Base Engagement Letter
Re: Engagement Letter for Accounting, Tax Compliance
/Consultation & Regulatory Compliance Services
This Engagement Letter, which is effective as of the date of execution (this “ENGAGEMENT LETTER”), is made by aBIZinaBOX Inc. (“we” or “aBIZinaBOX”) and. on behalf of itself and its affiliated entities and [XYZ Entity] (“you” or “Client”) and is subject to the General Terms and Conditions and potentially additional riders, which are attached to and made part of this letter. In any case, where there is a conflict between our General Terms and Conditions, the terms contained in the letter shall control.
Scope of Services
aBIZinaBOX will provide the Services to Client in connection with accounting and bookkeeping, tax compliance assistance, tax consultation, transactional tax consultation, technology and other services that you may request in connection with you provision of services to clients in the commercial cannabis industry. The specific tasks and assignments will be based upon the services which you request.
Our understanding is that the services may be provided to clients of your practice, or for your internal use.
You are responsible for the safeguarding of assets, the proper recording of transactions in the books of accounts, the substantial accuracy of the financial records, and the full and accurate disclosure of all relevant facts affecting the return(s) to us. You also have final responsibility for the tax return and, therefore, the appropriate personnel should review the return carefully before an authorized person from your firm signs and files it.
You are responsible for making all management decisions and performing all management functions; for designating an individual with suitable skill, knowledge, or experience to oversee the services we provide; and for evaluating the adequacy and results of the services performed and accepting responsibility for such services. Client’s approval of any services shall not constitute a waiver of any of its rights under this ENGAGEMENT LETTER.
In connection with the tax compliance services, we may provide you with a questionnaire or other document requesting specific information. Completing those forms will assist us in making sure you are well served for a reasonable fee. You represent that the information you are supplying to us is accurate and complete to the best of your knowledge and that you have disclosed to us all relevant facts affecting the returns. We will not verify the information you give us; however, we may ask for additional information.
Should our work involve entities that have previously filed tax returns, where we discover information that affects those prior year tax returns, we will make you aware of the facts. However, we cannot be responsible for identifying all items that may affect prior year returns. If you become aware of such information during the year, please contact us to discuss the best resolution of the issue. We will be happy to prepare appropriate amended returns as a separate engagement.
Our work in connection with the preparation of the tax return(s) does not include any procedures designed to discover defalcations or other irregularities, should any exist. The returns will be prepared solely from information provided to us without verification by us.
The firm may from time to time, and depending on the circumstances, use third party service providers to assist in preparing your return, but these preparers will not make substantive decisions concerning your return. We may share tax return information with these service providers but remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies, procedures, and safeguards to protect the confidentiality of your personal information.
In addition, we will secure confidentiality agreements with all service providers to maintain the confidentiality of your information and we will take reasonable precautions to determine that they have appropriate procedures in place to prevent the unauthorized release of your confidential information to others. If we are unable to secure an appropriate confidentiality agreement, you will be asked to provide your consent prior to the sharing of your confidential information with the third-party service provider.
Furthermore, the firm will remain responsible for the work provided by any such third-party service providers. However, we will not disclose any tax return information to third parties without your express written consent.
In accordance with federal law, in no case will we disclose your tax return information to any location outside the United States, to another tax return preparer outside of our firm for purposes of a second opinion, or to any other third party for any purpose other than to prepare your return without first receiving your consent.
By executing this Engagement Letter, you consent to the firm using your tax return information to send to you by any medium: firm newsletters, surveys, press releases, information concerning firm seminars and nontax related services, and any other communication sent to some or all the firm’s clients. This consent shall be valid for five years.
Further, by providing your financial information to us for the purpose of the preparation of tax returns, you are deemed to have reviewed the documents, approved, and executed our Engagement Letter without regard to whether you physically sign the Engagement Letter.
The disclosure will include the disclosure of the entire federal income tax return, and you acknowledge, by signing this engagement letter, that you have the right to consent to a disclosure of less than the entire tax return, but have decided, without coercion, that you consent to the disclosure of the entire tax return. This consent is not conditioned on our providing services to you.
The Internal Revenue Code and regulations impose preparation and disclosure standards with noncompliance penalties on both the preparer of a tax return and on the taxpayer. To avoid exposure to these penalties, it may be necessary in some cases to make certain disclosures to you and/or in the tax return concerning positions taken on the return that do not meet these standards. Accordingly, we will advise you if we identify such a situation and we will discuss those tax positions that may increase the risk of exposure to penalties and any recommended disclosures with you before completing the preparation of the return.
If we conclude that we are obligated to disclose a position and you refuse to permit the disclosure, we reserve the right to withdraw from the engagement. Likewise, where we do not agree about the obligation to disclose a position, you also have a right to choose another professional to prepare your return. In either event, you agree to compensate us for our services to the date of withdrawal. Our engagement with you will terminate upon our withdrawal.
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. Checking a box on the return evidences your consent to such a discussion. Unless you tell us otherwise, we will check that box authorizing the IRS to discuss your return with us.
It is our policy to keep records related to this engagement for three years. However, we do not keep any of your original records, so we will return those to you upon the completion of the engagement. When records are returned to you, it is your responsibility to retain and protect the records for possible future use, including potential examination by governmental or regulatory agencies.
By signing this Engagement Letter, you acknowledge and agree that upon the expiration of the three-year period, we are free to destroy our records related to this engagement.
Certain communications involving tax advice are privileged and not subject to disclosure to the IRS. By disclosing the contents of those communications to anyone, or by turning over information about those communications to the government, you, your employees, or agents may be waiving this privilege. To protect this right to privileged communication, please consult with us or your attorney prior to disclosing any information about our tax advice. Should you decide that it is appropriate for us to disclose any potentially privileged communication, you agree to provide us with written, advance authority to make that disclosure.
Should we receive any request for the disclosure of privileged information from any third party, including a subpoena or IRS summons, we will notify you. In the event, you direct us not to make the disclosure, you agree to hold us harmless from any expenses incurred in defending the privilege, including, by way of illustration only, our attorney’s fees, court costs, outside adviser’s costs, or penalties or fines imposed as a result of your asserting the privilege or your direction to us to assert the privilege.
The return(s) may be selected for review by the taxing authorities. In the event of an audit, you may be requested to produce documents, records, or other evidence to substantiate the items of income and deduction shown on a tax return. Any proposed adjustments by the examining agent are subject to certain rights of appeal. In the event of a tax examination, we will be available, upon request, to represent you. However, such additional services are not included in the fees for the preparation of the tax return (s).
Client shall pay aBIZinaBOX fees for the Services based on the amount of time that aBIZinaBOX professionals expend in performing them, billed at our standard billing rates for the personnel working on the engagement, as adjusted annually during the term of this ENGAGEMENT LETTER. Client shall also pay all applicable taxes incurred in connection with the delivery of the Services (except for taxes imposed on aBIZinaBOX’s income).
In addition, Client shall reimburse aBIZinaBOX for direct expenses incurred in connection with the performance of the Services. Direct expenses include reasonable and customary out-of-pocket expense for items such as travel, meals, accommodations and other expenses specifically related to this engagement. aBIZinaBOX shall bill Client for its fees and expenses, and applicable taxes, if any, on a monthly basis. All invoices are due and payable upon presentation. Client’s written approval is required for any expense which exceeds $500 per item or causes total expenses in any one month to exceed $1,500.
Other terms and conditions
In the event of a dispute related in any way to our services, our firm and you agree to discuss the dispute and, if necessary, to promptly mediate in a good faith effort to resolve. We will agree on a mediator, but if we cannot, either of us may apply to a court having personal jurisdiction over the parties for appointment of a mediator. We will share the mediator’s fees and expenses equally, but otherwise will bear our own attorneys’ fees and mediation cost. Participation in such mediation shall be a condition to either of us initiating litigation. In order to allow time for the mediation, any applicable statute of limitations shall be tolled for a period not to exceed 120 days from the date either of us first requests in writing to mediate the dispute. The mediation shall be confidential in all respects, as allowed or required by law, except our final settlement positions at mediation shall be admissible in litigation solely to determine the prevailing party’s identity for purposes of the award of attorneys’ fees.
We have the right to withdraw from this engagement, in our discretion, if you do not provide us with any information we request in a timely manner, refuse to cooperate with our reasonable requests or misrepresent any facts. Our withdrawal will release us from any obligation to complete your project and will constitute completion of our engagement. You agree to compensate us for our time and out-of-pocket expenses which are due hereunder through the date of withdrawal.
Please indicate your acceptance of this ENGAGEMENT LETTER and these additional terms and conditions by executing this ENGAGEMENT LETTER in the space provided below and returning it to Jordan Zoot at your earliest convenience.
Very truly yours,
By Jordan S. Zoot, Managing Director – CEO