What is a tax preparation engagement letter?
A tax preparation engagement letter sets the terms between a tax preparer, enrolled agent, accountant or firm and a client for preparing income tax returns. Its main job is to make responsibilities clear: the preparer prepares returns from the information provided, and the client is responsible for giving complete, accurate information and for the returns once they approve them.
This letter-style template names the tax year and the returns, lists what is not included (pre-filled with bookkeeping, audits, planning, payroll and sales tax returns and representation), and sets the client's duties — complete information including foreign accounts, keeping records, reviewing returns and paying tax on time. It covers an optional information deadline and extensions, how unclear positions are decided, e-filing only after approval and any separate authorisation form, handling of tax authority notices, fixed, estimated or hourly fees with an optional retainer, confidentiality and working papers.
- Best for
- Tax preparers, enrolled agents, accountants and small firms
- Signed by
- The preparer and the taxpayer (add a spouse for joint returns)
- Fees
- Fixed, estimated or hourly, with an optional retainer
- Length
- About 2 pages, initialled on every page
When to use a tax preparation engagement letter
- Preparing an individual's annual income tax return
- A couple filing a joint return with self-employment income
- Small business or partnership returns
- A new client switching from another preparer
- A one-off amended return for a prior year
What you fill in
15 blanks, then the name and email of each person who signs: tax preparer, client.
1 The parties
- Firm or preparer*
- Your email*
- Credentials or registration
- Client (person or business)*
- Client email*
2 The engagement
- Date of this letter*
- Tax year or period*
- Returns to be prepared*
- Not included
- Client to supply all information by
3 Fees
- Currency*
- Fee basis* a fixed fee · an estimated fee · an hourly rate
- Fee or hourly rate*
- Retainer due on signing
- Governing law*
4 Who signs
- Tax preparer signature and date, job title, initials on every page · The tax preparer or accounting firm.
- Client signature and date, initials on every page · The taxpayer. For a joint return, add the spouse or partner as a second client in the editor before sending.
What the tax preparation engagement letter covers
- The returns we will prepare
- Your responsibilities
- Our approach
- Electronic filing and authorisations
- Notices and examinations
- Fees
- Confidentiality and records
- Term and general
Using the tax preparation engagement letter, step by step
1 Name the year and returns
Enter the tax year and list each return you'll prepare, such as the federal and state returns. Add credentials or a preparer registration if your country issues one.
2 Edit the exclusions
Review the pre-filled list of what's not included and adjust it to your services.
3 Set a deadline and fees
Add the date you need the client's information by, the fee basis and amount, and any retainer due on signing.
4 Send for signature
Send the letter to the client. For a joint return, add the spouse or partner as a second signer in the editor before sending.
Tips before you send it
- Send engagement letters before you start work, not with the finished return.
- Set an information deadline a few weeks before the filing date so late documents don't become your emergency.
- Electronic filing usually needs its own signed authorisation form from the tax authority — this letter doesn't replace it.
- Check what your professional body or tax authority requires in engagement letters and record retention.
Sign it online in minutes
- Fill in the blanks. Names, dates and amounts go straight into the agreement — the preview shows exactly where.
- Name who signs. Tick “This is me” for your own part. FileIt builds the PDF with every signature, date and initials box on the right line, and you can check or move anything before sending.
- Send it. Each signer gets a secure link and signs from any device — no account needed. The signed PDF, with an audit trail and a Certificate of Completion, is filed in your vault and emailed to everyone.
Tax preparation engagement letter: frequently asked questions
Does this letter authorise me to e-file the return?
It agrees that you'll e-file only after the client approves the final return and signs any filing authorisation the tax authority requires. Where that's a separate official form, the client still needs to sign it.
Who is responsible for errors in the return?
The client is responsible for the completeness and accuracy of the information and for the return once approved. The preparer isn't responsible for penalties from incomplete or late information or from a position the client chose against advice.
Is representation in an audit included?
No. Responding to notices or audits is quoted separately and, where allowed, needs a separate authorisation.
Can I send engagement letters to all my clients at once?
Each letter is created from the template and sent as its own envelope in FileIt eSignature. Clients sign from an emailed link without an account, and you keep the signed PDF with its audit trail.