ANNUAL ENGAGEMENT LETTER (Gear-Up Sample)

[Melvinne]

IN VIEW OF NEW PREPARER PENALTIES, I AM ATTEMPTING TO REARRANGE SOME OF THE DATA TO HIGHLIGHT SOME OF

THE NEW TAX CHANGES FOR 2007. I NOTE THAT WITH THE GEAR-UP SAMPLE THEY ARE SAYING 7 YEARS FOR RETENTION

OF RETURNS, WORKPAPERS, ETC BY THE PREPARERS, AND THEN ONLY 4 YEARS FOR THE CLIENTS. I'VE ALWAYS TOLD

BUSINESSES TO RETAIN THEIR RECORDS UNTIL THEY DISPOSE OF THE BUSINESS. THIS WAS EXTREMELY BENEFICIAL

SEVERAL YEARS BACK WHEN I HAD TO PREPARE A 3115. ANY COMMENTS ON THE RETENTION BIT; OR IN REGARDS TO

A REVITALIZED ENGAGEMENT LETTER?

[TAXBILLY]

There are always exceptions to the general retention philosophy. I keep returns differently depending on circumstances and always urge my clients to keep all of their documents on rentals, for example.

taxbilly

[jainen]

The purpose of the engagement letter is to say what I will do, some things I won't do, and what I need the client to do in regards to tax preparation. I don't put retention information there; that would just add unnecessary length. I like my 1040 engagement letter to be under one page. I certainly wouldn't promise to be the client's document repository for seven years.

[So and So]

The purpose of the engagement letter is to say what I will do, some things I won't do, and what I need the client to do in regards to tax preparation. I don't put retention information there; that would just add unnecessary length. I like my 1040 engagement letter to be under one page. I certainly wouldn't promise to be the client's document repository for seven years.

I agree with this. I can see the scenario now. A client needs something from a tax return from several years ago. Preparer does not have that item. Client begins waving the letter around saying you promised to keep all that stuff for him. He's going to sue, etc, etc, etc. Nevermind that it can't be proven the preparer ever had the info to begin with.

So, if it is not stated in the letter, then if the client requests something I happen to still have, all for the good. If not, then the client should have kept better records himself.