TY2024 - Individual Income Tax Return - 1040 Engagement Letter Logo

  • TY2024 - Individual Income Tax Return - 1040 Engagement Letter

  • {todaysDate}
     
    Dear Valued Client:
     
    Subject: Preparation of Your 2024 Individual Income Tax Returns
     
    vbCPA, PLLC (“firm,” we,” “us,” or “our”) is pleased to provide you (“you” or “your”) with the professional services described below. Please read this letter, the attached Terms and Conditions Addendum and any other attachments incorporated herein (collectively, “Agreement”). This Agreement details the nature and limitations of the services we will provide, the terms of our engagement and each party’s responsibilities.
     
    Engagement Objective and Scope
    Our services are limited to the following federal and state tax returns for the year ended December 31, 2024:
    • Form 1040 - U.S. Individual Income Tax Return
    • State Tax Return(s) - Applicable State Individual Income Tax Return(s)
    The objective of our services is to assist you with the calculation of your tax due and provide you with forms and schedules we believe are suitable for you to file with the Internal Revenue Service (“IRS”) and applicable state and local tax authorities and sufficient to comply with your tax filing obligations. You have the final responsibility for the filing and content of your tax return(s). We will not assist you with any tax return other than those identified above, without your written request, and our written agreement to do so.

    Our services are not intended to benefit or influence any third party, including any entity or investment which may seek to evaluate your creditworthiness or financial strength. You agree to indemnify and hold us harmless from any and all claims arising from the use of the tax returns for any purpose other than complying with your tax filing obligations, regardless of the nature of the claim, excepting claims arising from our gross negligence or intentional wrongful acts.
     
    Our engagement does not include any procedures designed to detect errors, fraud, theft, or other wrongdoing. Therefore, our engagement cannot be relied upon to disclose such matters. In addition, we are not responsible for identifying or communicating deficiencies in your internal controls. You are responsible for developing and implementing internal controls applicable to your operations.

    Assisting you with your compliance with the Corporate Transparency Act (“CTA”), including beneficial ownership information (“BOI”) reporting, is not within the scope of this engagement. You have sole responsibility for your compliance with the CTA, including its BOI reporting requirements and the collection of relevant ownership information. We shall have no liability resulting from your failure to comply with CTA. Information regarding the BOI reporting requirements can be found at https://www.fincen.gov/boi. Consider consulting with legal counsel if you have questions regarding the applicability of the CTA’s reporting requirements and issues surrounding the collection of relevant ownership information.

    You may request that we perform additional services not contemplated in this engagement letter. If this occurs, we will communicate with you regarding the scope and estimated cost of these additional services. Engagements for additional services may necessitate that we amend the Agreement or issue a separate agreement to reflect the obligations of all parties. In the absence of any other written communications from us documenting additional services, our services will be limited to and governed by the terms of this Agreement.
     
    This engagement is limited to the professional services outlined above.

    CPA Firm Responsibilities
    It is our duty to prepare your returns based on the same standard of care that a reasonable tax return preparer would exercise in this type of engagement. Unless otherwise noted, the applicable standard of care for a “reasonable tax return preparer” shall be based upon the following pronouncements:
    • the Statements on Standards for Tax Services ("SSTS") issued by the American Institute of Certified Public Accountants ("AICPA");
    • U.S. Treasury Department Circular 230 ("Circular 230"); and
    • the Internal Revenue Code, Treasury Regulations, and any applicable state/local corollaries (collectively, "the Code"). 
    As tax return preparers, these pronouncements restrict our ability to sign a tax return when the tax positions you report do not comply with tax law. We will be unable to sign your return and may terminate this Agreement if you:
    • request that we report a tax position on your return which we feel is contrary to published guidance, frivolous, or a willful attempt to evade tax;
    • request that we include a deduction, credit or refund on your return that we believe you do not qualify for; or
    • decline to disclose a position where in our professional judgment tax law requires disclosure.

    Absent any direction from you, we will prepare your tax returns based upon your filing status (single, married filing jointly, married filing separately, head of household or qualifying widow[er] with dependent child) as reflected in your income tax returns for last year. Your filing status may be affected by any addition or subtraction to the members of your immediate household, a change in your marital status, or a change to the support you provide to individuals not in your immediate household. If you do not alert us, we will infer that you do not wish to change your filing status absent other information you provide to us. If your filing status has changed, you wish to change your filing status, or you have questions about your filing status, please contact us immediately.

    It is your responsibility to safeguard your assets and maintain accurate records pertaining to transactions. We will not hold your property in trust for you, or otherwise, accept fiduciary duties in the performance of the engagement.
     
    vbCPA, PLLC, in its sole professional judgment, reserves the right to refuse to take any action that could be conducted as making management decisons or performing management functions on your behalf.
     
    Arguable positions
    If there are conflicting interpretations of tax law, or if tax law is unclear, we will explain the possible positions that may be taken in order for us to sign your return. We will follow the position you request, provided it is consistent with our understanding of tax reference materials and our professional standards. Tax reference materials include, but are not limited to, the Code, Revenue Rulings, Revenue Procedures, 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. You will be responsible for these amounts, as well as any related professional fees, you may incur, to respond to the tax authority.
     
    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 any tax return information, including supporting documents provided to us, used in the preparation of your joint return, and any communications made to us by either of you in connection with the preparation of your joint return, may ultimately be shared with either spouse, without prior consent of the other.
     
    Bookkeeping assistance
    We may deem it necessary to provide you with accounting and bookkeeping assistance solely for the purpose of preparing the tax returns. These services will be performed solely in accordance with the AICPA Code of Professional Conduct. In the event we conclude that such services are necessary to prepare your tax returns, we will advise you in writing before services are performed and bill you for the required services. These services will be billed at our standard hourly rates and will be subject to the terms of this Agreement.
     
    Prior year review
    Our review of the prior year’s tax returns will necessarily be limited and may not find errors. We will, however, bring to your attention errors that we do find. Similarly, if you become aware of any information affecting prior year tax returns, please contact us. If an error or information affecting prior year tax returns is discovered by you or us, we will discuss your options with you. If you ask us to prepare amended tax returns, and we agree, we will confirm this engagement in a separate written agreement.
     
    Estimated tax payments
    You may be required to make quarterly estimated tax payments. We will calculate these payments for the 2025 tax year based upon the information you provide to prepare your 2024 tax returns (the “safe harbor” rule). Updating recommended payments to more closely reflect your actual current year’s income is not within the scope of this engagement. If you would like us to provide this service, we will confirm this update in a separate engagement letter.
     
    Tax planning services
    Our engagement does not include tax advice which affects the calculation of tax due or the filing of tax forms and schedules for previous or future tax years. However, we may communicate potential tax strategies to you, and you may ask high-level questions of us. It is your responsibility to communicate to us, in writing, any interest in pursuing a tax strategy identified, or if you require more than a cursory response to your question. If you do not request our assistance in writing, we will infer that you do not wish to pursue any suggestion made to you. If you do request our assistance and we agree, we will confirm our understanding with you in a separate agreement prior to proceeding.

    We shall not be liable for any forgone tax or other benefits if you fail to advise us of your desire to investigate or pursue any tax strategy communicated to or by us. Any tax advice described in this paragraph and provided to you shall be governed by this Agreement and billed at our standard hourly rates.
     
    Government inquiries
    This engagement does not include responding to inquiries by any governmental agency or tax authority. If you are contacted by a tax authority, either for an examination or other inquiry, you may request our assistance in responding. 
     
    Third-party requests
    We will not respond to any request from banks, mortgage brokers or others for verification of any information reported on these tax returns. We do not communicate with third parties or provide them with copies of tax returns.
     
    Divorce
    Because our services involve the preparation of a tax return claiming the Married Filing Jointly filing status, you are responsible for notifying us if you are in the process of filing for, have filed for, or have been granted a divorce before you sign this Agreement. If so, prior to proceeding, we will advise each of you to seek independent tax advice and will evaluate whether a conflict of interest exists which may limit our service.
     
    If we, in our sole professional judgment, determine a conflict exists and we are able to proceed, you will both be required to sign a conflict of interest waiver before we are able to prepare your returns. Depending upon your circumstances, as well as any legal advice you receive from your independent advisor, we may be unable to advise either of you until your divorce is finalized. In addition, we will require written instruction from you or your respective divorce attorneys [or, if the spouse(s) is/are unrepresented, the unrepresented spouse(s)] providing decisions we require in order to prepare your tax return. If we do not receive written instruction on a timely basis, we will be unable to proceed, and you will be responsible for any late filing and late payment penalties assessed.
     
    If either or both spouses fail to cooperate with us or with each other or any other dispute between the parties arises, and we determine that we can no longer provide services to you, we will be unable to proceed and may terminate this Agreement.
     
    In the event that you elect to file separate tax returns, you will both be required to sign new, separate written agreements prior to the preparation of the returns.
     
    Tax advice
    Any advice we may provide is based upon tax reference materials, facts, assumptions, and representations that are subject to change. We will not update our advice after the conclusion of the engagement for subsequent legislative or administrative changes or future judicial interpretations. To the extent we provide written advice concerning federal tax matters, we will follow the applicable guidance contained in the SSTS.
     
    Reliance on others
    There may be times when you engage another advisor to assist you.
    If you wish to take a tax position based upon the advice of another advisor, before we are able to sign your tax return, we must comply with the applicable provisions of the Code and the SSTS.

    We will review the other advisor’s work and may require a written statement from the advisor describing the statutory basis for the position and the suggested disclosure needed to appropriately report the position. If we believe additional research is required, we will discuss the matter with you. You agree to pay for the additional charges necessary to complete the disclosure or research as this is not included in the scope of our service.

    Moreover, you understand that the IRS, state or local tax authority may disagree with the position taken on the return. If this occurs, you will be responsible for any additional tax, penalties and interest, as well as any related professional fees, you may incur.

    If, after review of the work prepared by your other advisor, we determine that we are unable to sign the tax return, we will be unable to proceed and may terminate this Agreement.
     
    Substantial understatement penalties 
    The IRS and many states impose harsher accuracy-related penalties (20%) for substantial understatement of tax. Substantial understatement of tax may be found where the tax that should be reported on your return is less than what is actually reported on your return, based on a statutory formula which defines when an understatement is “substantial”. In some cases, avoiding substantial understatement penalties can be achieved if the tax position is adequately disclosed in a method approved by the IRS. Similar rules may apply at the state level. 
     
    While the decision to disclose or not disclose is yours, if we conclude that your return contains a tax position which we believe you are required to disclose, we will ask that you consent to include a disclosure in a method approved by the IRS. If you decline to disclose the tax position, we will be unable to proceed and may terminate this Agreement.
     
    Abusive tax strategies
    Certain tax positions or strategies, while not currently identified as “abusive” by the IRS, may ultimately be determined to be so in the future. Consequently, you agree to advise us of any transaction you have entered into that entitles you to disproportionate tax benefits (deductions, credits, or refunds), that generates significant income deferral or non-recognition, or that generates significant tax losses without corresponding cash impacts (“abusive tax strategy”). If you fail to timely notify us, in writing, of any abusive tax strategy you have entered into, you will be responsible for any liability, including but not limited to, additional tax, penalties, interest and related professional fees.
     
    Reportable transactions
    The law imposes substantial penalties on taxpayers and tax advisors for failure to disclose listed and other reportable transactions on Form 8886, Reportable Transaction Disclosure Statement and, in some cases, extends the statute of limitations tax authorities have to contest any tax return claiming those tax positions. In general, reportable transactions are potentially abusive transactions identified by the IRS that have a primary purpose of tax avoidance, including but not limited to listed transactions, confidential transactions, transactions with contractual protection, loss transactions, and transactions of interest (a definition of “reportable transactions” is located at https://www.irs.gov/instructions/i8886 and includes a link to a summary of listed transactions).
     
    If we conclude that your return contains a reportable transaction we believe you are required to disclose we will ask that you consent to include a disclosure, either on Form 8886 or other method approved by the IRS. If you decline to disclose the reportable transaction, we will be unable to proceed and may terminate this Agreement.
     
    Tax return preparer standards, reportable transactions and tax shelters
    Pursuant to the standards prescribed in Circular 230 and IRC §6694, we, as tax return preparers, are prohibited from signing a tax return unless we have a reasonable belief that there is substantial authority for a tax position taken on the tax return or we have a reasonable basis for the tax return position taken in the return and we disclose this tax position in a separate attachment to the tax return.
     
    The law imposes substantial penalties on taxpayers and tax advisors for failure to disclose listed and other reportable transactions on Form 8886, Reportable Transaction Disclosure Statement. In general, reportable transactions are potentially abusive transactions identified by the IRS that have a primary purpose of tax avoidance, including but not limited to listed transactions, confidential transactions, transactions with contractual protection, loss transactions, and transactions of interest (a definition of “reportable transactions” is located at https://www.irs.gov/instructions/i8886 and includes a link to a summary of listed transactions).
     
    The law imposes substantial penalties on taxpayers and tax advisors for failure to disclose tax shelters on Form 8271, Investor Reporting of a Tax Shelter Registration Number. A tax shelter is defined in IRC §6662((d)(2)(C) as a partnership or other entity, investment plan or arrangement, or any other plan or arrangement if a significant purpose of such partnership, entity, plan or arrangement is the avoidance or evasion of Federal income tax.
     
    You agree to advise us of any tax shelters and/or reportable transactions identified in tax reference materials. Unless a reportable transaction is more likely than not to be sustained on its merits, IRC §6662A, Imposition of Accuracy-Related Penalty on Understatements with Respect to Reportable Transactions, requires us to disclose the reportable transaction in a separate attachment to the tax return. Similarly, unless a tax shelter is more likely than not to be sustained on its merits, IRC §6662(d)(2)(C)(ii), Imposition of Accuracy-Related Penalty on Underpayments, requires us to disclose tax shelters in a separate attachment to the tax return.

    If you do not consent to a required disclosure, we may be unable to prepare your tax returns.
     
    You agree to hold our firm harmless with respect to any liability including but not limited to, additional tax, penalties, interest and professional fees resulting from your failure to timely notify us, in writing, of any tax shelters and/or reportable transactions identified in tax reference materials in order to facilitate the timely preparation and filing of your tax returns.
     
    Conflicts of interest
    If we, in our sole discretion, believe a conflict has arisen affecting our ability to deliver services to you in accordance with either the ethical standards of our firm or the ethical standards of our profession, we may be required to suspend or terminate our services without issuing our work product.
      
    Client Responsibilities
    If you fail to comply with the responsibilities as described in this Agreement, your actions or your inactions may result in economic or other loss to you, such as disallowance of tax deductions or credits claimed, additional tax, penalties or interest assessed against you, loss of administrative rights, or criminal punishment. You will be responsible for any loss suffered by you as a result of your failure to comply with your responsibilities, including any professional fees required to defend or correct changes made to your tax returns or prepare previously unfiled or amend previously filed tax returns. 
     
    The responsibilities detailed in this section are not exhaustive, and our services to you may require additional responsibilities not listed.
     
    Tax information
    Due to the high volume of tax returns prepared by our firm, you must provide your tax return information to us no later than March 20, 2025. Failure to do so may result in your inability to file your returns or pay your tax due by the original filing due dates.
     
    We will provide you with an income tax organizer or other method of collecting the information necessary to prepare your income tax returns. You are responsible for fully and accurately completing the income tax organizer, including any activities in which you engage outside of the U.S. or your home state.

    We will rely upon the completeness and accuracy of the information and representations you provide to us. We will not audit or otherwise verify the data you submit to us, although we may ask you to clarify certain information.
     
    We may deem it necessary to provide you with limited accounting or bookkeeping assistance solely for the purpose of helping you organize your information. This assistance is intended to be nominal and is not a separate accounting or bookkeeping service. In the event we conclude that bookkeeping or accounting assistance is necessary to prepare your tax returns, we will advise you in writing before proceeding. Any assistance will be billed at our standard hourly rates and will be subject to the terms of this Agreement.

    Online access to information
    To the extent you provide our firm with access to electronic data via a local or online database from which we will download your trial balance or other information, you agree that the data is accurate as of the date and time you make it available to be downloaded by us.
     
    Administrative Adjustments and Compliance with BBA
    If you are or were a partner at any time in a partnership and receive(d) Schedule K-1 (1065), you may receive a Form 8986, Partner’s Share of Adjustments to Partnership-Related Items. Form 8986 is used by partnerships to correct errors on previously filed partnership returns and to provide the IRS and partners with each partner’s share of those tax corrections. Recipients of Form 8986 must report this information and any additional tax due to the IRS on Form 8978, Partner’s Additional Year Reporting Tax, within a specified timeframe.
     
    Our services do not include assisting you with anything pertaining to Form 8986 and/or Form 8978 unless specifically identified in the Engagement Objective and Scope section. If you receive a Form 8986 once our work has begun but prior to the filing of your tax return, you are responsible for alerting us and requesting assistance. Additionally, the impact an adjustment from Form 8986 may have on any state return you have previously filed is unclear and may only be determined with additional research. If you do not alert us or request our assistance, we will infer that you have not received Form 8986 absent other information you provide to us.
     
    All Income
    You are responsible for identifying and communicating to us all income earned and received by you from any U.S. or non-U.S. source. This includes income earned from gambling and online wagers, gig or hobby work, and activity for which you should receive a Form 1099-K (online sales) whether or not you actually receive a 1099-K.
     
    Documentation
    You are responsible for maintaining adequate documentation to substantiate the accuracy and completeness of your tax returns. Our workpapers do not satisfy your documentation responsibility. You should retain all documents that provide evidence and support for reported income, credits, deductions, and other information on your returns, as required under applicable tax laws and regulations. The IRS recommends that you maintain this documentation for as long as it may be relevant to your taxes. 
     
    You represent that you have such documentation and can produce it, if necessary, to respond to any examination or inquiry by tax authorities. You will be responsible for any liability, including but not limited to, additional tax, penalties, interest and related professional fees, resulting from the disallowance of tax deductions due to inadequate documentation.
     
    Gift Tax Returns
    The preparation of gift tax returns is not within the scope of this engagement. The IRS considers a gift to be any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money’s worth) is not received in return. Under federal tax law, certain gifts are taxable and subject to an annual gift tax exclusion amount, which for 2024, is $18,000 per taxpayer. You are responsible for informing us if you have made any transfer of value for which you did not receive full consideration, such as, but not limited to, those made in trust, forgiveness of debt, or the use of property for which no or below-market rent was charged.
     
    Gifts received from foreign persons
    The preparation of IRS Form 3520 is not within the scope of this engagement. If you transferred property to or received property from a foreign person or trust, or are a U.S. person who “owns” assets in a foreign trust, you may be required to file a separate IRS Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts or Form 3520-A, Annual Information Return of Foreign Trust with a U.S. Owner. You are responsible for providing us with details of any cash, property, or value exchanged with foreign persons or trusts, or of ownership of foreign assets, including access to foreign bank or investment accounts.
     
    Personal expenses
    In general, personal expenses are not deductible for income tax purposes. You are responsible for ensuring that personal expenses, if any, are separated from business expenses and that expenses such as meals, travel, vehicle use, gifts, and related expenses are supported by documentation and records required by the IRS and other tax authorities. 
     
    State and local filing obligations 
    The preparation of any state or local tax return not listed in Engagement Objective and Scope above is not within the scope of our engagement. You are responsible for fulfilling your filing obligations with any state or local tax authorities, including but not limited to, income, franchise, sales, use, and property taxes or abandoned and unclaimed property. However, if upon review of the information you have provided to us, including information that comes to our attention, we believe that you may have additional filing obligations, we will notify you. 
     
    If you are unsure if you have any other filing obligation with other state or local tax authorities, you are responsible for alerting us and requesting assistance. If you do not alert us or request assistance, we will infer that you do not have other state or local filing obligations. You will be responsible for tax due and penalties associated with the failure to file or untimely filing of any form for which we were not engaged to prepare.
     
    U.S. filing obligations related to foreign investments and activities
    U.S. citizens and residents generally must report income and activities related to both domestic and foreign assets (worldwide income). You are responsible for fulfilling your filing obligations related to foreign activity where required. U.S. reporting requirements related to foreign activity are very complex. Contact us immediately if you have:
    • Ownership of, investment in, or officer responsibilities for a corporation, partnership, or other business entity formed under the laws of another country;
    • Fiduciary, grantor, or beneficiary relationships in connection with an entity formed under the laws of another country;
    • Ownership of, signature authority over, or control over any financial account held in a financial institution located in another country;
    • Citizenship or government-approved employment/visa status with a country other than the U.S. (including anyone in your immediate household, or your parents who live outside the U.S.);
    • Transferred property, including cash, offshore either directly or through the purchase of or investment in an entity formed under the laws of another country;
    • Received or have legally-recognizable rights to receive property, including cash, from a trust, business, or investment formed under the laws of another country or individual residing in another country;
    • Conducted business with any entity or person physically located in another country, regardless of whether such business is for-profit, not for-profit, or informal/irregular;
    • Received property, including cash, or income from a source outside of the U.S. which is not reported on a brokerage statement (such as a 1099-B or similar report); or
    • Any other activity or economic arrangement which takes place outside of the U.S.
    Failure to timely file the required forms may result in substantial civil and/or criminal penalties. You agree to provide us with complete and accurate information regarding any foreign activity in which you have a direct or indirect interest, or over which you have signature authority, during the above referenced tax year.
     
    If you are unsure if you have any other filing obligation related to foreign activity, you are responsible for alerting us and requesting assistance. If you do not alert us or request assistance, we will infer that you do not have foreign activity absent information you provide to us. In any event, you will be responsible for tax due, penalties, and interest associated with the failure to file or untimely filing of any form for which we were not engaged to prepare.
     
    Foreign filing obligations
    You are responsible for complying with the tax filing requirements of any non-U.S. country. You acknowledge and agree that we have no responsibility to raise these issues with you and that any foreign filing obligation is not within the scope of this engagement.
     
    Digital assets
    There are specific tax implications of investing in digital assets (e.g., virtual currencies, non-fungible tokens, virtual real estate and similar assets). The IRS considers these to be property for U.S. federal income tax purposes. As such, any transactions in, or transactions that use, digital assets are subject to the same general tax principles that apply to other property transactions.

    If you transacted in digital assets during the tax year, you may have tax consequences and/or additional reporting obligations associated with such transactions. Depending on the nature or volume of those transactions, a change to thescope of our services may be required. You are responsible for providing us with complete and accurate information, including basis, regarding any transactions in, or transactions that have used, digital assets during the applicable tax year.
     
    Other income, losses and expenses
    If you realized income, loss or expense from a business or supplemental income or loss, the reporting requirements of federal and state income tax authorities apply to such income, loss or expense. You are responsible for complying with all applicable laws and regulations pertaining to such operations, including the classification of workers as employees or independent contractors and related payroll tax and withholding requirements.
     
    Compensation and withholding compliance
    If you or your business compensates individuals (including household employees) for services performed, there are various federal, state, and/or local payroll tax and income tax obligations affecting both payor and payee. We will not provide employment, labor, or immigration law advice to you as part of our engagement, including the classification of workers as employees or independent contractors. You should seek the advice of an appropriate professional, such as an employment attorney, to address any classification or employment eligibility questions. You agree to indemnify and hold us harmless for any and all claims related to misclassification or improper eligibility of individuals whom you compensate for services, excepting claims arising from our gross negligence or intentional wrongful acts.
     
    If our service to you includes preparation of Form 1040, Schedule H, we will rely on information provided by you to support your filings and we will not audit or otherwise verify the data you submit to us.
     
    Further, you acknowledge it is your responsibility to both timely comply with all payroll tax and income tax filing and remittance obligations that apply to you, and to maintain all necessary documentation to support those filings and remittances. Such forms are due as early as January 31, 2025, and significant penalties may be assessed for late filing, non-filing, or filing of incorrect information. In some cases, penalties may also be assessed against responsible individuals, such as owners and officers, in their personal capacity.
     
    Preparation of these forms and calculation of any withholding amount due (excluding Form 1040, Schedule H where required) is not within the scope of this engagement.
     
    Worker classification
    You acknowledge and confirm that you, in consultation with other professional advisors, as needed, are responsible for determining the correctness of any worker classification. Payroll tax withholding and related employer payroll tax implications result from this determination. We cannot advise you with respect to worker classification and will rely upon your determination of same.
     
    You should also issue a Form 1099-NEC, Nonemployee Compensation, to all unincorporated domestic independent contractors to whom you pay $600 or more for services. In addition, state rules should also be reviewed to determine if state taxes are required to be withheld and separate returns completed for any independent contractor. At your written request, we are available to provide written answers to your questions on required documentation and only written responses from us may be relied upon.
     
    Some of these filings are due as early as January 31, 2025 and significant penalties are assessed for late filing, non-filing and filing of incorrect information. Preparation of these forms is not within the scope of this engagement. If you ask us to prepare these forms, and we agree to prepare them, we will confirm this engagement in a separate Agreement. If you fail to adhere to the filing deadlines, you will be responsible for any penalties, interest and related professional fees for the improper filing.
     
    Ultimate responsibility
    You are ultimately responsible for complying with any substantive or procedural tax law which applies to you, and for ensuring your tax returns and any required tax payments are timely received by the appropriate tax authority. Notwithstanding any term of this Agreement, this responsibility cannot be delegated to us. 
     
    Our assistance related to your tax return is based upon tax reference materials, facts, assumptions, and representations that are subject to change. We will not update your return after the conclusion of the engagement for any reason. To the extent we provide written advice concerning federal tax matters, we will follow the applicable guidance contained in our professional standards.
     
    You have final responsibility for the accuracy of your tax returns. We will provide you with a copy of your draft tax returns and accompanying schedules and statements for review. You agree to review and examine them carefully for accuracy and completeness. Tax authorities impose various penalties and interest charges for non-compliance with tax laws and regulations, including failure to file or late filing of returns, and underpayment of taxes. You will be responsible for the payment of any additional tax, penalties, and interest charges imposed by tax authorities.
     
    You have final responsibility for the payment of your taxes in whatever amount ultimately determined. You may choose to have funds automatically withdrawn from a designated account and transmitted when your tax return is electronically filed. We will not transmit partial payments. It is your responsibility to provide us with correct account and routing numbers, to review this information for accuracy prior to submission of your return, and to ensure that sufficient funds are available at the time of payment. We shall have no liability for any tax due, penalties, interest, or overdraft charges which may result from your failure to ensure sufficient funds are available at the time of payment.
     
    Timing of the Engagement
    We expect to begin our services upon receipt of this executed Agreement, the completed 2024 income tax organizer and all documents requested either in the organizer or by our office.
     
    Our services will conclude
    • upon the earlier of:
      • the latest date of electronic acceptance of your 2024 tax returns by the relevant tax authority;
      • the date we deliver the paper copy of your returns to you; or
      • December 31, 2024 if, and only if, the actual method is used to calculate estimated tax vouchers for tax year ended December 31, 2024 as noted in the Engagement Objective and Scope section of this Agreement,
    • written notification by either party that the engagement is terminated, or
    • one (1) year from the execution date of this Agreement, whichever comes first.
    Filing Your Tax Returns
    The original filing due dates for your tax returns are April 15, 2025 for federal and most state returns. Due to the high volume of tax returns prepared by our firm, the information needed to complete the tax returns must be received no later than MARCH 15, 2025 so that the returns may be completed by the original filing due dates. Failure to do so may result in the inability to complete your returns by the original filing due dates.
     
    The obligation to file a tax return and/or extension is solely that of the taxpayer. Although we will make every reasonably prudent effort to assist you with this obligation, this Agreement is not intended to and does not create an agent/principal relationship. By signing this Agreement, you understand that actual and timely receipt of your filings by the appropriate tax authority is the duty and responsibility of the taxpayer and the taxpayer alone.
     
    Extensions of Time to File Tax Returns
    It may become necessary to apply for an extension of the filing due dates if there are unresolved issues or delays in processing or if we do not receive all of the necessary information from you on a timely basis. Applying for an extension of time to file may limit your ability to make certain elections, extend the time available for a government agency to undertake an examination of your return and/or extend the statute of limitations to file a legal action. Although we may assist you in the preparation of an extension to file your return(s), you have sole responsibility for the filing of any extension, and you agree to hold our firm harmless from any consequences, including waived elections, where the extension is not timely filed. 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.
     
    If you wish to engage our firm to apply for extensions of time to file tax returns on your behalf, we will not file these applications unless and until we receive both an executed copy of this Agreement and your express written authorization to file for an extension. 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 can be substantial.
     
    We are available to discuss this matter with you at your request. Additional charges will apply for such services.
     
    Penalties and Interest Charges
    Federal, state, and local tax authorities impose various penalties and interest charges for non-compliance with tax laws and regulations, including failure to file or late filing of returns, and underpayment of taxes. You, as the taxpayer, remain responsible for the payment of all tax, penalties, and interest charges imposed by tax 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 may result in the imposition of penalties and interest charges.
     
    E-filing
    In addition to being a return preparer, we are an Electronic Return Originator (ERO) and may prepare your return(s) and/or extension(s) in a format that permits us, if you choose, to electronically transmit (“e-file”) those forms to the appropriate tax authority on your behalf. The e-filing of any form is a separate service from the preparation of that form.

    If you request that we e-file any form on your behalf, including requests for extensions of time to file, and we agree, the IRS and states require you to sign and return to us the appropriate governmental form(s) before your returns can be filed electronically. For joint returns, both spouses must sign the e-file authorization before the return can be transmitted. If you fail to timely sign and return e-file authorization, we cannot and will not e-file any form on your behalf. In those situations, you will be solely responsible for any penalties or interest assessed against you.

    If you choose not to have your return(s) or extension(s) e-filed, or if your return(s) or extension(s) cannot be e-filed, we will deliver to you a paper copy suitable for mailing to the taxing authorities. Once delivered to you, you bear full responsibility for reviewing the paper returns for accuracy, and either signing and timely filing them, along with any payments due, or notifying us of any issue which may need to be addressed prior to filing.

    Once our services have concluded, we shall have no obligation to notify you of future tax law developments affecting your return(s) except as may be required by Circular 230 or the SSTS related to errors we identify.
     
    Professional Fees
    Our professional fee for the services outlined above will be based upon the complexity of the work to be performed, and our professional time, as well as out-of-pocket expenses. To help you estimate the fees related to the services outlined above we have provided a chart below, also made available a fee estimator on our website at www.vbcpa.tax.
     
    General Pricing Table:
    DESCRIPTION FEE
    Protection Plus Audit Defense™  $25
    Form 1040 - Base Filing Fee (Federal + 1 state) $450
    Additional state filings - 1 included $150/state
    Additional W-2/1099 forms - 6 included $5/each
    Add-on: stock sales  
         *1-25 trades $75
         *26-50 trades $100
         *51-100 trades $125
         *101 to 200 trades $150
         *201 to 250 trades $200
         *251+ trades $250
    Schedule C - Sole Proprietor/SMLLC  $600/each
    Schedule E - Rental Property Reporting $400/each rental
    Note: The above Sch. C & E fees do not include any accounting services.  
    K-1s Received $100/each
     
    Circumstances may arise that impact our estimated fee such as, but not limited to, (1) the timeliness, accuracy, or completeness of information you provide to us; (2) changes in your personnel, use of other advisors, or operations that impact our services; (3) mutually agreed changes in the scope of this engagement; or (4) other unanticipated items that arise during our engagement and that require additional time in order to complete the agreed-upon services. You agree to pay all fees and expenses incurred whether or not we complete the engagement.
     
    As part of our engagement terms, please be aware that we will prepare your tax returns in accordance with the agreed-upon schedule; however, we will not electronically file (e-file) the returns with the relevant tax authorities until full payment of our invoice for these services is received. This policy ensures that our business operations continue smoothly and allows us to maintain high standards of service for all our clients. To the extent permitted by state law, an interest charge may be added to all accounts not paid within fifteen (15) days.
     
    Protection Plus – Audit Defense + ID Theft Restoration
    As part of our commitment to providing comprehensive tax services, we are pleased to include Protection Plus $1 Million Tax Audit Defense™ and Identity Theft Restoration services with your individual tax return preparation. For a nominal fee of $25, you will have access to a dedicated team of tax resolution experts who will assist you in the event of any tax notices or audits, as well as support for identity theft incidents. This service ensures that you are well-protected and supported throughout the tax year.
     
    By signing the separate Acknowledgment of Receipt and Access form provided to you, you confirm that you have been given access to this Engagement Letter, including the full terms, conditions, and scope of services we will provide. The complete Engagement Letter is accessible via www.vbcpa.tax/signature, or you may also request a copy by email.
     
    It is your responsibility to review the Engagement Letter, including any attached Terms and Conditions Addendum, prior to signing the acknowledgment form. If you have any questions or require clarification, please contact our office at 501-503-1272 or vbava@cpa.com before signing.
     
    Your signature on the acknowledgment form will confirm your understanding and acceptance of the terms outlined in this Engagement Letter.

  • * * * * * *


    Very truly yours,


    Vimal Bava
    vbCPA, PLLC

  • Should be Empty: