eLIZABETH bYSTROM cpa, lTD.
There is always small print.
This is where we keep ours.
Tax. Consulting. Accounting.
Here you will find all the details related to our Terms of Service, Privacy Policy, and Security Policy.
As the addendum to your engagement letter, you will be asked to confirm that you have read and understand these policies
Standard
Terms and Conditions
Updated November 2021
For the purposes of this Terms and Conditions Addendum, any reference to “firm,” “we,” “us,” or “our” is a reference to Elizabeth Bystrom CPA, Ltd., and any reference to “you,” or “your” is a reference to the party or parties that have engaged us to provide services. References to “Agreement” mean the engagement letter or other written document describing the scope of services, any other attachments incorporated therein, and this Terms and Conditions Addendum.
Table of Contents – Terms and Conditions Addendum
1.Billing and Payment Terms
2.Electronic Data Communication and Storage
3.Client Portals
4.Third-Party Service Providers or Subcontractors
5.Independent Contractor
6.Record Retention and Ownership
7.Working Paper Access Requests by Regulators and Others
8.Summons or Subpoenas
9.Newsletters and Similar Communications
10.Disclaimer of Legal and Investment Advice
11.Referrals
12.Brokerage or Investment Advisory Statements
13.Federally Authorized Practitioner – Client Privilege
14.Limitations on Oral and Email Communications
15.Electronic Signatures and Counterparts
16.Management Responsibilities
17.Conflicts of Interest
18.Mediation
19.Indemnification
20.Designation of Venue and Jurisdiction
21.Insurance
22.Proprietary Information
23.Statute of Limitations
24.Termination and Withdrawal
25.Potential Impact of COVID-19 on Services
26.Force Majeure
27.Assignment
28.Severability
29.Entire Agreement
Billing and Payment Terms
We operate a personal service business that relies upon your prompt payment to continue to offer our services without interruption. We administer our billing process as follows:
You may receive an invoice from us under any of the following scenarios:
Upon completion of our work, and a completed product has been delivered to you.
On the 1st of the month for time incurred during the preceding month, or longer, at our discretion.
On the 1st of the month for an agreed upon retainer related to work completed in the preceding month.
Payment for our services is due upon presentation of our invoice to you. We allow a grace period of 10 days for you to review the invoice and process a payment, after which time a late fee of $50 will be assessed. Stop-work and termination of services may result if your invoice with us is not paid in full within the timeframe outlined above.
Payment for a Tax Return
When an invoice for tax return preparation services is presented, payment in full is now required before we will sign and file the return. Late filing consequences with the Internal Revenue Service and state revenue departments are solely your responsibility if we do not file your return timely due to non-payment issues.
Payment Methods
We encourage electronic forms of payment using direct pay options. You can pay from nearly any bank account using the following peer-to-peer payment services with which we maintain accounts:
QuickBooks Pay Now Direct Payment – Pay your invoice with one click upon receipt of invoice via email
Zelle (a payment network backed by most major US banks) www.zellepay.com
Venmo (mobile payment service owned by PayPal) www.venmo.com
We also continue to accept checks as means of payment.
We do not accept credit cards (however, the above mentioned methods do offer a “Pay with a Credit Card” feature available for a small fee).
We reserve the right to suspend or terminate our work for non-payment of fees. In the event that work is discontinued, either temporarily or permanently, as a result of delinquent payment, we shall not be liable for any damages you may incur as a result of the work stoppage.
Electronic Data Communication and Storage
In the interest of facilitating our services to you, we may send data over the Internet, temporarily store electronic data via computer software applications hosted remotely on the Internet, or utilize cloud-based storage. Your confidential electronic data may be transmitted or stored using these methods. In using these data communication and storage methods, our firm employs measures designed to maintain data security. We use reasonable efforts to keep such communications and electronic data secure in accordance with our obligations under applicable laws, regulations, and professional standards.
You recognize and accept that we have no control over the unauthorized interception or breach of any communications or electronic data once it has been transmitted or if it has been subject to unauthorized access while stored, notwithstanding all reasonable security measures employed by us. You consent to our use of these electronic devices and applications during this engagement.
Client Portals
To enhance our services to you, we will utilize Citrix ShareFile, a collaborative, virtual workspace in a protected, online environment. Citrix ShareFile permits real-time collaboration across geographic boundaries and time zones and allows Elizabeth Bystrom CPA, Ltd. and you to share data, engagement information, knowledge, and deliverables in a protected environment. In order to use Citrix ShareFile, you may be required by the provider of Citrix ShareFile to execute a client portal agreement and agree to be bound by the terms, conditions and limitations of such agreement. You agree that we have no responsibility for the activities of Citrix ShareFile and agree to indemnify and hold us harmless with respect to any and all claims arising from or related to the operation of Citrix ShareFile.
Elizabeth Bystrom CPA, Ltd. is not a host for any of your information. You are responsible for maintaining your own copy of this information. We do not provide back-up services for any of your data or records, including information we provide to you. Portals are utilized solely as a method of transferring data and are not intended for the storage of your information. Information on a portal may be deleted by Elizabeth Bystrom CPA, Ltd.
If you decide to transmit your confidential information to us in a manner other than a secure portal, you accept responsibility for any and all unauthorized access to your confidential information. If you request that we transmit confidential information to you in a manner other than a secure portal, you agree that we are not responsible for any liability, including but not limited to, (a) any loss or damage of any nature, whether direct or indirect, that may arise as a result of our sending confidential information in a manner other than a secure portal, and (b) any damages arising as a result of any virus being passed on or with, or arising from any alteration of, any email message.
Third-Party Service Providers or Subcontractors
To enhance our availability to meet your professional service needs while maintaining service quality and timeliness, we may use a third-party service provider to assist us. This may include provision of your confidential information to the third-party service provider. We require our third-party service providers to have established procedures and controls designed to protect client confidentiality and maintain data security. As the paid provider of professional services, our firm remains responsible for exercising reasonable care in providing such services, and our work product will be subjected to our firm's customary quality control procedures.
By accepting the terms and conditions of our engagement, you are providing your consent and authorization to disclose your confidential information to a third-party service provider, if such disclosure is necessary to deliver professional services or provide support services to our firm.
Independent Contractor
When providing services to your company, we will be functioning as an independent contractor and in no event will we or any of our employees be an officer of you, nor will our relationship be that of joint venturers, partners, employer and employee, principal and agent, or any similar relationship giving rise to a fiduciary duty to you.
Our obligations under this agreement are solely obligations of Elizabeth Bystrom CPA, Ltd. and no partner, principal, employee or agent of Elizabeth Bystrom CPA, Ltd. shall be subjected to any personal liability whatsoever to you or any person or entity.
Record Retention and Ownership
We will return any original records and documents you provide to us by the conclusion of the engagement. Our copies of your records and documents are solely for our documentation purposes and are not a substitute for your own records and do not mitigate your record retention obligations under any applicable laws or regulations. You are responsible for maintaining complete and accurate books and records, which may include financial statements, schedules, tax returns and other deliverables provided to you by us. If we provide deliverables or other records to you via an information portal, you must download this information within 30 days, after which time the information portal may be deleted. Professional standards preclude us from being the sole repository of your original data, records, or information.
Workpapers and other documents created by us are our property and will remain in our control. Copies are not to be distributed without your written request and our prior written consent. Our workpapers will be maintained by us in accordance with our firm’s record retention policy and any applicable legal and regulatory requirements. A copy of our record retention policy is available upon request.
Our firm destroys workpaper files after a period of 3 years. Catastrophic events or physical deterioration may result in damage to or destruction of our firm’s records, causing the records to be unavailable before the expiration of the retention period, as stated in our record retention policy.
Working Paper Access Requests by Regulators and Others
State, federal and foreign regulators may request access to or copies of certain workpapers pursuant to applicable legal or regulatory requirements. Requests also may arise with respect to peer review, an ethics investigation, the sale of your organization, or the sale of our accounting practice. If requested, access to such workpapers will be provided under the supervision of firm personnel. Regulators may request copies of selected workpapers to distribute the copies or information contained therein to others, including other governmental agencies.
If we receive a request for copies of selected workpapers, provided that we are not prohibited from doing so by applicable laws or regulations, we agree to inform you of such request as soon as practicable. You may, within the time permitted for our firm to respond to any request, initiate such legal action as you deem appropriate, at your sole expense, to attempt to limit the disclosure of information. If you take no action within the time permitted for us to respond, or if your action does not result in a judicial order protecting us from supplying requested information, we may construe your inaction or failure as consent to comply with the request.
If we are not a party to the proceeding in which the information is sought, you agree to reimburse us for our professional time and expenses, as well as the fees and expenses of our legal counsel, incurred in responding to such requests.
Summons or Subpoenas
All information you provide to us in connection with this engagement will be maintained by us on a strictly confidential basis.
If we receive a summons or subpoena which our legal counsel determines requires us to produce documents from this engagement or testify about this engagement, provided that we are not prohibited from doing so by applicable laws or regulations, we agree to inform you of such summons or subpoena as soon as practicable. You may, within the time permitted for our firm to respond to any request, initiate such legal action as you deem appropriate, at your sole expense, to attempt to limit discovery. If you take no action within the time permitted for us to respond, or if your action does not result in a judicial order protecting us from supplying requested information, we may construe your inaction or failure as consent to comply with the request.
If we are not a party to the proceeding in which the information is sought, you agree to reimburse us for our professional time and expenses, as well as the fees and expenses of our legal counsel, incurred in responding to such requests.
Newsletters and Similar Communications
We may send newsletters, emails, explanations of technical developments or similar communications to you. These communications are of a general nature and should not be construed as professional advice. We may not send all such communications to you. These communications do not constitute a client relationship with you, nor do they constitute advice or an undertaking on our part to monitor issues for you.
Disclaimer of Legal and Investment Advice
Our services under this Agreement do not constitute legal or investment advice unless specifically engaged to provide investment advice in the Engagement Objective and Scope section of this Agreement. We recommend that you retain legal counsel and investment advisors to provide such advice.
Referrals
In the course of providing services to you, you may request referrals to products or professionals such as attorneys, brokers, or investment advisors. We may identify professional(s) or product(s) for your consideration. However, you are responsible for evaluating, selecting, and retaining any professional or product and determining if the professional or product meets your needs. You agree that we will not oversee the activities of and have no responsibility for the work product of any professional or the suitability of any product we refer to you or that you separately retain. Further, we are not responsible for any services we perform that fail to meet the intended outcomes as a result of relying on the services of other professionals or products you may retain.
Brokerage or Investment Advisory Statements
If you provide our firm with copies of brokerage (or investment advisory) statements and/or read-only access to your accounts, we will use the information solely for the purpose described in the Engagement Objective and Scope section of the engagement letter. 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 transactions, investment activity, provide investment advice, or supervise the actions of the entity or individuals entering into transactions or investment activities on your behalf. We recommend that you receive and carefully review all statements upon receipt, and direct any questions regarding account activity to your banker, broker or investment advisor.
Federally Authorized Practitioner – Client Privilege
Internal Revenue Code §7525, Confidentiality Privileges Related to Taxpayer Communication, provides a limited confidentiality privilege applying to tax advice embodied in taxpayer communications with federally authorized tax practitioners in certain limited situations.
This privilege is limited in several important respects. For example, the privilege may not apply to your records, state tax issues, state tax proceedings, private civil litigation proceedings, or criminal proceedings.
While we will cooperate with you with respect to the privilege, asserting the privilege is your responsibility. Inadvertent disclosure of otherwise privileged information may result in a waiver of the privilege. Please contact us immediately if you have any questions or need further information about this federally authorized practitioner-client privilege.
Limitations on Oral and Email Communications
We may discuss with you our views regarding the treatment of certain items or decisions you may encounter. We may also provide you with information in an email. Any advice or information delivered orally or in an email (rather than through a memorandum delivered as an email attachment) will be based upon limited research and a limited discussion and analysis of the underlying facts. Additional research or a more complete review of the facts may affect our analysis and conclusions.
Due to these limitations and the related risks, it may or may not be appropriate to proceed with a decision solely on the basis of any oral or email communication from us. You accept all responsibility, except to the extent caused by our gross negligence or willful misconduct, for any liability, including but not limited to additional tax, penalties or interest resulting from your decision (i) not to have us perform the research and analysis necessary to reach a more definitive conclusion and (ii) to instead rely on an oral or email communication. The limitation in this paragraph will not apply to an item of written advice that is a deliverable of a separate engagement. If you wish to engage us to provide formal advice on a matter on which we have communicated orally or by email, we will confirm this service in a separate engagement letter.
Electronic Signatures and Counterparts
Each party hereto agrees that any electronic signature is intended to authenticate a written signature, shall be valid, and shall have the same force and effect as a manual signature. For purposes hereof, “electronic signature” includes, but is not limited to, a scanned copy of a manual signature, an electronic copy of a manual signature affixed to a document, a signature incorporated into a document utilizing touchscreen capabilities, or a digital signature. Documents may be executed in one or more counterparts, each of which shall be considered an original instrument, but all of which shall be considered one and the same agreement.
Management Responsibilities
While Elizabeth Bystrom CPA, Ltd. can provide assistance and recommendations, you are responsible for management decisions and functions, and for designating an individual with suitable skill, knowledge or experience to oversee any services that Elizabeth Bystrom CPA, Ltd. provides. You are responsible for evaluating the adequacy and results of the services performed and accepting responsibility for such services. You are ultimately responsible for establishing and maintaining internal controls, including monitoring ongoing activities.
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.
Mediation
If a dispute arises out of or relates to the Agreement, including the scope of services contained herein, or the breach thereof, and if the dispute cannot be settled through negotiation, the parties agree first to try to settle the dispute by mediation administered by the American Arbitration Association (“AAA”) under the AAA Accounting and Related Services Arbitration Rules and Mediation Procedures before resorting to arbitration, litigation, or some other dispute resolution procedure. The mediator will be selected by mutual agreement of the parties. If the parties cannot agree on a mediator, a mediator shall be designated by the AAA. The mediation will be conducted in Minnesota.
The mediation will be treated as a settlement discussion and, therefore, all discussions during the mediation will be confidential. The mediator may not testify for either party in any later proceeding related to the dispute. No recording or transcript shall be made of the mediation proceedings. The costs of any mediation proceedings shall be shared equally by all parties. Any costs of legal representation shall be borne by the hiring party.
Indemnification
You agree to indemnify, defend, and hold harmless Elizabeth Bystrom CPA, Ltd. and any of its partners, principals, shareholders, officers, directors, members, employees, agents or assigns with respect to any and all claims made by third parties arising from this engagement, regardless of the nature of the claim, and including the negligence of any party, excepting claims arising from the gross negligence or intentional acts of the Elizabeth Bystrom CPA, Ltd.
Designation of Venue and Jurisdiction
In the event of a dispute, the courts of the state of Minnesota shall have jurisdiction, and all disputes will be submitted to the State or Federal Court therein, which is the proper and most convenient venue for resolution. We also agree that the law of the state of Minnesota shall govern all such disputes.
Insurance
Elizabeth Bystrom CPA, Ltd. shall, during the term of the engagement and for subsequent years covered by statute of limitations after termination of same by either you or us, maintain in full force and effect, accountants professional liability and cyber liability insurance coverage from an insurer or insurers licensed to conduct business in the state of Minnesota. As of the policy effective date, such insurer or insurers shall be rated A- (Excellent), by A.M. Best with a Financial Size Category of Class VII or greater. Premiums for said insurance policy shall be paid by Elizabeth Bystrom CPA, Ltd.
Upon your written request, Elizabeth Bystrom CPA, Ltd. shall furnish certificates of insurance for the required insurance coverage. Such certificate of insurance shall indicate the minimum limits of liability per claim and in the aggregate, as required by you.
Proprietary Information
You acknowledge that proprietary information, documents, materials, management techniques and other intellectual property are a material source of the services we perform and were developed prior to our association with you. Any new forms, software, documents or intellectual property we develop during this engagement for your use shall belong to us, and you shall have the limited right to use them solely within your business. All reports, templates, manuals, forms, checklists, questionnaires, letters, agreements and other documents which we make available to you are confidential and proprietary to us. Neither you, nor any of your agents, will copy, electronically store, reproduce or make available to anyone other than your personnel, any such documents. This provision will apply to all materials whether in digital, “hard copy” format or other medium.
Statute of Limitations
You agree that any claim arising out of this Agreement shall be commenced within 1 year of the delivery of the work product to you, regardless of any longer period of time for commencing such claim as may be set by law. A claim is understood to be a demand for money or services, the service of a suit, or the institution of arbitration proceedings against Elizabeth Bystrom CPA, Ltd.
Termination and Withdrawal
We reserve the right to withdraw from the engagement without completing services for any reason, including, but not limited to, non-payment of fees, your failure to comply with the terms of this Agreement, or as we determine professional standards require. If our work is suspended or terminated, you agree that we will not be responsible for your failure to meet governmental and other deadlines, or for any liability, including but not limited to, penalties or interest that may be assessed against you resulting from your failure to meet such deadlines.
If this Agreement is terminated before services are completed, you agree to compensate us for the services performed and expenses incurred through the effective date of termination.
Potential Impact of COVID-19 on Services
We and you acknowledge that governmental authorities may restrict travel and/or the movement of citizens due to the COVID-19 pandemic. In addition, we and you may restrict personnel from travel and onsite work, whether at a client facility or our facility. Accordingly, to the extent that the services described in the Agreement requires or relies on personnel to travel and/or perform work onsite, we and you acknowledge and agree that the performance of such work may be delayed, significantly or indefinitely, or may require modification. We and you agree to provide the other with prompt written notice in the event any of the services described herein must be rescheduled, suspended, or modified. We and you also both acknowledge and agree that any delays or modifications may increase the cost of the services. We will obtain your prior written approval for any increase in the cost of our services that may result from the impact of COVID-19 on our services.
Force Majeure
Neither party shall be held liable for any delays resulting from circumstances or causes beyond our reasonable control, including, without limitation, fire or other casualty, act of God, strike or labor dispute, war or other violence, epidemics or pandemics as defined by The Centers for Disease Control and Prevention, or any law, order or requirement of any governmental agency or authority. However, no Force Majeure event shall excuse you of any obligation to pay any outstanding invoice or fee or from any indemnification obligation under this Agreement.
Assignment
All parties acknowledge and agree that the terms and conditions of this Agreement shall be binding upon and inure to the parties’ successors and assigns, subject to applicable laws and regulations.
Severability
If any portion of this Agreement is deemed invalid or unenforceable, said finding shall not operate to invalidate the remainder of the terms set forth in this Agreement.
Entire Agreement
The engagement letter, including this Terms and Conditions Addendum and any other attachments, encompass the entire agreement of the parties and supersedes all previous understandings and agreements between the parties, whether oral or written. Any modification to the terms of this Agreement must be made in writing and signed by both parties. This Agreement has been entered into solely between you and Elizabeth Bystrom CPA, Ltd., and no third-party beneficiaries are created hereby.
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Business Tax
Terms and Conditions
Updated November 2021
For the purposes of this Terms and Conditions Business Tax Addendum, any reference to “firm,” “we,” “us,” or “our” is a reference to Elizabeth Bystrom CPA, Ltd., and any reference to “you,” or “your” is a reference to the party or parties that have engaged us to provide services. References to “Agreement” mean the engagement letter or other written document describing the scope of services, any other attachments incorporated therein, and this Terms and Conditions Business Tax Addendum.
Table of Contents – Terms and Conditions Business Tax Addendum
1.CPA Firm Responsibilities
a.Arguable positions
b.Bookkeeping assistance
c.Tax planning services
d.Government inquiries
e.Third-party requests
f.Tax Advice
g.Reliance on Others
h.Substantial Understatement Penalties
i.Tax return preparer standards, reportable transactions and tax shelters
2.Client Responsibilities
a.Impact of COVID-19 tax law
b.On-line access to information
c.Deadlines
d.Extensions of Time to File Tax Returns
e.Adequate Business Documentation
f.Personal expenses
g.State and local filing obligations
h.U.S. filing obligations related to foreign financial assets
i.Foreign filing obligations
j.Virtual currency
k.Other income, losses and expenses
l.Worker classification
m.Engagement responsibility
n.Signing and filing your return
o.Penalties and Interest Charges
3.Entire Agreement
4.S corporation
a.Changes in ownership
b.Tax basis schedules
c.S corporation Election
d.S corporation shareholder agreements
e.Salaries and wages for S corporation shareholders
f.S corporation distributions
g.Schedule K-1 distribution
5.C corporation
a.Changes in ownership
b.Reasonable compensation
c.Estimated tax payments
6.Partnerships
a.Changes in ownership
b.Partnership or limited liability company (LLC) agreement
c.Tax basis schedules
d.Allocation of partnership income and expenses
e.Partner salaries
f.Schedule K-1 distribution
CPA Firm Responsibilities
Unless otherwise noted, we will perform our services in accordance with the Statements on Standards for Tax Services (“SSTSs”) issued by the American Institute of Certified Public Accountants (“AICPA”) and U.S. Treasury Department Circular 230 (“Circular 230”). It is our duty to perform services with the same standard of care that a reasonable tax return preparer would exercise in this type of engagement. 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.
Arguable positions
We will use our judgment to resolve questions in your favor where a tax law is unclear, provided that we have a reasonable belief that there is substantial authority for doing so. If there are conflicting interpretations of the law, 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 tax reference materials. Tax reference materials include but are not limited to, the Internal Revenue Code (“IRC”), tax regulations, Revenue Rulings, Revenue Procedures, Private Letter Rulings, 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. We assume no liability, and you hereby release us from any liability, including but not limited to, additional tax, penalties, interest, and related professional fees.
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. You agree to pay for those required services.
Tax planning services
Tax planning services are not within the scope of this engagement. During the course of preparing the tax returns identified above, we may bring to your attention potential tax savings strategies for you to consider as a possible means of reducing your taxes in subsequent tax years. However, we have no responsibility to do so, and will take no action with respect to such recommendations, as the responsibility for implementation remains with you, the taxpayer. If you ask us to provide tax planning services, and we agree to provide them to you, we will confirm this engagement in a separate Agreement.
Government inquiries
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 our assistance in responding to such an inquiry. If you ask us to represent you, we will confirm this representation in a separate engagement letter
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, regardless of a direct request from any party.
Tax Advice
Our advice is based upon tax reference materials, facts, assumptions, and representations that are subject to change. Tax reference materials include, but are not limited to, the Internal Revenue Code (“IRC”), tax regulations, Revenue Rulings, Revenue Procedures, private letter rulings and court decisions. 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 guidance contained in Circular 230, §10.37, Requirements for Written Advice.
Reliance on Others
If you wish to take a tax position based upon the advice of another tax advisor, you agree to obtain a written statement from the advisor confirming that the position should meet the “realistic possibility,” “substantial authority,” or “more likely than not” standard, as applicable. In preparing your federal tax return, we are subject to a diligence as to accuracy regarding reliance on others standard, as defined in revisions to Circular 230, §10.22(b). To the extent a position is based upon the advice of another tax advisor, prior to preparing or signing the tax return, the AICPA SSTS No. 1 also requires our firm to have a good faith belief that the position has, at a minimum, a realistic possibility of being sustained administratively or judicially on its merits, if challenged. Additional charges will apply to such research.
Substantial Understatement Penalties
The IRS and many states impose penalties for substantial understatement of tax. To avoid the substantial understatement penalty, you must have substantial authority to support the tax treatment of the item challenged by the IRS or have an adequate disclosure of the item. To fulfill the adequate disclosure requirement, you may be required to attach to your tax return a completed Form 8275, Disclosure Statement, or Form 8275-R, Regulation Disclosure Statement, which discloses all relevant facts.
You agree to advise us if you wish to disclose a tax treatment on your return. If you request our assistance in identifying or performing further research to ascertain if there is substantial authority for the proposed position to be taken on the tax item(s) in your returns, and we agree to perform the research, we will confirm this engagement in a separate Agreement. It is your responsibility to contact us if additional assistance is required.
If we conclude as a result of our research that you are required to disclose a transaction on your tax return, you consent to attach Form 8275 or Form 8275-R to your tax return for filing after we discuss the matter with you. If the IRS, state or local tax authorities later contest the position taken, additional tax, penalties, and interest may be assessed. We assume no liability, and you hereby release us from any liability arising from such contest, including but not limited to, additional tax, penalties, interest, and related professional fees for the position taken.
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 on 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.
Client Responsibilities
You will provide us with a trial balance and other supporting data necessary to prepare your tax returns. You must provide us with accurate and complete information. Income from all sources, including those outside of the U.S., is required.
We rely upon the accuracy and completeness of both the information you provide in the trial balance and other supporting data you provide in rendering professional services to you.
Impact of COVID-19 tax law
Over the past year, various federal and state laws were enacted in response to the COVID-19 pandemic. Various programs were made available to provide economic relief to businesses and individuals, and in certain cases, may have an impact on a taxpayer’s tax return. It is your responsibility to inform us of any COVID-19 programs you have explored, engaged, or participated in, and to notify us if you have received relief in the form of loans, grants, or other financial assistance.
On-line 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 authorize it to be downloaded.
Deadlines
The tax filing season becomes more and more compressed every year due to additional deadline and form implementation required by the government, as well as behind-the-scene fraud prevention techniques. These necessary steps help to contribute to the cultivation of a situation where it is more likely for last minute maneuvering to occur, which in turn creates an unfavorable environment of rushing to meet deadlines and transfer of information.
Along with tools we may provide such as an organizer and portal access, we are also implementing the following deadlines so as to manage the flow of information in a more streamlined fashion:
Corporate Return (S-Corp/C-Corp/Partnership)
Statutory Due Date of Return: March 15th
Deadline for submitting information to our office: February 20th
Sole Proprietor (Schedule C)
Statutory Due Date of Return: April 15th (filed in conjunction with your Form 1040)
Deadline for submitting information to our office: March 20th
Individual Return (Form 1040)
Statutory Due Date of Return: April 15th
Deadline for submitting information to our office: March 20th
Any return for which substantially all the information necessary to complete the return has not been received by our office by the deadline listed below will automatically receive a protective extension.
Returns are completed in the order they are received by our office. Preference is given to returns for which a statutory due date is imminent.
You can expect your return to be completed within a reasonable amount of time, generally within two weeks of submission to our office. We track the status of all returns, beginning with their receipt by our office of the information necessary to prepare the return. There may be times during tax filing season when this turnaround time is longer due to high volume times. Your submission of a complete package of information well in advance of the submission deadline will ensure we can meet all of your expectations.
We guarantee completion of your return by the statutory due date if you meet the due date for getting your information to our office, as well as have submitted substantially all the information necessary to complete your return, barring any unforeseen circumstances beyond our control.
Please contact us if you have questions as to what constitutes substantially all the information necessary to complete your return.
Extensions of Time to File Tax Returns
The original filing due date for your business tax returns is March 15th. 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 February 20th so that the returns may be completed by the original filing due dates.
It may become necessary to apply for an extension of the filing deadline 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 extend the time available for a government agency to undertake an audit of your return or may extend the statute of limitations to file a legal action. 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.
To the extent you wish to engage our firm to apply for extensions of time to file tax returns on your behalf, you must notify us of this request in writing. Our firm will not file these applications unless we receive an executed copy of this Agreement and your express written authorization to file for an extension. In some cases, your signature may be needed 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.
Adequate Business Documentation
You are responsible for maintaining adequate documentation to substantiate the accuracy and completeness 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 applicable tax laws and regulations. You are responsible for the adequacy of all information provided in such documents. You represent that you have such documentation and can produce it if necessary, to respond to any audit or inquiry by tax authorities. You agree to hold our firm harmless from any liability including but not limited to, additional tax, penalties, interest and professional fees resulting from the disallowance of tax deductions due to inadequate documentation.
Personal expenses
You are responsible for ensuring that personal expenses, if any, are segregated from business expenses and that expenses such as meals, travel, vehicle use, gifts, and related expenses are supported by necessary records required by the IRS and other tax authorities. At your written request, we are available to provide you with written answers to your questions on the types of supporting records required.
State and local filing obligations
You are responsible for determining your tax filing obligations with any state or local tax authorities, including, but not limited to, income, franchise, sales, use, property or unclaimed property taxes. You agree that we have no responsibility to research these obligations or to inform you of them. 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 of this responsibility in writing and ask you to contact us. If you ask us to prepare these returns, we will confirm this representation in a separate engagement letter.
On June 21, 2018, the U.S. Supreme Court reversed the long-standing physical presence nexus standard in South Dakota v. Wayfair, Inc. et. al. This decision significantly changes the landscape of sales and use tax compliance, especially for online sellers. If you wish to understand the impact of the decision on your business, we will confirm this in a separate engagement letter. The scope of our services under this engagement letter does not include services related to your compliance with other tax obligations.
U.S. filing obligations related to foreign financial assets
You are responsible for informing us of all foreign assets owned directly or indirectly, including but not limited to financial accounts with foreign institutions, other foreign non-account investments, and ownership of any foreign entities, regardless of amount. 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.
These assets include any ownership interests you directly or indirectly hold in businesses located in a foreign country, and any assets or financial accounts located in a foreign country over which you have signature authority. Based upon the information you provide, this information will be used to calculate any applicable foreign tax credits. We will also use this data to inform you of any additional filing requirements, which may include FinCEN Form 114, Report of Foreign Bank and Financial Accounts (“FBAR”). Failure to file required forms can result in the imposition of both civil and criminal penalties, which may be significant. The FBAR is not a tax return and its preparation is not within the scope of this engagement. If you ask us to prepare the FBAR, we will confirm this representation in a separate engagement letter.
Failure to timely file the required forms may result in substantial civil and/or criminal penalties. By your signature below, you agree to provide us with complete and accurate information regarding any foreign investments in which you have a direct or indirect interest, or over which you have signature authority, during the above referenced tax year.
The foreign reporting requirements are very complex. If you have any questions regarding the application of the reporting requirements for your foreign interests or activities, please ask us and we will respond in writing. Only advice that is in writing may be relied upon. We assume no liability for penalties associated with the failure to file or untimely filing of any of these forms.
Foreign filing obligations
You are responsible for complying with the tax filing requirements of any other country. You acknowledge and agree that we have no responsibility to raise these issues with you and that foreign filing obligations are not within the scope of this engagement.
Virtual currency
The IRS considers virtual currency (e.g., Bitcoin) as property for U.S. federal income tax purposes. As such, any transactions in, or transactions that use, virtual currency are subject to the same general tax principles that apply to other property transactions.
If you had virtual currency activity during the tax year, you may be subject to tax consequences associated with such transactions and may have additional reporting obligations. You agree to provide us with complete and accurate information regarding any transactions in, or transactions that have used, virtual currency 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.
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.
We recommend obtaining a signed contract and signed Form W-9, Request for Taxpayer Identification Number and Certification, or Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals,) from all independent contractors. You should provide all independent contractors with both forms and let them decide which form (W-9 or W-8BEN) is reflective of their status.
You should also issue a Form 1099-NEC, Nonemployee Compensation, to all unincorporated independent domestic contractors to whom you pay $600 or more for services. For those who provided a completed Form W-8BEN, a Form 1042-S must be issued to individuals if any payment is made from U.S. sources that would be deemed to be fixed or determinable annual or periodical income or other types of income included in the instructions, even if these payments are subject to a reduced income tax withholding rate or are exempt from income tax withholding due to an income tax treaty. 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 31st, 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.
Engagement responsibility
If, in the course of this engagement, we become aware of a service needed to complete the engagement that we do not or will not provide, we will advise you of that needed service and recommend to you in writing that you engage another service provider to address that service. If you decline to engage such recommended service provider, and we determine that such action impairs our ability to properly address the terms of this engagement, we will so advise you, in writing, and terminate this engagement.
If you decline to engage such recommended service provider and we determine that our ability to properly address the terms of this engagement is not impaired, but may be limited in some way, we will advise you, in writing, with respect to how we believe our conclusions and recommendations may be affected.
We cannot be responsible for the acts, omissions, or solvency of any broker, agent, or independent contractor or other advisor or professional engaged to work with you on any part of your business and/or personal tax and accounting.
Our services are not designed to discover fraud, irregularities, or misrepresentations. We rely upon you to provide us with accurate information to advise you in your business and/or personal tax and accounting. Our signature upon your business and/or personal tax return indicates we have prepared the return in accordance with all applicable laws.
Should there be any concern to the following situations, a stop-work provision will be instituted until resolved:
Nonpayment of fees.
Revelation of a conflict of interest.
Revelation of willful failure by client to heed our advice.
Revelation of acts considered unethical.
Disagreement on tax positions taken that do not meet professional standards.
If we are unable to obtain sufficient information to proceed with any parts of the engagement as contemplated and agreed, we will advise you and, as appropriate, discuss the options to move forward with the engagement, if possible, including terminating or modifying the engagement with you.
This engagement may be terminated without penalty or further obligation except for the payment of fees for services performed and expenses incurred prior to termination.
Signing and filing your return
You have final responsibility for your tax returns. We will provide you with a copy of your electronic tax returns and accompanying schedules and statements for review prior to filing with the IRS and state and local tax authorities, as applicable. You agree to review and examine them carefully for accuracy and completeness.
You will be required to verify and sign a completed form authorizing us to file your return electronically:
S Corporation: Form 8879-S, IRS e-file Signature Authorization for Form 1120S
C Corporation: Form 8879-C, IRS e-file Signature Authorization for Form 1120
Partnership: Form 8879-PE, IRS e-file Signature Authorization for Form 1065
And any similar state and local equivalent authorization form before your returns can be filed electronically.
In the event that you do not wish to have your tax returns filed electronically, please contact our firm. Additional procedures will apply. You will be responsible for reviewing the paper returns for accuracy, signing them, and filing them timely with the tax authorities.
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
Entire Agreement
The engagement letter, including this Terms and Conditions Business Addendum and any other attachments, encompass the entire agreement of the parties and supersedes all previous understandings and agreements between the parties, whether oral or written. Any modification to the terms of this Agreement must be made in writing and signed by both parties. This Agreement has been entered into solely between you and Elizabeth Bystrom CPA, Ltd., and no third-party beneficiaries are created hereby.
S Corporation
Changes in ownership
You are responsible for advising us of any changes in ownership so we can properly reflect those on the tax returns.
Tax basis schedules
You are responsible for maintaining tax basis schedules for shareholders. If you ask us to prepare these schedules, we will confirm this service in a separate engagement letter.
S Corporation Election
You are responsible for retaining a copy of your S Corporation election and/or the IRS’s acceptance of it.
S Corporation shareholder agreements
You should review your corporate buy-sell agreement and other stock agreements with your attorney to ensure these documents meet your goals for the transfer of corporate stock.
Salaries and wages for S Corporation shareholders
You are responsible for determining the appropriate salary or wage to pay shareholders. If the IRS determines that the S Corporation made distributions in lieu of an appropriate shareholder salary or wage, the IRS may reclassify the payments. As a result of the reclassification, the shareholder and S corporation may be responsible for employment taxes on the reclassified amounts in addition to penalties and interest. 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 changes to S Corporation shareholder salaries and wages.
S Corporation distributions
Distributions should be made to shareholders on a per share, per day basis. If distributions were not made proportionately, the IRS may take corrective action, including potentially revoking the entity’s S Corporation election, which may result in unfavorable tax consequences. As such, it is your responsibility to ensure that shareholder distributions are made on a pro-rata basis.
Schedule K-1 distribution
You are responsible for distributing a copy of the S Corporation’s Schedule K-1s to each shareholder.
C Corporation
Changes in ownership
You are responsible for advising us of any changes in ownership so we can properly reflect those on the tax returns.
Reasonable compensation
You are responsible for determining the appropriate salary or wage to pay shareholder-employees. If the IRS determines that the C Corporation paid salaries or wages in lieu of an appropriate taxable dividend, the IRS may reclassify the payments. As a result of the reclassification, the shareholder may be responsible for tax, penalties and interest on the taxable dividend in addition to potential employment taxes on the reclassified amounts. 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 any reclassification.
Estimated tax payments
You may be required to make quarterly estimated tax payments. We will calculate these payments based upon the information you provide to prepare your 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, and we agree to do so, we will confirm this update in a separate Agreement.
Partnerships
Changes in ownership
You are responsible for advising us of any changes in ownership, including the death of a partner, so we can properly reflect those on the tax returns.
Partnership or limited liability company (LLC) agreement
You should review your partnership (or LLC) agreement with your attorney to ensure it addresses the significant changes to the partnership audit regime that will generally apply to partnership returns filed after 2018. These changes include, but are not limited to the following:
Replacement of a “tax matters partner” with a “partnership representative,”
Current partners being held responsible for tax liabilities of prior partners,
The partnership being held responsible for remittance of additional tax rather than individual partners being taxed, and
Numerous elections or opt-outs that the “partnership representative” may make.
In addition, you should review your partnership or LLC agreement to ensure that it meets your goals for the transfer of ownership and distribution of income. Often, partnership agreements do not address the transfer of ownership or may require updating as circumstances change. A review of your partnership or LLC agreement is not within the scope of this engagement.
Tax basis schedules
You are responsible for maintaining tax basis schedules for partners or LLC members. If you ask us to prepare these schedules, and we agree to prepare these schedules, we will confirm this service in a separate engagement letter.
Allocation of partnership income and expenses
You are responsible for verifying the accuracy of both the allocation of partnership income per the terms of the partnership agreement and the partnership income calculations used in the preparation of the tax returns.
The Treasury Department has proposed regulations under IRC §752, Treatment of Certain Liabilities, concerning transactions between partners and the partnership, on the allocation among partners of partnership level debt and disguised sales under IRC §707, Transactions Between Partner and Partnership. If you ask us to evaluate compliance with IRC §707 and/or §752, and we agree to do so, we will confirm this evaluation in a separate engagement letter.
Partner salaries
A partner or LLC member receiving a guaranteed salary payment is not regarded as an employee of the entity for the purpose of withholding or Social Security taxes. Any additional fringe benefits a partner or LLC member receives are not subject to withholding. These fringe benefits may, however, be included in the income of the partner or LLC member. You are responsible for informing us of the total guaranteed payments, including fringe benefits, received by each partner or LLC member.
Schedule K-1 distribution
You are responsible for distributing a copy of the partnership or LLC’s Schedule K-1s to each partner or member.
* * * * * *
Individual Tax
Terms and Conditions
Updated November 2021
For the purposes of this Terms and Conditions Individual Tax Addendum, any reference to “firm,” “we,” “us,” or “our” is a reference to Elizabeth Bystrom CPA, Ltd., and any reference to “you,” or “your” is a reference to the party or parties that have engaged us to provide services. References to “Agreement” mean the engagement letter or other written document describing the scope of services, any other attachments incorporated therein, and this Terms and Conditions Individual Tax Addendum.
CPA Firm Responsibilities
Unless otherwise noted, we will perform our services in accordance with the Statements on Standards for Tax Services (“SSTSs”) issued by the American Institute of Certified Public Accountants (“AICPA”) and U.S. Treasury Department Circular 230 (“Circular 230”). It is our duty to perform services with the same standard of care that a reasonable tax return preparer would exercise in this type of engagement. 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.
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. 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.
Arguable positions
We will use our judgment to resolve questions in your favor where a tax law is unclear, provided that we have a reasonable belief that there is substantial authority for doing so. If there are conflicting interpretations of the law, 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 tax reference materials. Tax reference materials include but are not limited to, the Internal Revenue Code (“IRC”), tax regulations, Revenue Rulings, Revenue Procedures, Private Letter Rulings, 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. We assume no liability, and you hereby release us from any liability, including but not limited to, additional tax, penalties, interest, and related professional fees.
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 there is no expectation of privacy from the other concerning our services in connection with this Agreement. We are at liberty to share with either of you, without prior consent of the other, documents and other information concerning the preparation of your tax returns.
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. You agree to pay for those required services.
Estimated tax payments
You may be required to make quarterly estimated tax payments. We will calculate these payments for the subsequent tax year based upon the information you provide to prepare your current year 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, and we agree to do so, we will confirm this update in a separate Agreement.
Tax planning services
Tax planning services are not within the scope of this engagement. During the course of preparing the tax returns identified above, we may bring to your attention potential tax savings strategies for you to consider as a possible means of reducing your taxes in subsequent tax years. However, we have no responsibility to do so, and will take no action with respect to such recommendations, as the responsibility for implementation remains with you, the taxpayer. If you ask us to provide tax planning services, and we agree to provide them to you, we will confirm this engagement in a separate Agreement.
Government inquiries
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 our assistance in responding to such an inquiry. If you ask us to represent you, we will confirm this representation in a separate engagement letter
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, regardless of a direct request from any party.
Divorce
If you inform us of your pending divorce, we will advise each of you to seek independent tax advice. As you may have conflicting interests with your spouse, you will both be required to sign a conflict of interest waiver. We will not be able to advise either of you until your divorce is finalized. For example, your income tax return filing status is an item about which we will need instruction. Electing a filing status of married filing jointly establishes joint liability for taxes owed and requires that certain tax-related decisions be made prior to the preparation of income tax returns. Consequently, we will require a letter of instruction from both of your divorce attorneys [or, if the spouse(s) is/are unrepresented, we will require a letter of instruction from the unrepresented spouse(s)]identifying items needed to prepare your tax return and your agreement to same before the tax returns can be prepared. In the event that you elect to file separate tax returns, you will both be required to sign new engagement letters prior to the preparation of your returns
Tax Advice
Our advice is based upon tax reference materials, facts, assumptions, and representations that are subject to change. Tax reference materials include, but are not limited to, the Internal Revenue Code (“IRC”), tax regulations, Revenue Rulings, Revenue Procedures, private letter rulings and court decisions. 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 guidance contained in Circular 230, §10.37, Requirements for Written Advice.
Reliance on Others
If you wish to take a tax position based upon the advice of another tax advisor, you agree to obtain a written statement from the advisor confirming that the position should meet the “realistic possibility,” “substantial authority,” or “more likely than not” standard, as applicable. In preparing your federal tax return, we are subject to a diligence as to accuracy regarding reliance on others standard, as defined in revisions to Circular 230, §10.22(b). To the extent a position is based upon the advice of another tax advisor, prior to preparing or signing the tax return, the AICPA SSTS No. 1 also requires our firm to have a good faith belief that the position has, at a minimum, a realistic possibility of being sustained administratively or judicially on its merits, if challenged. Additional charges will apply to such research.
Substantial Understatement Penalties
The IRS and many states impose penalties for substantial understatement of tax. To avoid the substantial understatement penalty, you must have substantial authority to support the tax treatment of the item challenged by the IRS or have an adequate disclosure of the item. To fulfill the adequate disclosure requirement, you may be required to attach to your tax return a completed Form 8275, Disclosure Statement, or Form 8275-R, Regulation Disclosure Statement, which discloses all relevant facts.
You agree to advise us if you wish to disclose a tax treatment on your return. If you request our assistance in identifying or performing further research to ascertain if there is substantial authority for the proposed position to be taken on the tax item(s) in your returns, and we agree to perform the research, we will confirm this engagement in a separate Agreement. It is your responsibility to contact us if additional assistance is required.
If we conclude as a result of our research that you are required to disclose a transaction on your tax return, you consent to attach Form 8275 or Form 8275-R to your tax return for filing after we discuss the matter with you. If the IRS, state or local tax authorities later contest the position taken, additional tax, penalties, and interest may be assessed. We assume no liability, and you hereby release us from any liability arising from such contest, including but not limited to, additional tax, penalties, interest, and related professional fees for the position taken.
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 on 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.
Client Responsibilities
We will provide you with an income tax organizer to help you compile and document the information necessary to prepare your income tax returns. You must complete the income tax organizer with accurate and complete information. Income from all sources, including those outside the U.S., is required.
Impact of COVID-19 tax law
Over the past year, various federal and state laws were enacted in response to the COVID-19 pandemic. Various programs were made available to provide economic relief to businesses and individuals, and in certain cases, may have an impact on a taxpayer’s tax return. It is your responsibility to inform us of any COVID-19 programs you have explored, engaged, or participated in, and to notify us if you have received relief in the form of loans, grants, or other financial assistance.
On-line 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 authorize it to be downloaded.
Deadlines
The tax filing season becomes more and more compressed every year due to additional deadline and form implementation required by the government, as well as behind-the-scene fraud prevention techniques. These necessary steps help to contribute to the cultivation of a situation where it is more likely for last minute maneuvering to occur, which in turn creates an unfavorable environment of rushing to meet deadlines and transfer of information.
Along with tools we may provide such as an organizer and portal access, we are also implementing the following deadlines so as to manage the flow of information in a more streamlined fashion:
Corporate Return (S-Corp/C-Corp/Partnership)
Statutory Due Date of Return: March 15th
Deadline for submitting information to our office: February 20th
Sole Proprietor (Schedule C)
Statutory Due Date of Return: April 15th (filed in conjunction with your Form 1040)
Deadline for submitting information to our office: March 20th
Individual Return (Form 1040)
Statutory Due Date of Return: April 15th
Deadline for submitting information to our office: March 20th
Any return for which substantially all the information necessary to complete the return has not been received by our office by the deadline listed below will automatically receive a protective extension.
Returns are completed in the order they are received by our office. Preference is given to returns for which a statutory due date is imminent.
You can expect your return to be completed within a reasonable amount of time, generally within two weeks of submission to our office. We track the status of all returns, beginning with their receipt by our office of the information necessary to prepare the return. There may be times during tax filing season when this turnaround time is longer due to high volume times. Your submission of a complete package of information well in advance of the submission deadline will ensure we can meet all of your expectations.
We guarantee completion of your return by the statutory due date if you meet the due date for getting your information to our office, as well as have submitted substantially all the information necessary to complete your return, barring any unforeseen circumstances beyond our control.
Please contact us if you have questions as to what constitutes substantially all the information necessary to complete your return.
Extensions of Time to File Tax Returns
The original filing due date for your individual income tax returns is April 15th. 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 20th so that the returns may be completed by the original filing due dates.
It may become necessary to apply for an extension of the filing deadline 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 extend the time available for a government agency to undertake an audit of your return or may extend the statute of limitations to file a legal action. 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.
To the extent you wish to engage our firm to apply for extensions of time to file tax returns on your behalf, you must notify us of this request in writing. Our firm will not file these applications unless we receive an executed copy of this Agreement and your express written authorization to file for an extension. In some cases, your signature may be needed 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.
Adequate Business Documentation
You are responsible for maintaining adequate documentation to substantiate the accuracy and completeness of your tax returns. 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. You represent that you have such documentation and can produce it, if necessary, to respond to any audit or inquiry by tax authorities. You agree to hold our firm harmless from any liability including but not limited to, additional tax, penalties, interest and professional fees resulting from the disallowance of tax deductions due to inadequate documentation.
Personal expenses
You are responsible for ensuring that personal expenses, if any, are segregated 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. At your written request, we are available to provide you with written answers to your questions on the types of supporting records required.
State and local filing obligations
On June 21, 2018, the U.S. Supreme Court reversed the long-standing physical presence nexus standard in South Dakota v. Wayfair, Inc. et. al. This decision significantly changes the landscape of sales and use tax compliance, especially for online sellers. If you wish to understand the impact of the decision on your business, please so advise and we will confirm this in a separate Agreement.
You are responsible for determining your tax filing obligations with any state or local tax authorities, including, but not limited to income, franchise, sales, use, property or unclaimed property taxes. 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. You acknowledge that the scope of our services under this Agreement does not include any services related to your compliance with tax obligations other than those identified in the Engagement Objective and Scope section of this Agreement. If you ask us to prepare any other returns, and we agree to do so, we will confirm this engagement in a separate Agreement.
U.S. filing obligations related to foreign financial assets
You are responsible for informing us of all foreign assets owned directly or indirectly, including but not limited to financial accounts with foreign institutions, other foreign non-account investments, and ownership of any foreign entities, regardless of amount. 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.
These assets include any ownership interests you directly or indirectly hold in businesses located in a foreign country, and any assets or financial accounts located in a foreign country over which you have signature authority. Based upon the information you provide, this information will be used to calculate any applicable foreign tax credits. We will also use this data to inform you of any additional filing requirements, which may include FinCEN Form 114, Report of Foreign Bank and Financial Accounts (“FBAR”). Failure to file required forms can result in the imposition of both civil and criminal penalties, which may be significant. The FBAR is not a tax return and its preparation is not within the scope of this engagement. If you ask us to prepare the FBAR, we will confirm this representation in a separate engagement letter.
Based upon the information you provide, we will use this data to inform you of any additional filing requirements, which may include FinCEN Form 114, Report of Foreign Bank and Financial Accounts (“FBAR”). The FBAR is not a tax return and its preparation is not within the scope of this engagement. If you ask us to prepare the FBAR, and we agree to prepare the FBAR, we will confirm this engagement in a separate Agreement.
Failure to timely file the required forms may result in substantial civil and/or criminal penalties. By your signature below, you agree to provide us with complete and accurate information regarding any foreign investments in which you have a direct or indirect interest, or over which you have signature authority, during the above referenced tax year.
The foreign reporting requirements are very complex. If you have any questions regarding the application of the reporting requirements for your foreign interests or activities, please ask us and we will respond in writing. Only advice that is in writing may be relied upon. We assume no liability for penalties associated with the failure to file or untimely filing of any of these forms.
Foreign filing obligations
You are responsible for complying with the tax filing requirements of any other country. You acknowledge and agree that we have no responsibility to raise these issues with you and that foreign filing obligations are not within the scope of this engagement.
Virtual currency
The IRS considers virtual currency (e.g., Bitcoin) as property for U.S. federal income tax purposes. As such, any transactions in, or transactions that use, virtual currency are subject to the same general tax principles that apply to other property transactions.
If you had virtual currency activity during the tax year, you may be subject to tax consequences associated with such transactions and may have additional reporting obligations. You agree to provide us with complete and accurate information regarding any transactions in, or transactions that have used, virtual currency 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.
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.
We recommend obtaining a signed contract and signed Form W-9, Request for Taxpayer Identification Number and Certification, or Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals,) from all independent contractors. You should provide all independent contractors with both forms and let them decide which form (W-9 or W-8BEN) is reflective of their status.
You should also issue a Form 1099-NEC, Nonemployee Compensation, to all unincorporated independent domestic contractors to whom you pay $600 or more for services. For those who provided a completed Form W-8BEN, a Form 1042-S must be issued to individuals if any payment is made from U.S. sources that would be deemed to be fixed or determinable annual or periodical income or other types of income included in the instructions, even if these payments are subject to a reduced income tax withholding rate or are exempt from income tax withholding due to an income tax treaty. 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 31st, 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.
Engagement responsibility
If, in the course of this engagement, we become aware of a service needed to complete the engagement that we do not or will not provide, we will advise you of that needed service and recommend to you in writing that you engage another service provider to address that service. If you decline to engage such recommended service provider, and we determine that such action impairs our ability to properly address the terms of this engagement, we will so advise you, in writing, and terminate this engagement.
If you decline to engage such recommended service provider and we determine that our ability to properly address the terms of this engagement is not impaired, but may be limited in some way, we will advise you, in writing, with respect to how we believe our conclusions and recommendations may be affected.
We cannot be responsible for the acts, omissions, or solvency of any broker, agent, or independent contractor or other advisor or professional engaged to work with you on any part of your business and/or personal tax and accounting.
Our services are not designed to discover fraud, irregularities, or misrepresentations. We rely upon you to provide us with accurate information to advise you in your business and/or personal tax and accounting. Our signature upon your business and/or personal tax return indicates we have prepared the return in accordance with all applicable laws.
Should there be any concern to the following situations, a stop-work provision will be instituted until resolved:
Nonpayment of fees.
Revelation of a conflict of interest.
Revelation of willful failure by client to heed our advice.
Revelation of acts considered unethical.
Disagreement on tax positions taken that do not meet professional standards.
If we are unable to obtain sufficient information to proceed with any parts of the engagement as contemplated and agreed, we will advise you and, as appropriate, discuss the options to move forward with the engagement, if possible, including terminating or modifying the engagement with you.
This engagement may be terminated without penalty or further obligation except for the payment of fees for services performed and expenses incurred prior to termination.
Signing and filing your return
You have final responsibility for the accuracy of your tax returns. We will provide you with a copy of your electronic tax returns and accompanying schedules and statements for review prior to filing with the IRS, state and local tax authorities, as applicable. You agree to review and examine them carefully for accuracy and completeness.
You will be required to verify and sign a completed form authorizing us to file your return electronically:
Individual: Form 8879, IRS e-file Signature Authorization for Form 1040
And any similar state and local equivalent authorization form before your returns can be filed electronically.
In the event that you do not wish to have your tax returns filed electronically, please contact our firm. Additional procedures will apply. You will be responsible for reviewing the paper returns for accuracy, signing them, and filing them timely with the tax authorities.
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
Entire Agreement
The engagement letter, including this Terms and Conditions Business Addendum and any other attachments, encompass the entire agreement of the parties and supersedes all previous understandings and agreements between the parties, whether oral or written. Any modification to the terms of this Agreement must be made in writing and signed by both parties. This Agreement has been entered into solely between you and Elizabeth Bystrom CPA, Ltd., and no third-party beneficiaries are created hereby.
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Privacy Policy
Updated November 2021
CPAs, like all providers of personal financial services, are required by law to inform their customers of their policies regarding privacy of customer information. CPAs have been and continue to be bound by professional standards of confidentiality, put forth in the AICPA Code of Professional Conduct, that are even more stringent than those required by law. Therefore, we have always protected your right to privacy.
Types of Nonpublic Personal Information We Collect
Information we receive from you on tax preparation organizers, worksheets, Federal and State tax reporting forms, and from other documents we use in tax preparation or other financial and related services. Information about your transactions with us, our affiliates, and others and information we may receive from outside agencies such as banks and brokerage houses.
Parties to Whom We Disclose Information
For current and former customers, we do not disclose any nonpublic personal information obtained in the course of our practice except as required or permitted by law. Permitted disclosures include: providing information to our employees, and in limited situations, to unrelated third parties who need to know that information to assist us in providing services to you, requirements to comply with Federal, state or local laws and licensing rules, requirements to disclose information in response to legal subpoenas, items you permit or request us to disclose, as authorized by you, information, which, you authorize us to disclose to electronically file your tax return, and information, which you authorize us to disclose that discloses that you are our customer, without disclosure of financial or other personal information. In all such situations, we stress the confidential nature of information being shared.
Consent
By signing this letter, your consent also allows us to disclose the above information with these third parties to keep communication flowing. This consent will continue as long as we are engaged for services, or until you revoke it.
Protecting the Confidentiality and Security of Current and Former Customers’ Information
We retain records relating to professional services that we provide so that we are better able to assist you with your professional needs and, in some cases, to comply with professional guidelines. In order to guard your nonpublic personal information, we maintain physical, electronic, and procedural safeguards that comply with our professional standards.
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Security Policy
Updated November 2021
The primary focus of information security is balanced protection of the confidentiality, integrity, and availability of data.
In accordance with the Gramm-Leach-Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, we have a written information security plan that places us in compliance with the safeguards rule contained within the GLBA.
The FTC Safeguards Rule requires financial institutions to develop a written ISP that describes how the business is prepared to protect clients’ nonpublic personal information. This safeguards rule applies to all businesses, regardless of size, that are “significantly engaged” in providing financial products or services. This definition includes professional tax preparers/CPAs (as well as, for example, mortgage brokers, nonbank lenders, personal property or real estate appraisers).
Also, as part of a business’s ISP, it must:
Designate one or more employees to coordinate its ISP.
Identify and assess the risks to customer information in each relevant area of the company’s operation and evaluate the effectiveness of the current safeguards for controlling these risks.
Design and implement a safeguards program and regularly monitor and test it.
Select service providers that can maintain appropriate safeguards, make sure the contracts with the service providers require them to maintain safeguards and oversee their handling of customer information.
Evaluate and adjust the plan considering relevant circumstances, including changes in the firm’s business or operations, or the results of security testing and monitoring.
Please contact us if you have any questions or concerns about our security policy, or would like to see a copy of our written security plan.
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