Engagement Agreement – Tax Planning
We are pleased to be able to serve you, and your accounting and payroll needs. This letter is to specify and confirm the terms of our engagement with you, and to clarify the nature and extent of the services we will provide as agreed to in the Business Services and Consultation Agreement. The IRS, American Institute of Certified Public Accountants (AICPA), ethical guidelines and our professional liability insurance require this form to be completed- this is to your advantage.
Jonathan Clark, CPA will prepare, from information you provide, an estimated plan of year end tax obligations. These reports are limited to information that are the representations of management. We will not audit or review the accompanying information and accordingly we cannot express an opinion or any other form of assurance on them.
We may furnish you an organizer or checklist to guide you in gathering the necessary information. Your use of an organizer or checklist will assist in keeping pertinent information from being overlooked.
Based on our discussions, these reports are for taxpayers/management’s use only and are not intended for third-party use. Material departures from American Institute of Certified Public Accountants (AICPA) and Generally Accepted Accounting Principles (GAAP) might unintentionally exist and the effects of those departures, if any, on the financial reports may or may not be disclosed.
Notwithstanding those limitations, you represent that you have the knowledge necessary to allow you to place these future year tax returns in the proper context. You also represent and agree that the future tax returns are intended solely for your information and use, and are not intended to be and should not be used by third parties.
Our engagement cannot be relied on to disclose errors, irregularities, or illegal acts, including fraud or defalcations that might exist. In addition, we have no responsibility to identify and communicate significant or material weaknesses in your internal control as a part of this engagement. However, we will inform you of any material errors, irregularities or illegal acts that come to our attention.
In addition, we will use professional judgment in resolving questions where the IRS or state law including GAAP is unclear, or where there may be conflicts between the authorities’ interpretation of the law and other supportable positions. Unless otherwise instructed by you, we will resolve such issues with you and in your favor whenever possible.
It is your responsibility to provide all the information required for the preparation of your tax planning engagement. You agree that effective communication can only occur if you give Jonathan Clark, CPA efficient access to your financial information and documents, and that you are responsive to questions about the information you provide.
You should retain all documents, including bank statements, cancelled checks, credit card statements, vendor invoices and other material data that form the basis of your financial picture. You also represent and agree that you are sole custodian of the original documents and data.
Fee Schedule
Jonathan Clark, CPA's fee for this engagement will be in accordance with our standard fee schedule, certain taxable events might incur additional fees.
We like to think of our fee structure as easy, medium, and hard. Having said that, we try to maintain historical fees for returning clients....but that is not synonymus with fees never increasing (sorry). Our staff of accounting professionals are impacted by the increased cost of living just like everyone else.
Our fee for these services will depend on the volume and complexity of the work required to complete these services. This fee does not include services that might be needed that do not relate to the normal operation of the business, such as the acquisition or sale of major assets, income modeling, new employee setups, employee terminations, employment verifications, year-end payroll reporting, resending W2s, handling IRS or state notices, correcting 1099s, property tax filings, governmental agency audits, postage, delivery, etc. These will be charged on a time and material basis at our current billing rates. The basis of our rates are shown below and fall within our tax planning agenda.
Tax Planning Agenda:
- Review household changes and tax plan, and if necessary, payroll plan
- Verify estimated tax payments
- Review business/contractor activites.
- Confirm profit projections.
- Review 401k / SEP ambitions.
- Review health insurance and related matters.
- Review Accountable Plan reimbursements.
- Review business estimated tax payments including PTET
- Review adding spouse / children to payroll.
- Review tax reduction strategies
- Answer any questions you may have
Tax Planning Fees:
| Plan |
Fee |
| Streamlined |
$275*-$375 |
| Pro Active |
$400-$500 |
| Pro Active Business |
$550-$800 |
| Comprehensive |
quote |
*If tax return was completed by Jonathan Clark, CPA in the previous year.
Streamlined
Streamlined tax planning (household tax planning) is done annually and includes but is limited to changes in:
- W-2 wages
- Portfolio income
- Retirement income (household tax planning) and
- Medical expenses, property taxes, mortgage interest and charitable donations.
Tax strategy is limited to review and general discussion only.
Pro-Active
Pro-active tax planning builds on Streamlined above, is done 1-2 times per year, and includes but is limited to:
- Changes in rental income
- Changes in business income (Schedule C or K-1) and
- Shareholder salary recommendations.
Tax strategy is limited to review and general discussion only.
Pro-Active Business
Pro-active business tax planning is done 1-2 times per year, and includes but is limited to:
- Computing business entity estimated tax payments for the state and the IRS in some situations (California’s Franchise Tax, etc.),
- Calculating backup withholdings for non-resident owners and
- Determining single-owner, single-state pass-through entity tax (PTET) payments for the SALT workaround.
- Pro-active Business is entity-specific and does not automatically include Streamlined or Pro-Active tax planning.
Comprehensive
Comprehensive tax planning is designed for tax strategy and scenario-based decision making. For example:
- Rental property sale
- Primary residence sale
- Changes in state residency
- Tax effects of accelerated depreciation of business equipment or automobiles
- Complex PTET payments (multiple owners and / or multiple states)
- Cost segregation or short-term rental benefitsa multiple rental sale where you want to see how things look if you sold rental A and rental B, or rental A and rental C.
- You are selling your business and want to know the tax changes between installment sale and a big check.
- Whether a cost segregation study should be done this year or next.
- A million other ideas.
Not all business entities require separate business tax planning! It is primarily based on the state, and where your business operates including the owners / principals. California has both franchise tax payments and PTET payments. Contact us if you are not sure about your situation.
As an additional consideration for us to provide you these services, you agree that the extent of our liability for damages to you for any actions taken will not exceed the total amount actually paid by you for our services. You agree that this will by your only remedy and hereby waive any other claims you have now or in the future for actual, incidental, and consequential damages, including, but not limited to, lost profits and third party claims.
On occasion there may be an opportunity to refer you to another organization for services or products that we believe could be beneficial to you. We may, or may not, receive some form of compensation for such referral. Your consent to this arrangement is included in your acceptance of this Engagement Agreement.
Regardless of the location of your residence or business, the State of California, or the appropriate federal district court having venue, will have jurisdiction over all controversies that might arise regarding this agreement.
It is agreed by us that there are no other agreements or understandings between us relating to the subject matter of this Engagement Agreement, except the Business Services and Consultation Agreement, and that it supersedes all prior accounting and payroll engagement agreements and the like, either written or oral, that exist or may have existed. Neither this engagement agreement nor its execution have been induced by any reliance, representation, stipulation, warranty, agreement or understanding of any kind other than those expressed in this agreement. No change or modification of this engagement agreement shall be valid unless made in writing and signed by the parties.
You or Jonathan Clark, CPA may cancel this engagement at any time by any form of written or electronic notice. If you cancel and we have performed any work prior to our receiving your cancellation notice, you agree to pay us for such work performed based upon our current rate schedule. We may use any deposits or payments already received and apply them to your account.
Record Retention Policy
In accordance with Jonathan Clark, CPA’s current record retention policy, we will retain our work papers and copies of your financial reports and other records for the engagement for seven years. We will provide you copies of all reports prepared that should be a part of your books and records. If you should need replacements, we will provide additional copies which might incur additional costs to you. All of your original records will be returned to you. After seven years, our records pertaining to this engagement will no longer be available. Physical deterioration or catastrophic events may shorten the term during which our records will be available. The work papers and files of our firm are not a substitute for your original records. It is agreed and understood that in connection with the performance of our engagement, the work papers prepared by us will remain property of Jonathan Clark, CPA.
Privacy Policy
This is being furnished to you as required by the Gramm-Leach-Bliley act of 1999, which addresses in part the protection of individuals’ privacy. This is the annual notice required by law.
Jonathan Clark, CPA treats any information concerning our clients and former clients with strict confidentiality. Consistent with that policy, we restrict access to nonpublic personal information concerning you to staff members who must have it in order to provide you the products and services for which you have retained us. We do not disclose any personal or confidential information to anyone else without your express permission to do so, except as permitted or required by law. In addition, we maintain physical, electronic and procedural safeguards that comply with federal regulations to guard your nonpublic personal information.
Thank you for permitting us to be of service. We value our relationship with you and hope you view us as your most trusted advisor. We will work to continue earning that trust.