Tax Preparation contract template
A tax preparation engagement letter protects both sides by fixing exactly what return(s) are covered, who is responsible for the accuracy of the underlying information, and what happens if the IRS later has questions — the most common sources of dispute in this line of work.
Scope of engagement
List exactly which return(s) and schedules are covered (e.g. federal Form 1040, one state return, Schedule C) and state that anything outside that scope — an additional state, a late-discovered K-1, prior-year amended returns — is a separate, additionally billed engagement.
Client's responsibility for accuracy of information
State plainly that the preparer relies on the accuracy and completeness of documents and information the client provides, that the client is responsible for disclosing all income and reviewing the completed return before it's filed, and that the preparer isn't liable for penalties resulting from the client's omitted or inaccurate information.
No representation before the IRS unless stated
Clarify whether the engagement includes responding to an IRS notice or representing the client in an audit — uncredentialed preparers generally cannot represent a client before the IRS at all, and even for an EA or CPA this is normally separate, additionally billed work, not included in the original preparation fee.
Payment terms and e-file authorization
State that payment is due before the return is filed (a completed, signed return is not transmitted to the IRS until the fee is paid), and that the client must sign Form 8879 (e-file authorization) or the equivalent before the preparer can submit the return electronically.
Record retention
State how long the preparer will retain copies of the return and supporting documents (commonly at least 3 years, matching the IRS's own recordkeeping guidance for preparers) and that the client is responsible for keeping their own copies beyond that.
Extensions and deadline responsibility
Clarify that filing an extension extends the time to file, not the time to pay, that the preparer will file an extension if a completed return can't be finished by the deadline due to missing client information, and who bears responsibility for any resulting late-payment penalty in that case.
This is general guidance, not legal advice. Consider having a local attorney review your final agreement.