2023 Fiduciary Engagement Letter

  • This letter is to specify the terms of our engagement, clarify the nature and extent of the services we will provide, and confirm an understanding of mutual responsibilities. 

    We will prepare your 2022 Federal and State individual income tax returns based on the returns you filed last year.  Our services are not intended to determine whether you have filing requirements in other taxing jurisdictions than the one(s) you have informed us of.  If you would like to add any additional forms or services to this engagement, please use the Comments or Additional Requests space provided below.

    Certain individuals may be required to electronically file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR) with the U.S. Department of the Treasury.  Failure to comply with the filing requirements may result in significant civil and criminal penalties.  Unless otherwise specifically agreed in writing, we will not prepare, file, or provide assistance with this form.  If you would like to add FinCEN Form 114 to this engagement, please use the Comments or Additional Requests space provided below.

    It is your responsibility to provide all the information required to prepare your income tax returns.  We may provide you with an organizer or checklist of information required for the returns, and you represent that the information you provide will be accurate and complete to the best of your knowledge.  We will not audit or otherwise verify the information provided, although we may ask for clarification if the information appears to be incorrect, inconsistent, or incomplete.  Our work in connection with the preparation of your income tax returns does not include any procedures designed to discover errors or other irregularities, should any exist.  You have the final responsibility for the income tax returns and, therefore, you should review them carefully before you sign and file them.

    Taxpayers are required to maintain all the documents that form the basis of income, deductions, credits, and payments shown on the returns.  In addition, some items have specific substantiation requirements set forth by the IRS (e.g., auto, meals, charitable contributions over $250, etc.).  If you have any questions as to the type of records required, please ask us for advice in that regard.  Your signature on this letter confirms that we have advised you of the record keeping requirements.

    We will use our judgment to resolve questions in your favor where a tax law is unclear, provided there is sufficient support 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 the Internal Revenue Code, tax regulations, Revenue Rulings, Revenue Procedures, private letter rulings, and court decisions.  There may be situations where we are required by law to disclose a position on a tax return.  In the event that you ask us to take an unsupported tax position or refuse to make any required disclosures, we reserve the right to withdraw from the engagement without completing or delivering the tax returns.  Such withdrawal would complete our engagement and you agree to pay our fee based on time expended at our standard rates plus all out-of-pocket expenses through the date of withdrawal.


    Your returns may be selected for examination or audit by tax authorities.  In the event of such governmental tax examination, we would be pleased to represent you under the terms of a separate engagement.

    The engagement does not include any services not specifically identified above.  We may need to perform additional accounting or research services incidental to the preparation of your tax returns.  These incidental services will be billed with your tax return, at our standard rates.

    Your federal income tax return is required to be filed electronically with the IRS.  We will provide you with a copy of your final returns for review prior to electronic transmission.  The IRS requires that you sign an e-file authorization form indicating that you have reviewed the return, it is correct to the best of your knowledge, and you authorize us to submit it electronically.  We cannot transmit any return until we have the appropriate signed authorizations.  E-filing of state returns varies by taxing authority.  If e-filing is not available or you choose not to electronically file, paper copies will be provided for you to sign and mail.

    The IRS permits you to authorize us to discuss, on a limited basis, aspects of your return for one year after the return's due date.  Your consent to this authorization is evidenced by checking a box on the return.  Unless you tell us otherwise, we will check that box authorizing the IRS to discuss your return with us.

    The original filing due date for your federal income tax return is April 18, 2023. Due to the high volume of tax returns prepared by our firm, you must provide the information needed to prepare the tax returns no later than April 1, 2023. Failure to do so may result in the inability to complete your returns by the original filing due date.

    Our fees for services include consideration for the cost of technology processing, research facilities, the time required to process your information, and any out-of-pocket expenses incurred.  Our standard rate schedule for tax staff processing services will range from $160 to $265 per hour depending on the complexity of your specific tax elements.  Our minimum fee for individual tax preparation has been set at $550.  Dependent returns will be billed at a minimum of $170.  In addition, taxpayers and their dependents who have obtained health insurance through the Marketplace will be charged additional fees based on the time it will take to prepare federal compliance forms and/or worksheets.  This time will be billed on an hourly basis which we anticipate will cost $165 - $265 per return. 

    If the foregoing fairly sets forth your understanding, please sign and date this letter in the space indicated below and return it to our office.  If there are additional tax returns you expect us to prepare, such as gift and/or property tax returns, please inform us by noting them in the Comments or Additional Requests space provided below. 

    We want to express our appreciation for the opportunity to work with you.

    Very truly yours,

    McMahon & Associates Certified Public Accountants, P.C.

Contact us at 219.924.3450 to schedule an appointment with one of our professionals.

mcmahon team