Engagement Letter

    January 2022

    Krowne CPAs is pleased to provide you with the professional services described below. This letter is to confirm our understanding of the terms and objectives of our engagement and the nature and limitations of the services we will provide. We will perform our services in accordance with the Statements on Standards for Tax Services issued by the American Institute of Certified Public Accountants.If you accept the terms of this engagement, please type your name in the space provided at the bottom of the letter and click “send”.

    Scope of Engagement

    We will prepare your 2021 Federal and applicable State income tax returns, including tax planning.

    We will not prepare any tax returns except those identified above without your written authorization to do so. We will prepare your tax returns based on information and representations that you provide to us. We will not audit or otherwise verify the data you submit to us, although we may ask you to clarify some of the information. We will prepare the tax returns solely for filing with the Internal Revenue Service (“IRS”) and state and local tax authorities. They are not intended for third-party use, either to obtain credit or for any other purpose.

    As a result, you agree to indemnify and hold our firm and any of its partners, principals, shareholders, officers, directors, members, employees, agents or assigns harmless with respect to any and all claims arising from the use of the tax returns for any purpose other than filing with the IRS and state and local tax authorities regardless of the nature of the claim including the negligence of any party.

    Client Responsibilities

    We will provide you with an income tax organizer to help you gather and document the information we will need to prepare your income tax returns. It is your obligation to complete the tax organizer with accurate and complete information, including all worldwide income.

    You are responsible to inform us of activities you are engaged in, in states other than your state of residence. This applies, but is not limited to, things like purchases of real and personal property, rental activities, etc. As long as you provide us with the necessary information, we will work with you to determine if you have reporting requirements in other states or localities. If it is determined that you do, we will address this with you in a separate engagement letter or correspondence.

    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. 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 bereceived by the Department on the due date of your tax return, including extensions. Effective July 1, 2013 electronic filing of FBAR reports is mandatory using the Bank Secrecy Act (BSA) e-filing system for the Financial Crimes Enforcement Network (FinCEN). If you would like our firm to submit your electronic FBAR report (FinCEN Form 114) on your behalf, we must receive a signed consent form (FinCEN Form 114a) from you prior to submitting the foreign reporting form. If you do not provide our firm with information regarding any interest you may have in a foreign account, or if we do not receive your signed authorization to file your foreign reporting form, we will not be able to prepare and file any of the required disclosure statements.

    In addition, the Internal Revenue Service also requires information reporting under applicable Internal Revenue Code sections and related regulations, and the respective IRS tax forms are due when your income tax return is due, including extensions. The IRS reporting requirements are in addition to the U.S. Department of the Treasury reporting requirements stated above. Therefore, if you fall into one of the below categories, or if you have any direct or indirect foreign interests, you may be required to file applicable IRS forms:

    • You are an individual or entity with ownership of foreign financial assets and meet specified criteria (Form 8938);

    • You are an officer, director or shareholder with respect to certain foreign corporations (Form 5471);

    • You are a foreign-owned U.S. corporation or foreign corporation engaged in a U.S. trade or business (Form 5472);

    • You are a U.S. transferor of property to a foreign corporation (Form 926);

    • You are a U.S. person with an interest in a foreign trust (Forms 3520 and 3520-A); or

    • You are a U.S. person with interests in a foreign partnership (Form 8865).

    Failure to timely file the appropriate forms with the U.S. Department of the Treasury and the Internal Revenue Service may result in substantial monetary penalties. By your signature below, you accept responsibility for informing us if you believe that you may have foreign reporting requirements with the U.S. Department of the Treasury and/or Internal Revenue Service and you agree to timely provide us with the information necessary to prepare the appropriate form(s). We assume no liability for penalties associated with the failure to file, or untimely filing, of any of these forms.

    You are responsible for maintaining adequate documentation to substantiate the accuracy and completeness of your tax returns. You are responsible for maintaining records, including keeping copies of your tax returns. You should retain all documents that provide evidence and support for reported income, credits, and deductions on your returns as required under the tax law. You are responsible for the adequacy of all such documents. You represent that you have such documentation and can produce it if needed to respond to any audit or inquiry by taxing authorities. You agree to hold us harmless with respect to any additional taxes, penalties, or interest imposed upon you by taxing authorities resulting from the disallowance of tax deductions due to inadequate documentation.

    Extensions may affect your liability for penalties and interest or compliance with government or other deadlines. We are available to discuss this matter with you at your request at our regular hourly fee should the need arise.

    You [and your spouse] must verify and sign a completed Form 8879, IRS e-file Signature Authorization, and [state equivalent authorization form] before we can file your returns electronically. (If applicable)

    You have final responsibility for the income tax returns. Check them carefully for accuracy and completeness before you sign them.

    CPA Firm Responsibilities

    Unless we are otherwise advised, if you have a Schedule C business, you confirm that your personal expenses are segregated from business expenses and expenses such as meals, travel, entertainment, vehicle use, gifts, and related expenses for your business are supported by necessary records required by the IRS. At your request, we are available to answer your questions and advise you on the types of records required.

    We will use our judgment to resolve questions in your favor where a tax law is unclear if there is reasonable justification for doing so. Whenever we are aware that a possibly applicable tax law is unclear or that there are conflicting interpretations of the law by authorities (e.g., IRS and courts) 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 the current tax code, regulations, and their interpretations. If the IRS or state tax authorities later contest the position taken, there may be an assessment of additional tax, interest, and penalties. We assume no liability for and you hereby release us from any such additional tax, interest, and penalties or other fees and assessments.

    The IRS imposes a 20% penalty for substantial understatement of tax. The understatement is considered substantial if it exceeds the larger of 10 percent of the correct tax liability or $5,000 for individuals.

    Our engagement in connection with the preparation of your income tax returns does not include any procedures designed to discover defalcations or other irregularities, should any exist. We will render such accounting and bookkeeping assistance as we find necessary for preparing the income tax returns.

    We reserve the right to withdraw from this engagement without preparing your income tax returns in the event you disagree with our recommendations regarding tax return filing and reporting obligations, tax return positions to be taken, or disclosures to be made in the returns.

    During the course of preparing the tax returns identified above, we may bring to your attention certain available tax saving strategies (such as available credits, deductions, or deferrals) for you to consider as possible means of reducing your income taxes in subsequent tax years. However, we have no responsibility to do so, and will take no action with respect to any such recommendations, as the responsibility for implementation remains with you, the taxpayer.

    This engagement does not include responding to inquiries by any governmental agency or tax authority. If your tax return is selected for examination or audit, you may request that we assist you in responding to such inquiry. In that event, we would be pleased to discuss providing assistance to you under the terms of a separate engagement letter for that specific purpose. You agree that you will not and are not entitled to rely on any advice unless it is provided in writing.

    If you provide our firm with copies of brokerage (or investment advisory) statements, we will use the information from these statements solely in connection with the preparation of your income tax returns. 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 investment activity, provide investment advice, or supervise the actions of the entity or individuals performing investment activities on your behalf. We recommend that you receive and review all brokerage (or investment advisory) statements promptly and carefully, and direct any questions regarding activities on your account to your broker (or investment advisory). (If applicable)

    Penalties and Interest Charges

    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. You, as the taxpayer, remain responsible for the payment of all taxes, penalties, and interest charges imposed by taxing 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 can result in the imposition of penalties and interest.

    Fee and Billings

    Our prices for this work will be at our regular hourly rates for the individuals involved plus direct out-of-pocket expenses including computer charges. Hourly rates are assigned, ranging from $110 to $500 per hour, depending on the staff level and experience of the individual. Payments for services are due when rendered, and interim billings may be submitted as work progresses and expenses are incurred. We reserve the right to issue tax returns C.O.D. if there has been a past history of delinquency in payments.

    The cost is based upon the complexity of the work to be performed and our professional time to complete the work. Additionally, this fee is dependent on the availability, quality, and completeness of your records. You agree that you will deliver all records requested by our staff to complete this engagement on a timely basis. In the event your records are not submitted in a timely manner, or they are incomplete or unusable, we reserve the right to charge additional fees and expenses for services required to correct the problem. If this occurs, we will contact you to discuss the matter and the anticipated delay in completing our engagement prior to rendering further services.

    [You agree that in the event your payment is not received by the due date, we will not be responsible for your failure to meet government and other filing deadlines, for any penalties or interest that may be assessed against you resulting from your failure to meet the deadlines, and for any other damages (including, but not limited to consequential, indirect, lost profits, or punitive damages) incurred by you as a result of the late filing or non-filing of the tax returns.]

    Termination and Other Terms

    Either party may terminate this agreement at any time by giving written notice to the other party. In that event, the provisions of this agreement shall continue to apply to all services rendered prior to termination.

    In our relationship, we are often advisors, not advocates, regarding investment advice. We will advise you on the implications, if any, of specific matters you bring to our attention. From time to time during our relationship, you may seek our advice regarding potential investments. We are not investment advisors. 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.

    Federal law has extended the attorney-client privilege to some, but not all, communications between a client and the client’s CPA. The privilege applies only to non-criminal tax matters that are before the IRS or brought by or against the U.S. Government in a federal court. The communications must be made in connection with tax advice. Communications solely concerning the preparation of a tax return will not be 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.

    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.

    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.

    If any dispute arises among the parties, they agree first to try in good faith to settle the disputes by mediation administered by an association such as the American Arbitration Association (AAA) under its Commercial Mediation Rules. All unresolved disputes shall then be decided by final and binding arbitration in accordance with the Commercial Arbitration Rules of an association such as the AAA. Fees charged by any mediators, arbitrators or an association such as the AAA shall be shared equally by all parties.

    As your CPA, we collect:

    • Information provided by you from your tax organizer, worksheets, documents, and discussions

    • Information that we develop as part of the engagement

    As your CPA, we are required to keep all information about our engagement confidential; so, we will not disclose any information about you unless we have your approval or are required/permitted by law. This applies even if you are no longer a client. As your CPA, we are committed to the safekeeping of your confidential information and we maintain physical, electronic, and procedural safeguards to protect your information.

    Conflict of Interest

    It is customary for a married couple and/or business partners to have the same accountant represent both of them in their financial affairs. If you have differences of opinion as to the proper course of action, we will point out the pros and cons of the alternatives, but we cannot advocate for either of your positions. Rules of professional conduct require that we do not withhold any information obtained from one of you from the other. Lastly, if a dispute arises between you so that we cannot perform the work we have undertaken to perform, it will be necessary for us to withdraw as your joint accountant and to advise one or both of you to obtain independent advice.

    This engagement is not modifiable unless done so in writing and agreed to by the parties.

    It is our policy to initiate services only after we receive the signed copy of this engagement letter from you.

    We are pleased to have you as a client and look forward to a long and mutually satisfying relationship.


    KROWNE Certified Public Accountants

    I accept the terms of this engagement letter.