Thank you for choosing Polaris Tax & Accounting to assist you with your Tax Amendment. This letter confirms the terms of our engagement with you and outlines the nature and extent of the services we will provide.
We will prepare your federal and state income tax returns amendments, we will provide you with a copy of your Tax Returns before electronically submitting the Returns to the Internal Revenue Service and State Tax Authority. Upon receipt of this copy, we will discuss the information reported in your Tax Returns and how we determined your Tax Liability or Tax Refund, please carefully review the information reported. Once you sign Form 8879 IRS e-file Signature Authorization along with this Agreement, we will assume that you have reviewed the information contained in your Tax Returns and to the best of your knowledge you believe the information to be accurate, true, correct, and complete. Therefore, your signed Form 8879 and your signed Agreement for Engagement of Income Tax Service is an acknowledgment that the information presented in your Tax Returns requires no further review or modifications, and therefore you authorize our Firm to submit your Tax Returns to the Internal Revenue Service and the State Tax Authority. Upon review of your Tax Returns and signed authorization to e-file, you agree to hold us harmless for any misclassification and/or misstatements to your return. Our firm reserves the right to charge an additional Fee should your Tax Returns require additional modifications as a result of misclassifications and/or misstatements due to your unwillingness or inability to review your return.
Under the general due diligence standards of our profession, we can (on most occasions) rely in good faith and without verification on information provided by the client or third parties and contained in previously filed returns. In this regard, our firm may rely in good faith on the advice, schedules, or other documents prepared by the taxpayer, another adviser, another tax return preparer, or another party (including another adviser or preparer at the preparer’s firm) who our firm has reason to believe was competent to render the advice or other information. We will not audit, review, compile or otherwise verify the data you submit although we may ask you to some of the information Our firm is not required to audit, examine, or review books and records, business operations, documents, or other evidence to independently verify information provided by the taxpayer or reported on previously filed returns. However, our firm will not ignore the implications of information furnished by the taxpayer or prior preparers and we will make reasonable inquiries if the information as furnished appears to be incorrect, incomplete, or inconsistent, either on its face or on the basis of other facts known to us.
From time to time various third parties may request that we sign, for you, some verification of income, employment, or tax filing status. Because we were engaged only to prepare your income tax return, without examination, review, audit, or verification the state board of accountancy prohibits us from signing any such document, and any third party request to do so is a violation of those rules prohibiting us, by law, from the issuance of an opinion without performing an audit. These returns are not intended to benefit or influence any third party, either to obtain credit or for any other purpose.
You agree to hold us harmless for any errors filed on Tax Returns prepared by us if, our firm relied in good faith on historical information reported from you, or your prior tax return preparer, and subsequently this information was deemed to be erroneous, frivolous, or inaccurate. Should our firm require to Amend previously filed returns (whether completed by us or by another tax professional) to correct information or positions that were inaccurate because of our good-faith reliance on prior Tax and Accounting professional advice, we reserve the right to treat these amendments as a separate engagement, subject to additional billing.
The Internal Revenue Service imposes penalties on taxpayers, and on us as return preparers, for failure to observe due care in reporting for income tax returns. In order to ensure an understanding of our mutual responsibilities, we ask all clients for whom we prepare tax returns to confirm the following arrangements.
We will prepare your Federal and State tax forms for the type and year specified above, we do not use foreign third parties for the preparation of your tax return. We will not audit or otherwise verify the data you submit although we may ask you to clarify some of the information. We may furnish you with tax organizers and questionnaires to help you gather and organize the necessary information for us, in order to keep our fee to a minimum. We are responsible for preparing only the returns listed above, if you have taxable activity in a state other than that specifically listed you are responsible for providing our firm with all information necessary to prepare any additional applicable state(s) income tax returns as well as informing us of the applicable states. Any additional state income tax returns will be prepared as a separate engagement. If you have income tax filing requirements in a given state but do not file that return there could be possible adverse ramifications such as an unlimited statute of limitations, penalties, etc. If you would like us to investigate to determine each state where you have an income tax filing requirement please inform us.
If you have derived income from a foreign country, we will use the foreign country income information which you provide to calculate any applicable federal or state foreign tax credit or other affected federal or state income tax items. However, you are responsible for meeting any foreign country income tax or other foreign country reporting requirements.
Please note that any person or entity subject to the jurisdiction of the United States (includes individuals, corporations, partnerships, trusts, and estates) having a financial interest in, or signature or other authority over, bank accounts, securities, or other financial accounts having an aggregate value exceeding $10,000 at any time during the calendar year in a foreign country, shall report such a relationship. It is your responsibility to inform us of any Foreign Assets you might currently hold. Although there are some limited exceptions, filing requirements also apply to taxpayers that have direct or indirect control over a foreign or domestic entity with foreign financial accounts, even if the taxpayer does not have foreign account(s). For example, a corporate-owned foreign account would require filings by the corporation and by the individual corporate officers with signature authority. Failure to disclose the required information to the U.S. Department of the Treasury may result in substantial civil and/or criminal penalties. If you and/or your entity have a financial interest in, or signature authority over, any foreign accounts, you are responsible for providing our firm with all the information necessary to prepare the Report of Foreign Bank and Financial Accounts (FBAR) required by the U.S. Department of the Treasury in order for the FBAR to be received by the Department on or before the due date. Beginning with the 2017 tax filing season, the FBAR filing deadline is April 15th and follows the federal income tax due date guidance, which notes that if the tax due date falls on a weekend or legal holiday, the form is considered timely filed if filed on the next business day. An automatic 6-month extension will be granted to October 15th of each tax year. Electronic filing of the FBAR is mandatory using the Bank Secrecy Act (BSA) e-filing system located on the Financial Crimes Enforcement Network (FinCEN).
If applicable, please note that filing a joint return usually results in lower tax liability than if each spouse filed separately. Filing a joint return, however, renders each spouse both individually and jointly liable to the IRS for the entire tax liability reported on the return or later determined by audit. The joint and several liability may be avoided only if you qualify for very restrictive so-called “innocent spouse” relief. To avoid for each spouse to become both individually and jointly liable to the IRS for the entire tax liability reported on the return or later determined by audit, you can choose to file with a status of Married Filing Separately. If you choose to file your Individual Income Tax Returns with a Married Filing Separately status, each spouse will report their own income, deductions, tax credits and withholding on separate returns. By signing this Letter of Engagement and Authorization to e-file your Individual Tax Returns you acknowledge and understand that you are intending to file a joint return and thereby assume all the benefits and burdens of the joint return election.
An extension to file your Individual Income Tax Returns simply extends the filing deadline, it DOES NOT relieve you from paying the tax due on the due date or making quarterly estimated tax payments for the current year. Failure to pay any tax due with the extension or failure to pay quarterly estimated tax payments may result in various penalties and interest. Failure to file an extension by the Tax Filing Deadline may cause you to be subject to various penalties and interest. To prepare your return without having to file an extension, we request that you have your paperwork to us no later than March 15th. If your paperwork is received after the March 15th deadline, we cannot guarantee that our firm can file your Income Tax Returns by the filing deadline. If your Individual Income Tax Returns have been extended, we request that you have your paperwork to us no later than October 4th. If your paperwork is received after the October 4th deadline, we cannot guarantee that our firm can file your Income Tax Returns by the extended filing deadline.
We must receive all information to prepare your returns in a timely matter so that we can meet the filing deadline. 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 tax returns and underpayment of taxes. Failure to file required forms or meet filing deadlines can result in the imposition of penalties, which can be significant. You, as the taxpayer, remain responsible for the payment of all taxes, penalties, and interest charges imposed by taxing authorities. It is your responsibility to remain in contact with us, engaged in your case, and be responsive to requests and aware of deadlines. During our engagement, please notify us immediately if your contact information changes. If you send us information and do not receive a timely acknowledgment, it is your responsibility to follow up and confirm we received it. It is your responsibility to maintain, in your records, the documentation necessary to support the data used in preparing your tax returns, including but not limited to the auto, travel, entertainment, and related expenses and the required documents to support charitable contributions over $250. If you have any questions as to the type of records required, please ask us for advice in that regard. It is also your responsibility to carefully examine and approve your completed tax returns before signing and mailing them to the tax authorities. We are not responsible for the disallowance of doubtful deductions or inadequately supported documentation, nor for resulting taxes, penalties and interest. We will rely, without further verification, upon the information you provide to us from 3rd parties including, but not limited to, k-1s, 1099s, 1098s, receipts, and similar items. It is our policy to keep records related to this engagement for 5 years. However, we do not keep any of your original records, so you should retain these records in secure storage. Upon the expiration of the 5-year period, we are free to destroy our records related to this engagement.
If applicable, the client attests under penalty of perjury that the information reported by Polaris Tax & Accounting on Form 8867 Paid Preparer’s Due Diligence Checklist has been reviewed by the client prior to us e-filing the Tax Return, and such information reported on Form 8867 is truthful and accurate. The Taxpayer claims full legal responsibility for any inaccuracies related to Form 8867, including responses to qualify for the Earned Income Credit.
We are responsible for preparing only the returns listed above, all others are to be prepared by you or other preparers. Our fee does not include responding to inquiries or examinations by taxing authorities. However, we are available to represent you and our fees for such services are at our standard rates and would be covered under a separate engagement letter.
We will use our professional judgment in preparing your returns. Whenever we are aware that possibly applicable tax law is unclear or that there are conflicting interpretations of the law by authorities (e.g., tax agencies and courts), we will explain the possible positions that may be taken on your return. We will adopt whatever position you request on your return so long as it is consistent with the codes, regulations, and interpretations that have been promulgated. If the Internal Revenue Service should later contest the position taken, there may be an assessment of additional tax plus interest and penalties. We assume no liability for any such additional penalties or assessments.
If we are asked to disclose any privileged communication, unless we are required to disclose the communication by law, we will not provide such disclosure until you have had an opportunity to argue that the communication is privileged. You agree to pay any and all reasonable expenses that we incur, including legal fees, that are a result of attempts to protect any communication as privileged.) In addition, your confidentiality privilege can be inadvertently waived if you discuss the contents of any privileged communication with a third party, such as a lending institution, a friend, or a business associate. We recommend that you contact us before releasing any privileged information to a third party.
It is our policy to keep records related to this engagement for four years after which they are destroyed. However, Polaris Tax & Accounting does not keep any original client records, so we will return those to you at the completion of the services rendered under this engagement. When records are returned to you, it is your responsibility to retain and protect your records for possible future use, including potential examination by any government or regulatory agencies. Prior to each tax filing season, we send client organizers to most of our clients as a convenience to assist them with gathering their tax information. If you move or do not wish to receive an organizer, please notify us, or we will send the organizer to the address we used on your prior year’s tax return.
In the interest of facilitating our services to you, we may communicate by facsimile transmission or send electronic mail over the Internet. Such communications may include information that is confidential to your company. While we will use our best efforts to keep such communications secure in accordance with our obligations under applicable laws and professional standards, you recognize and accept that we have no control over the unauthorized interception of these communications once they have been sent and consent to our use of these electronic devices during this engagement.
From time to time during our relationship, you may seek our advice with regard to potential investments. We are not investment advisors unless specifically and in writing by separate agreement hired for that purpose. Accordingly, we suggest that you seek the advice of qualified investment advisors appropriate to each investment being considered. Unless otherwise specifically agreed to in a separate engagement letter or in a written addendum or amendment to this engagement letter signed by the parties, we will not advise you regarding the economic viability or consequences of an investment or whether you should or should not make a particular investment.
Billings become delinquent if not paid within 30 days of the invoice date. If billings are not paid within 60 days of the invoice date, at our election, we will stop all work until your account is brought current, or we will withdraw from this engagement. You acknowledge and agree that we are not required to continue work in the event of your failure to pay on a timely basis for services rendered as required by this engagement letter. You further acknowledge and agree that in the event we stop work or withdraw from this engagement as a result of your failure to pay on a timely basis for services rendered as required by this engagement letter, we shall not be liable to you for any damages that occur as a result of our ceasing to render services. Our services will conclude upon delivery of the completed income tax returns discussed above or upon our suspension of services or resignation from the engagement.
In the event that we have initiated the process of preparing your tax return and/or have completed your tax preparation services, and you subsequently decide not to proceed with the e-filing process, you shall remain responsible for the full invoice amount associated with the tax preparation services provided. Immediate payment will be required.
If any dispute arises among the parties hereto, the parties agree first to try in good faith to settle the dispute by mediation administered by the American Arbitration Association under its Rules for Professional Accounting and Related Services Disputes. If the parties are unable to resolve the dispute through mediation within 60 days from the date notice is first given from one party to the other as to the existence of such a dispute and the demand to mediate, then they may proceed to resolve the matter by arbitration. Costs of any mediation proceeding shall be shared equally by all parties.
To affirm that this letter correctly summarizes your understanding of the arrangements for this work, sign the enclosed copy of this letter.
Thank you for the opportunity to be of service. If you have any questions, contact our office at 704-947-3178.