A tax preparation engagement letter puts the terms of return work in writing before the work starts: which return you’re preparing, what it costs, what the client must provide and by when, and what happens if information arrives late. Without one, a fixed per-return fee quietly absorbs prior-year cleanup, tax planning questions, and audit support you never priced.
The template below is a complete tax engagement letter for annual return preparation on a per-return fixed fee. It’s the tax-specific version of our general engagement letter template, it covers individual, company, trust, and partnership returns, and it’s designed to be re-issued for each new tax year.
The tax preparation engagement letter template
[Your firm letterhead]
[Date]
[Client name] [Client address]
Re: Engagement for the preparation of your [year] income tax return
Dear [Client name],
Thank you for engaging [Your Firm Name]. This letter confirms the terms on which we will prepare your [individual / company / trust / partnership] income tax return for the year ending [date].
Scope of services. We will prepare your income tax return based on the information and records you provide, calculate the tax payable or refundable, file the return with the [IRS / ATO / HMRC / IRD / CRA] once you have approved it, and advise you of any payment due dates. We will not audit or independently verify the information you supply.
Services not included. This engagement covers the preparation and filing of the return described above only. It does not include tax planning or structuring advice, review or amendment of prior-year returns (unless separately agreed in writing), representation in any audit or examination by the [IRS / ATO / HMRC / IRD / CRA], bookkeeping, preparation of financial statements, or [sales tax / BAS / VAT / GST] filings. We are happy to quote for any of these separately.
Fees. Our fee for this engagement is $[amount] per return, payable within [14] days of invoice. If your return is more complex than a standard return (for example, multiple income sources, rental properties, or capital gains events), we will confirm a revised fee after reviewing your information and before we begin work.
Your responsibilities. You agree to provide complete and accurate information by [date], including all sources of income, the deductions you wish to claim together with supporting records, details of any significant transactions during the year, and, if you are a new client, a copy of your most recent tax return. The return is prepared from the information you provide, and responsibility for its accuracy and completeness remains with you. If information is provided late, the return may not be filed by the deadline, and any late-filing penalties or interest remain your responsibility.
Term and termination. This letter covers the [year] tax year only; we will issue a new engagement letter for each subsequent year. Either of us may end this engagement by written notice before the return is filed, in which case our fee for work performed to that date will be invoiced.
Confidentiality. We will keep your information confidential and use it only for the purposes of this engagement, except where disclosure is required by law or by our professional obligations.
Limitation of liability. Our total liability in connection with this engagement is limited to the fees paid for it. We accept no liability for any loss arising from inaccurate or incomplete information provided to us.
If you accept these terms, please sign and return a copy of this letter.
Sincerely,
[Name] [Title], [Your Firm Name]
Accepted and agreed
Signature: ______________________ Date: ____________ [Client name], [Client / entity name]
Signature: ______________________ Date: ____________ [Name], [Your Firm Name]
What to include in a tax preparation engagement letter
Whether you call it a tax preparer engagement letter or an engagement letter for tax services, an engagement letter for return work should pin down:
- The return and the year: the return type ([individual / company / trust / partnership]) and the specific year end the letter covers
- Scope of services: prepare and file the return from client-provided information, calculate the tax position, advise payment due dates
- Exclusions: tax planning, prior-year reviews, audit representation, bookkeeping, and [sales tax / BAS / VAT / GST] filings, quoted separately if needed
- Fees: the per-return fee, what triggers a revised quote, and payment terms
- Client responsibilities: the information deadline, and that late information (and late-filing penalties) sit with the client
- Term: one letter, one year, re-issued each season
- Confidentiality and limitation of liability: standard protections, adapted to your jurisdiction
- Acceptance: signature blocks for both parties
How to use this template
Fill in the bracketed fields, delete the return types and exclusions that don’t apply, and set the information deadline early enough that a slow client doesn’t push you against the filing deadline. Have the final letter reviewed under your professional standards: many professional bodies require or strongly recommend a signed engagement letter before work begins. Or answer a few questions in the engagement letter generator and it assembles the letter for your region, services, and fee structure.
Send tax engagement letters for signature in Tidyflow
In Tidyflow, proposals and engagement letters are built from your templates and sent for electronic signature, so each season’s letter goes out, comes back signed with a timestamped audit trail, and lives on the client’s file. When the next tax year rolls around, re-issue the letter in a few clicks instead of rebuilding it in Word.