We look forward to providing you with tax return preparation services this year. The purpose of this letter is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can provide you with high-quality, seamless services.
Returns Covered under the Engagement
With this letter, you are engaging us to prepare your Federal, State and Local individual income tax returns. We will do so with the information you provide to us in the process described below. If you have taxable income or loss in a state or locality other than your resident state, please let us know, and we will prepare the required nonresident state and/or local tax return(s).
We will prepare the above-referenced tax returns solely for filing with the Internal Revenue Service (“IRS”) and applicable state and local tax authorities.
You agree to indemnify and hold us harmless with respect to all claims arising from the use of the tax returns for any purpose other than filing with the IRS, state, and local tax authorities regardless of the nature of the claim, including the negligence of any party.
Dependent or Minor Children Tax Returns
In some cases, a dependent or minor child under your care and supervision may be required to file a U.S. and/or state income tax return. Generally, this is a service we will provide under this Engagement as a “dependent tax filing” billed at a discounted rate. To qualify for a “dependent tax filing”, the dependent must be claimed on your tax return.
Information Gathering and Submittal Process
You are responsible for fully and accurately disclosing all relevant facts affecting your returns. Please review your prior year tax return and documentation to ensure you are providing complete current year information. All documentation will be provided to First State Tax (“FST”) using the Canopy Client Portal.
We will not audit or otherwise verify the information you provide; however, we may ask for additional clarification of some information. You should maintain the documentation necessary to support the data used in the preparation of your tax returns should you be required to produce them upon examination by the taxing authorities.
Client Due Diligence
It is your responsibility to provide complete tax information in a timely manner so we can prepare your tax returns in time to file them by the due date. You also have the final responsibility for the tax returns, and therefore, you should confirm all information during the final tax return review to determine there are no omissions or misstatements before signing the e-file authorization or submitting them to the tax authorities.
Tax Planning Services
Tax estimate and/or planning services are not within the scope of this engagement. While preparing the tax returns identified above, we may bring to your attention potential tax savings strategies to consider as a possible means of reducing your taxes in subsequent tax years. However, we have no responsibility to do so and will take no action with respect to such recommendations, as the responsibility for implementation remains with you, the taxpayer. If you ask us to provide tax planning services, and we agree to provide them to you, we will confirm this engagement in a separate Agreement not included as part of your Tax Preparation.
Arguable Positions
We will use our judgment to resolve questions in your favor where a tax law is unclear, provided that we have a reasonable belief there is substantial authority for doing so. If there are conflicting interpretations of the law, 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 tax reference materials. Tax reference materials include but are not limited to, the Internal Revenue Code (“IRC”), tax regulations, Revenue Rulings, Revenue Procedures, Private Letter Rulings, court cases, and similar state and local guidance. If the IRS, state or local tax authorities later contest the position you select, additional tax, penalties, and interest may be assessed. We assume no liability, and you hereby release us from any liability, including but not limited to, additional tax, penalties, interest, and related professional fees.
Confidentiality
If the tax returns prepared in connection with this engagement are filed using the married filing jointly filing status, both spouses are deemed to be clients of the firm under the terms of this Agreement. Both spouses acknowledge that there is no expectation of privacy from the other concerning our services in connection with this Agreement. We are at liberty to share with either of you, without prior consent of the other, documents and other information concerning the preparation of your tax returns.
Support for Examinations by Tax Authorities
Not every interpretation of promulgated tax rules is straightforward and/or without uncertainty. Accordingly, we will use our professional judgment in preparing your returns. If a tax authority should later contest a position taken, or otherwise impose penalties and/or interest for non-compliance with tax laws and regulations, there may be an assessment of additional tax plus interest and/or penalties. We assume no liability for any such additional assessments. Any items resolved against you by the examining agent are subject to certain rights of appeal. In the event of an examination, we may be available to represent you. Since the selection of your return for review or examination is beyond our control, our fee to prepare your returns does not include responding to inquiries or examination by tax authorities.
Method of Communication
Our firm uses a client portal as the primary means of communication during this engagement. You consent to our use of electronic communications and recognize and accept the inherent risks related to these forms of communication.
Electronic Data Communication and Storage
In the interest of facilitating our services to you, we will send data over the Internet or utilize cloud-based storage. 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 electronic data secure in accordance with our obligations under applicable laws, regulations, and professional standards.
You recognize and accept that we have no control over the unauthorized interception or breach of any communications or electronic data once it has been transmitted or if it has been subject to unauthorized access while stored, notwithstanding all reasonable security measures employed by us. You consent to our use of these electronic devices and applications during this engagement.
Brokerage, Investment Advisory or Cryptocurrency Statements
If you provide our firm with copies of brokerage, investment advisor, or cryptocurrency statements, we will use the information solely for the purpose described in the Engagement Objective and Scope section of this Agreement. We will rely on the accuracy of the information provided in the statements and will not undertake any action to verify this information. We will not monitor transactions, investment activity, provide investment advice, or supervise the actions of the entity or individuals entering into transactions or investment activities on your behalf. We recommend that you receive and carefully review all statements upon receipt, and direct any questions regarding account activity to your banker, broker or investment advisor.
Virtual Currency
The IRS considers virtual currency (e.g., Bitcoin) as property for U.S. federal income tax purposes. As such, any transactions in, or transactions that use, virtual currency are subject to the same general tax principles that apply to other property transactions. If you had virtual currency activity during the tax year, you may be subject to tax consequences associated with such transactions and may have additional reporting obligations. You agree to provide complete and accurate information regarding any transactions in, or transactions that have used, virtual currency during the applicable tax year.
Extensions of Time to File Tax Returns
The original filing due date for your tax returns is April 15, 2025 (March 17, 2025 for business returns). You must provide the information needed to prepare the tax returns no later than March 28, 2025 (February 28, 2025 for business returns). Failure to do so may result in the inability to complete your returns by the original filing due date.
It may become necessary to apply for an extension of the filing deadline if there are unresolved issues or delays in processing, or if we do not receive all the necessary information from you on a timely basis. All taxes owed are due by the original filing due date. Additionally, extensions may affect your liability for penalties and interest or compliance with governmental or other deadlines.
You must notify us in writing (email) by April 4, 2025, if you require an extension of time to file. Keep in mind, an extension is only an extension to file the tax return and not an extension of time to pay tax. In some cases, your signature may be required on such applications prior to filing. Failure to timely request an extension of time to file can result in penalties for failure to file tax returns, which accrue from the original due date of the returns and may be substantial.
Fees
Fees for our services will be charged based on the complexity and time needed to prepare your returns. Our services will conclude upon delivery of the completed tax returns posted to your client portal or upon our written (email) withdrawal from the engagement, if earlier. Tax returns will be filed upon payment receipt. FST is not responsible for any interest or penalty incurred on taxes due to unpaid fees. Failure to pay service fees in a timely manner will result in termination of client relationship and discontinued client portal access.
Responsibilities of the Client
A fundamental term of this Agreement is that the Client will provide us with all information relevant to the services to be performed and to provide us with any reasonable assistance as may be required to properly perform the engagement. The Client agrees to bring to our attention any matters that may reasonably be expected to require further consideration to determine the proper treatment of any relevant item. The Client also agrees to bring to our attention any changes in the information as originally presented as soon as such information becomes available. Unless otherwise indicated, any deliverables are solely for Client’s internal use and benefit.
Responsibilities of FST
We will perform our services on the basis of the information you have provided and in consideration of the applicable federal, state or local laws, regulations and associated interpretations relative to the appropriate jurisdiction as of the date the services are provided. Tax laws and regulations and/or their interpretation are subject to change at any time, and such changes may be retroactive in effect and may be applicable to advice given or other services rendered before their enactment dates. We do not assume responsibility (and will have no liability) for such changes occurring after the date we have completed our services.
Engagement Limitations
The services performed under this Agreement do not include the provision of legal advice and we make no representations regarding questions of legal interpretation. Client should consult with its attorneys with respect to any legal matters or items that require legal interpretation, under federal, state or other type of law or regulation.
As you may be aware, tax returns and other filings are subject to unexpected refund delays and examination by taxing authorities. We will be available to assist the Client in the event of a refund delay, an audit or any issue for which we have provided services under this Agreement. However, unless circumstances are the fault of FST, our fees for these additional services are not covered by this Agreement and additional fees will apply.
Disassociation or Termination of Engagement
Either party may terminate this Agreement at any time upon written (email) notice of termination to the other party. In the event of termination, Client will be responsible for fees incurred through the actual date of termination.
Other Provisions
Neither party shall be liable to the other for any delay or failure to perform any of the services or obligations set forth in this Agreement due to causes beyond its reasonable control.
If you authorize FST to prepare your individual income tax returns pursuant to the terms set forth above, please mark the “Client Engagement Letter Acknowledgement” task as complete in your client portal, this shall be deemed to evidence your acceptance of the terms set forth herein.
Very truly yours,
Thomas J Walsh
tom@firststatetax.com