Link portal. This easy to use portal is used to securely transfer documents and information between your company and Pinnacle Business Solutions. Intuit Link can also be used to provide periodic reminders to Pinnacle Business Solutions and its clients to ensure that the necessary information is submitted to Pinnacle Business Solutions and that your income tax filing is submitted on time. This service will be optional for all clients. You will be able to choose whether or not you want to utilize this new service.
We will also be offering the Intuit eSignature service this year. This service will allow for the more efficient signature of all legal documents needed prepare and file your tax return. This service will be optional for all clients. You will be able to choose whether or not you want to utilize this service. The additional charge for this service will be $5 per eSignature.
Another new service we will be offering this year is Intuit Pay-By-Refund which is offered through our partner Refund Advantage. This service will allow you to pay your tax preparation fees out of your federal tax refund. This service will be optional for all clients. You will be able to choose whether or not you want to utilize this new service. The fee to utilize this service will be $50/return.
We will bill you for our professional fees, expenses and out-of-pocket costs as of the date we deliver our work product you. Payment is due upon receipt of the billing statement. If payment is not received by the due date, you will be assessed interest charges of 2.33 % per month on the unpaid balance.
You agree that in the event your 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.
We will retain copies of records you supplied to us along with our work papers for your engagement for a period of seven years. After seven years, our work papers and engagement files will be destroyed. All of your original records will be returned to you at the end of this engagement. You should keep the original records in secure storage.
To affirm that this letter correctly summarizes your understanding of the arrangements for this work, please sign the enclosed copy of this letter in the space indicated and return it to us at the address below.
We appreciate your business. Please call if you have questions.
Paul J. Beckert, President, Pinnacle Business Solutions L.L.P.
Accepted By: _________________________________________
- Revenue Ruling 90-105 – Certain Accelerated Deductions for Contributions to a Qualified Cash or Deferred Arrangement or Matching Contributions to a Defined Contribution Plan
- Notice 95-34 – Voluntary Employee Beneficiary Association
- ASA Investering Partnership v. Commissioner -Transactions similar to that described in the ASA Investering litigation and in ACM Partnership v. Commissioner
- Treasury Regulation § 1.643(a)-8 – Certain Distributions from Charitable Remainder Trusts
- Notice 99-59 – Corporate Distributions of Encumbered Property (BOSS)
- Step-Down Step Down Preferred/Fast Pay Stock §1.7701(1)-3
- Revenue Ruling 2000-12 – Debt Straddles
- Notice 2000-44 – Inflated Partnership Basis Transactions (Son of Boss)
- Notice 2000-60 Stock Compensation Stock Compensation Transactions
- Notice 2000-61 – Guam Trust
- Notice 2001-16 – Intermediary Transactions
- Notice 2001-17 – §351 Contingent Liability
- Notice 2001- 45 – §302 Basis-Shifting Transactions
- Notice 2002-21 – Inflated Basis “CARDS” Transactions
- Notice 2002-35 – Notional Principal Contracts
- Common Trust Fund Straddles (Notice 2003-54), Pass-Through Entity Straddle (Notice 2002-50), and S Corporation Tax Shelter Transaction (Notice 2002-65)
- Revenue Ruling 2002-69 – Lease In / Lease Out or LILO Transactions
- Revenue Ruling 2003-6 – Abuses Associated with S Corp ESOPs
- Notice 2003-22 – Offshore Deferred Compensation Arrangements
- Notice 2003-24 – Certain Trust Arrangements Seeking to Qualify for Exception for Collectively Bargained Welfare Benefit Funds under § 419A(f)(5)
- Notice 2003-47 – Transfers of Compensatory Stock Options to Related Persons
- Notice 2003-55 – Accounting for Lease Strips and Other Stripping Transactions
- Notice 2003-77 – Improper use of contested liability trusts to attempt to accelerate deductions for contested liabilities under IRC 461(f)
- Notice 2003-81 – Major/Minor Tax Avoidance Using Offsetting Foreign currency Option Contracts
- Notice 2004-8 – Abusive Roth IRA Transactions
- Revenue Ruling 2004-4 – S Corporations ESOP
- Revenue Ruling 2004-20 – Abusive Transactions Involving Insurance Policies in IRC 412(i) Retirement Plans
- Notice 2004-20 – Abusive Foreign Tax Credit Transactions
- Notice 2004-30 – S Corporation Tax Shelter Involving Shifting Income to Tax Exempt Organization
- Notice 2004-31 – Intercompany Financing Through Partnerships
- Notice 2005-13 – Sale-In Lease-Out transactions
- Notice 2007-57 – Loss Importation Transaction
- Notice 2007-83 – Abusive Trust Arrangements Utilizing Cash Value Life Insurance Policies Purportedly to Provide Welfare Benefits
- Notice 2008-34 – Distressed Asset Trust (DAT) Transaction