The Engagement letter I am planning on using (most of it anyway) has an ending date of the engagement, when the tax return is delivered. I always encourage clients to call me during the summer, I would like to have the engagement end at the end of the year and include helping with preparing for the 2010 return. Is any one else doing this? Does anyone see any problem doing this?
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Do we have any Lawyers on this board?
I see only one fly in the ointment with your plan. What if something in the regulatory environment changes and you therefore decide that you need different language about the tax planning? A few clients might balk at the new engagement letter if they remembered that the old one covered the tax planning.
My engagement letter does not have an expiration date. I wonder if that is a problem? I always figured that I have certain responsibilities even after I give them the return. For example if there is a retroactive change in the tax law or if I simply find out that for some other reason I made a mistake on the return per Circular 230 I have to contact the client and inform them of the consequences of fixing the problem now as well as the potential consequences of waiting for the government to contact them. Furthermore if an engagement letter has an expiration date then it seems to me that there would need to be carefully crafted language to the effect that all the cya provisions survive the expiration. -
I have my clients sign a engagement letter every year. Taxes, bookkeeping, and payroll.
I first started with an kind of open ended letter that said "until the end of the engagement". No tax year listed. But I read something from my E&O insurance carrier about a accounting firm that did the exact same thing. Something came up several years later after the client had moved on. He was blaming the old accounting firm for some problems with the IRS in regards to bookkeeping they had done.
E&O said the firm should have got a engagement letter each year. So they only covered one year instead of the ten years the client was with the accounting firm.
After reading that I make sure I do them each year and that the engagement letter states what tax year it is covering, and it is only for one year.Comment
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Tax Year
My letter does list a tax year and I do plan to get a new one for each new year. I just don't have language providing for an expiration of the agreement.Comment
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