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Re: Individual Income Tax Returns Engagement Agreement
We are pleased that you have engaged CliftonLarsonAllen LLP (“CLA,” “we,” “us,” and “our”) to prepare
your federal and state (if applicable) individual income tax returns. This agreement confirms the scope,
limitations, and related terms of our engagement for the year ended December 31, 2021.
Our responsibility to you
We will prepare your federal and state (if applicable) income tax returns and those of any of your
dependents, if requested, in accordance with the applicable income tax laws. We will use our judgment
in resolving questions where the law is unclear, and where there is reasonable authority, we will resolve
questions in your favor whenever possible. We will not audit or otherwise verify the accuracy or
completeness of the information we receive from you for the preparation of the returns, and our
engagement cannot be relied upon to uncover errors or irregularities in the underlying information. We
will furnish you (at your last known address) with a tax organizer to assist you in gathering and organizing
the necessary information for us.
Your responsibilities
It is your responsibility to provide us with all of the information needed to prepare complete and accurate
returns. We will have no obligation to prepare the returns until you have provided such information to us.
You agree to read and consider the content of our tax organizer when providing your information to us.
We will prepare returns for the same states where you filed the preceding year unless you notify us to the
contrary or a source document clearly indicates the need to file an additional state return. It is your
responsibility to comply with all foreign jurisdiction filing requirements. We have no obligation to prepare
returns for foreign jurisdictions.
It is important for you to identify any ownership OR signature authority over a foreign bank account or
other foreign financial assets which includes but is not limited to foreign: stocks, mutual funds,
partnerships, bonds, retirement accounts, estates, trusts, annuities, swaps, and derivatives. Failure to
disclose penalties can be significant, starting at $10,000 and can be upwards of 50 percent of the value of
the asset. Please provide account statements if you have any foreign account ownership or signature
authority. Note that these rules do not apply to foreign investments held by U.S. mutual funds. In addition,
ownership in a foreign business entity (association, corporation, disregarded entity, or partnership) could
trigger additional U.S. foreign informational reporting requirements. These reporting requirements
require the disclosure of ownership, financial information, and related-party transactions. Failure to
properly disclose ownership, related-party transactions, and the required information could trigger a
penalty of up to $25,000 per filing. We cannot be held responsible if you fail to identify or provide such
information to us.
For all nonattest services we may provide to you, including these tax services, you agree to assume all
management responsibilities; oversee the services; make all personal decisions and perform all personal
functions related to the services; evaluate the adequacy and results of the services performed; and accept
responsibility for the results of the services. You are also responsible for ensuring that your data and
records are complete and that you have received sufficient information to oversee the services. You are
responsible to carefully review the returns that we prepare on your behalf before they are signed and
submitted to tax authorities. We will advise you with regard to tax positions taken in the preparation of
the tax returns, but the responsibility for the tax returns remains with you. Our services will be concluded
upon the delivery to you of your tax returns for your review and filing with all appropriate tax authorities.
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If requested, we will prepare 1099 information returns from information provided by you.
It is your responsibility to provide us with all of the information needed to prepare complete and accurate
1099 information returns. We will have no obligation to prepare 1099 information returns until you have
provided such information to us. You are responsible to determine which vendors are required to receive
1099 information returns. Our 1099 preparation services will include electronically transmitting 1099
information returns to federal and state taxing authorities on your behalf with your written approval and
authorization. (An email is acceptable documentation).
Withholdings
Unless you are subject to adequate income tax withholdings or we agree to compute quarterly estimated
tax payments, we will determine the requirements for and the amounts of your quarterly estimated tax
payments, if applicable, for the next year based on “safe harbor” payments to avoid underpayment
penalties.
We will assume that tax withholdings will be the same as during the year prior unless you provide us
additional information about withholdings.
Tax examinations
All returns are subject to potential examination by the IRS and state taxing authorities. In the event of an
examination, we will be available, at your request, to assist or represent you. Services in connection with
tax examinations are not included in our fee for preparation of your returns. Our fee for such services will
be billed to you separately, along with any direct costs.
Record retention
You are responsible for retaining all documents, records, canceled checks, receipts, or other evidence in
support of information and amounts reported on your tax returns. These items may be necessary in the
event the taxing authority examines or challenges your returns. These records should be kept for at least
seven years. Your copy of the tax returns should be retained indefinitely.
If carryover item(s) exist (e.g., capital loss, net operating loss, tax credits, etc.), you should retain the
supporting records related to the carryover item(s) until the item has either been utilized (and the statute
of limitations associated with the year of utilization has expired) or the carryforward period has expired.
In preparing the tax returns, we rely on your representation that you understand and have complied with
these documentation requirements. You are responsible for the proper recording of transactions, for the
safeguarding of assets, and for the substantial accuracy of your financial records.
All of the records that you provide to us to prepare your tax returns will be returned to you after our use.
Our working papers, including any copies of your records that we chose to make and the tax organizer
that you complete, are our property and will be retained by us in accordance with our established records
retention policy. This policy states, in general, that we will retain our working papers for a period of seven
years. After this period expires, our working papers and files will be destroyed. Furthermore, physical
deterioration or catastrophic events may shorten the time our records are available. The working papers
and files of our firm are not a substitute for your records.
Tax consulting services
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This engagement agreement also covers tax consulting services that may arise for which you seek our
consultation and advice, both written and oral, that are not the subject of a separate engagement
agreement. These additional services are not included in our fees for the preparation of the federal and
state tax returns.
We will base our tax analysis and conclusions on the facts you provide to us, and will not otherwise verify
those facts. We will review the applicable tax law, tax regulations, and other tax authorities, all of which
are subject to change. At your request, we will provide a memorandum of our conclusions. Written advice
provided by us is for your information and use only and is not to be provided to any third party without
our express written consent.
Unless we are separately engaged to do so, we will not continuously monitor and update our advice for
subsequent changes or modifications to the tax law and regulations, or to the related judicial and
administrative interpretations.
Communications and confidentiality
The Internal Revenue Code contains a limited privilege for confidentiality of tax advice between you and
our firm. In addition, the laws of some states likewise recognize a confidentiality privilege for some
accountant-client communications. You understand that CLA makes no representation, warranty or
promise, and offers no opinion with respect to the applicability of any confidentiality privilege to any
information supplied or communications you have with us, and, to the extent that we follow instructions
from you to withhold such information or communications in the face of a request from a third party
(including a subpoena, summons or discovery demand in litigation), you agree to hold CLA harmless
should the privilege be determined not to apply to particular information or communications.
CLA will not disclose any of your confidential, proprietary, or privileged information to any persons
without your authorization or unless required by law. This confidentiality provision does not prohibit us
from disclosing your information to one or more of our affiliated companies in order to provide services
that you have requested from us or from any such affiliated company. Any such affiliated company shall
be subject to the same restrictions on the use and disclosure of your information as apply to us.
Subcontractors
CLA may, at times, use subcontractors to perform services under this agreement, and they may have
access to your information and records. Any such subcontractors will be subject to the same restrictions
on the use of such information and records as apply to CLA under this agreement.
Technology
CLA may, at times, use third-party software applications to perform services under this agreement. CLA
can provide a copy of the application agreement at your request. You acknowledge the software vendor
may have access to your data.
Limitations
Our role is strictly limited to the services described in this agreement, and we offer no assurance as to the
results or ultimate outcomes of any services or of any decisions that you may make based on our
communications with you. You agree that it is appropriate to limit the liability of CLA, its partners,
principals, directors, officers, employees, and agents (each a “CLA party”) and that this limitation of
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remedies provision is governed by the laws of the state of Minnesota, without giving effect to choice of
law principles.
You further agree that you will not hold CLA or any other CLA party liable for any claim, cost, or damage,
whether based on warranty, tort, contract, or other law, arising from or related to the services provided
under this agreement, the work product, or for any plans, actions, or results of any service, except to the
extent authorized by this agreement. In no event shall any CLA party be liable to you for any indirect,
special, incidental, consequential, punitive, or exemplary damages, or for loss of profits or loss of goodwill,
costs, or attorney fees.
The exclusive remedy available to you shall be the right to pursue claims for actual damages that are
directly caused by acts or omissions that are breaches by a CLA party of our duties owed under this
engagement agreement, but any recovery on any such claim shall not exceed the portion of the total fees
actually paid by you to CLA that corresponds to the particular service(s) that give(s) rise to the claim (i.e.,
the specific service(s) that a CLA party performed in such a manner as to cause CLA to be liable to you).
Time Limitation
The nature of our services makes it difficult, with the passage of time, to gather and present evidence that
fully and fairly establishes the facts underlying any dispute that may arise between you and any CLA party.
The parties (you and CLA) agree that, notwithstanding any statute or law of limitations that might
otherwise apply to a dispute, including one arising out of this agreement or the services performed under
this agreement, for breach of contract or fiduciary duty, tort, fraud, misrepresentation or any other cause
of action or remedy, any action or legal proceeding by you against any CLA party must be commenced as
provided below, or you shall be forever barred from commencing a lawsuit or obtaining any legal or
equitable relief or recovery. An action to recover on a dispute shall be commenced within the shorter of
these periods (“Limitation Period”):
• For tax return preparation, separately within thirty-six (36) months after the date when we deliver any
final tax return(s) under this agreement to you on which the dispute is based, regardless of whether any
CLA party provides other services for you or relating to said return(s).
• For tax consulting engagements, separately within thirty-six (36) months from the date of our last billing
for services on each consultation on which the dispute is based.
• For all tax return and tax consulting engagements, within twelve (12) months from the date when you
terminate this or any other engagement of our services.
The applicable Limitation Period applies and begins to run even if you have not suffered any damage or
loss, or have not become aware of the existence or possible existence of a dispute.
Fees
Our professional fees will be billed based on the degree of responsibility and contribution of the
professionals working on the engagement. We will also bill for expenses (including internal and
administrative charges) plus a technology and client support fee of five percent (5%) of all professional
fees billed. We may need to perform additional services if significant changes to the tax law occur or
unexpected circumstances require additional time. Fees and expenses for this work will be invoiced
separately. Our invoices, including applicable state and local taxes, will be rendered each month as work
progresses and are payable on presentation. In accordance with our firm policies, work may be suspended
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if your account becomes 60 days or more overdue and will not be resumed until your account is paid in
full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been
completed even if we have not issued the tax returns. You will be obligated to compensate us for all time
expended and related fees and to reimburse us for all out-of-pocket expenditures through the date of
termination.
Other fees
You also agree to compensate us for any time and expenses, including time and expenses of legal counsel,
we may incur in responding to discovery requests or participating as a witness or otherwise in any legal,
regulatory, or other proceedings that we are asked to respond to on your behalf.
Finance charges and collection expenses
You agree that if any statement is not paid within 30 days from its billing date, the unpaid balance shall
accrue interest at the monthly rate of one and one-quarter percent (1.25%), which is an annual percentage
rate of 15%. In the event that any collection action is required to collect unpaid balances due us,
reasonable attorney fees and expenses shall be recoverable.
Termination of agreement
Either party may terminate this agreement at any time by giving written notice to the other party. In that
event, the provisions of this agreement shall continue to apply to all services rendered prior to
termination.
Agreement
If you agree with the terms of this agreement, please return a signed copy to us to indicate your
acknowledgment and understanding of this agreement. If you fail to return a signed copy of this
agreement, we will endeavor to follow up with you. However, regardless of whether you sign and return
a copy of this agreement, you will be confirming your acceptance of the engagement terms outlined in
this agreement if you provide to us the information necessary to allow us to prepare your tax return(s) or
if you submit the tax return(s) that we have prepared for you to the tax agencies.
Sincerely,
CliftonLarsonAllen LLP
Accepted:
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Spouse Signature (if joint return)
(Type your name if completing electronically)
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