2021 Gift Tax Return Engagement Letter

Please fill out the signature form below and select your method of payment. After completing the process, you will receive a receipt by email with a link to the engagement letter for later reference.

Dear Client:

The Wolf Group, P.C. is pleased to provide you with the professional services described below. This letter, and the attached Additional Engagement Terms and any other attachments incorporated herein (collectively, “Agreement”), confirm our understanding of the terms and objectives of our engagement and the nature and limitations of the services we will provide. The engagement between you and our firm will be governed by the terms of this Agreement.

Engagement Objective and Scope

We will prepare the following federal gift tax return for the year ended December 31, 2021:

Form 709:  United States Gift (and Generation-Skipping Transfer) Tax Return

Federal and state law governs your obligation to file a gift tax return and pay gift tax. The Internal Revenue Service (“IRS”) considers a gift to be any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money’s worth) is not received in return. Under federal tax law, certain gifts are not taxable, and taxable gifts are subject to an annual gift tax exclusion amount, which for 2021, is $15,000 per taxpayer. In addition, a lifetime gift exclusion amount applies to federal transfer taxes, which for 2021, is $11,700,000, per individual.

A gift tax return is an individual filing; there is no joint gift tax return.  Under certain circumstances spouses may elect to “split” gifts.  If you are eligible for, and elect gift-splitting, we will also prepare your spouse’s Gift Tax Return.

We will not prepare any tax returns except those identified above, without your written request, and our written consent to do so. We will prepare your gift tax return based upon information and representations that you provide to us. We have not been engaged to and will not prepare financial statements. We will not audit or otherwise verify the data you submit to us, although we may ask you to clarify certain information.

We will prepare the above-referenced gift tax return solely for filing with the IRS and state and local tax authorities as identified above. Our work is not intended to benefit or influence any third party, either to obtain credit or for any other purpose.

You agree to indemnify and hold us harmless with respect to any, and all, claims arising from the use of the tax return for any purpose other than filing with the IRS and other tax authorities regardless of the nature of the claim, including the negligence of any party.

The scope of our engagement is limited to the preparation of the gift tax return listed above. It may include tax advice related to the preparation of the gift tax return.

Our engagement does not include any procedures designed to detect errors, fraud, or theft. Therefore, our engagement cannot be relied upon to disclose such matters.

This engagement is limited to the professional services outlined above.

CPA Firm Responsibilities

Unless otherwise noted, we will perform our services in accordance with the Statements on Standards for Tax Services (“SSTS”) issued by the American Institute of Certified Public Accountants (“AICPA”) and U.S. Treasury Department Circular 230 (“Circular 230”). It is our duty to perform services with the same standard of care that a reasonable income tax preparer would exercise in this type of engagement. It is your responsibility to safeguard your assets and maintain accurate records pertaining to transactions. We will not hold your property in trust for you, or otherwise accept fiduciary duties in the performance of the engagement.

We will prepare your gift tax return based upon the information and representations that you provide to us. We may request your authorization to make inquiries of your attorneys or estate planning professionals on issues related to the gift tax return. You should discuss the gift tax return with them before filing it with the IRS and other tax authorities, as applicable.

Tax planning services

Our engagement does not include income or estate tax planning services. During the course of preparing the gift tax return identified above, we may bring to your attention potential tax savings strategies for you to consider as a possible means of reducing your taxes in subsequent tax years. However, we have no responsibility to do so, and will take no action with respect to such recommendations, as the responsibility for implementation remains with you, the taxpayer. If you ask us to provide tax planning services, we will confirm this representation in a separate engagement letter.

Government inquiries

This engagement does not include responding to inquiries by any governmental agency or tax authority. If your tax return is selected for examination or audit, you may request our assistance in responding to such an inquiry. If you ask us to represent you, we will confirm this representation in a separate engagement letter.

Client Responsibilities

You agree to provide us with the information and the documentation requested by our firm. This information and documentation is necessary to determine your federal and state gift tax filing obligations.

We rely upon the accuracy and completeness of both the information you provide and supporting data you provide in rendering professional services to you.

Elections

A gift tax return includes elections that may materially affect the taxes owed. Preparation of the gift tax return requires you to make decisions regarding these elections.

While we will explain gift tax return elections that you may make and provide recommendations based upon the information you provide, you remain responsible for consulting with your attorney as needed regarding the advisability of making such elections.

You agree to instruct us in writing regarding the gift tax return elections to be made by you. You agree that any gift tax return elections reflected on the completed return are made at your instruction following consultation with your attorney.

Appraisals and valuations

Determining the value of property, other than cash or publicly traded securities, may require an appraisal or valuation. You acknowledge that it is your responsibility to engage a qualified independent third party to determine values of assets other than cash or publicly traded securities. In preparing the gift tax return, we will not independently determine values. You agree to hold us harmless with respect to any additional tax, penalties, interest, and professional fees resulting from any change to an appraisal or valuation determined by third party appraisers or valuators.

Documentation

You are responsible for maintaining adequate documentation to substantiate the accuracy and completeness of your gift tax return. You should retain all documents that provide evidence and support for reported gifts and deductions reported on your return, as required under applicable tax laws and regulations. You are responsible for the adequacy of all information provided in such documents. You represent that you have such documentation and can produce it, if necessary, to respond to any audit or inquiry by tax authorities. You agree to hold our firm harmless with respect to any additional tax, penalties, interest, and professional fees resulting from the disallowance of tax deductions due to inadequate documentation.

Foreign filing obligations

You are responsible for complying with the gift reporting and tax filing requirements of any tax authority outside of the U.S. You acknowledge and agree that we have no responsibility to raise these issues with you and that foreign filing obligations are not within the scope of this engagement.

Gifts received from foreign persons

If you received a gift from a foreign person or trust, you may be required to file a separate IRS Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts. If you ask us to prepare this return, we will confirm this in a separate engagement letter.

Consultations

It is your responsibility to consult with your attorneys and estate planning professionals as needed prior to filing the gift tax return with taxing authorities. Positions taken on a gift tax return may impact your estate taxes and the future income and estate taxes owed by the heirs and beneficiaries of your estate.

Ultimate responsibility

You have final responsibility for your gift tax return. We will provide you with a copy of your gift tax return and accompanying schedules and statements for review prior to filing with the IRS and state and local tax authorities (as applicable). You agree to review and examine it carefully for accuracy and completeness prior to signing and filing it timely with the tax authorities.

Timing of the Engagement

 We expect to begin our services upon receipt of all information and documentation requested by our office.

Our services will conclude upon the earlier of:

  • mailing or delivery of your 2021 gift tax return for your review and filing with the appropriate tax authorities,
  • written notification by either party that the engagement is terminated, or
  • one year from the execution date of this Agreement.

Extensions of Time to File Gift Tax Return

The original filing due date for your federal gift tax return is April 18, 2022.

It may become necessary to apply for an extension of the filing deadline if there are unresolved issues or delays in processing, or if we do not receive all of the necessary information from you on a timely basis. Applying for an extension of time to file may extend the time available for a government agency to undertake an audit of your return or may extend the statute of limitations to file a legal action. All taxes owed are due by the original filing due date. Additionally, extensions may affect your liability for penalties and interest or compliance with governmental or other deadlines.

To the extent you wish to engage our firm to apply for an extension of time to file a gift tax return on your behalf, you must notify us of this request in writing. Our firm will not file these applications unless we receive an executed copy of this Agreement and your express written authorization to file for an extension. In some cases, your signature may be needed on such applications prior to filing. Failure to timely request an extension of time to file can result in penalties for failure to file tax returns, which accrue from the original due date of the return and can be substantial.

We are available to discuss this matter with you at your request.

Penalties and Interest Charges

Federal, state, and local tax authorities impose various penalties and interest charges for non-compliance with tax laws and regulations, including failure to file or late filing of returns, and underpayment of taxes. You, as the taxpayer, remain responsible for the payment of all tax, penalties, and interest charges imposed by tax authorities.

The IRS describes fair market value as the price for which property would sell for on the open market. Taxing authorities closely scrutinize excessive valuation discounts from fair market value taken on property gifted to others. IRC §6662, Imposition of Accuracy-Related Penalty on Underpayments, imposes large penalties on substantial gift tax valuation understatements and gross valuation misstatements. You agree to hold us harmless with respect to any tax, penalties, interest, and professional fees resulting from failure to disclose, or inadequate disclosure of, gifts.

The IRS can assess a gift tax liability within three (3) years after the due date of the return, or three (3) years after the return is actually filed, whichever is later. Failure to disclose all asset transfers, or inadequate disclosure of gifts, may result in the imposition of penalties and interest charges in addition to extending the period of time in which the IRS may assess an additional liability.

We rely on the accuracy and completeness of the information you provide to us in connection with the preparation of your gift tax return. Failure to disclose, or inadequate disclosure of gifts, or tax positions, may result in the imposition of penalties and interest charges.

Professional Fees

Our current[1] standard hourly rates are as follows:

  • Partner/Director – $550-$575 per Hour
  • Senior Manager – $375-$450 per Hour
  • Manager – $325-$375 per Hour
  • Associate – $275-$325 per Hour
  • Associate – $200-$250 per Hour

Our professional fee for the services outlined above is based on our standard hourly rates, with a minimum fee of $850 per gift tax return.  If we are also preparing your spouse’s return only to report your split gifts (i.e. your spouse has made no gifts of his/her own), our fee for your spouse’s return will be discounted.

The majority of gift tax returns we undertake with circumstances and/or complexity similar to yours have typically run between $900 and $1,000.  We feel it is important to share with you the range of fees we typically see on gift tax returns similar to yours; however, we will be invoicing our services based on the time we actually incur on the engagement.

If circumstances and/or issues, including international considerations, arise during the term of this engagement that were unknown to us at the inception of the engagement, it may be necessary to expand the engagement accordingly, and such a modification could result in a fee that is higher than the above referenced estimated fee range. If the modification is substantial, the fee differential may also be substantial.

The above referenced estimated fee range is based, in part, upon the timely delivery, availability, quality, and completeness of the information you provide to us. You agree that you will deliver all records requested and respond to all inquiries made by our staff to complete this engagement on a timely basis.

Fees are considered earned when payment is received, or services concluded, whichever is earlier. Invoices are due and payable on presentation. Past due balances may be subject to finance and collection charges.

We require a retainer of $500 to get started. In addition, we require a credit card to be placed on file with our office. Once your returns are completed, we will send them to you, along with a copy of your invoice for services rendered. Then, we will charge the balance of your invoice to your card shortly after delivery of your returns to you.

If you have questions regarding your gift tax return filing obligations, please contact our office.

Authorization

If you authorize The Wolf Group, PC to prepare your 2021 Form(s) 709 pursuant to the terms set forth above, please sign below. Retain a copy of this letter for your records. If we do not receive a signed original of this letter but receive supporting documentation for your return preparation, then such receipt shall be deemed to evidence your acceptance of the terms set forth herein.

We want to express our appreciation for this opportunity to serve you.

Very truly yours,

The Wolf Group, P.C.

Additional Engagement Terms

Responsibilities of the Client

A fundamental term of this Agreement is that the Client will provide us with all information relevant to the services to be performed and to provide us with any reasonable assistance as may be required to properly perform the engagement. The Client agrees to bring to our attention any matters that may reasonably be expected to require further consideration to determine the proper treatment of any relevant item. The Client also agrees to bring to our attention any changes in the information as originally presented as soon as such information becomes available. Unless otherwise indicated, any deliverables are solely for Client’s internal use and benefit.

Responsibilities of The Wolf Group, PC (“The Wolf Group”)

We will perform our services on the basis of the information you have provided and in consideration of the applicable federal, state or local laws, regulations and associated interpretations relative to the appropriate jurisdiction as of the date the services are provided. Tax laws and regulations and/or their interpretation are subject to change at any time, and such changes may be retroactive in effect and may be applicable to advice given or other services rendered before their enactment dates. We do not assume responsibility (and will have no liability) for such changes occurring after the date we have completed our services.

Engagement Limitations

The services performed under this Agreement do not include the provision of legal advice and we make no representations regarding questions of legal interpretation. Client should consult with its attorneys with respect to any legal matters or items that require legal interpretation, under federal, state or other type of law or regulation.

As you may be aware, tax returns and other filings are subject to examination by taxing authorities. We will be available to assist the Client in the event of an audit or any issue for which we have provided services under this Agreement. However, unless otherwise indicated, our fees for these additional services are not included in our fee for the services covered by this Agreement.

Disassociation or Termination of Engagement

Either party may terminate this Agreement at any time upon written notice of termination to the other party. In the event of termination, Client will be responsible for fees earned and expenses incurred through the actual date of termination.

Except to the extent finally determined to have resulted from the gross negligence or other intentional misconduct of The Wolf Group, The Wolf Group’s liability to pay damages for any losses incurred by the client as a result of breach of conduct, negligence or other tort committed by The Wolf Group, is limited to the total amount of fees charged by The Wolf Group for the particular service provided under this Agreement to which such claim relates.

Limitation of Actions (Statue of Limitations)

In accordance with the Code of Virginia § 59.1-508.5, you agree to a modified Statute of Limitations to bring an action for breach of contract. The action for breach of contract must be commenced within the later of three years after the right of action accrues or one year after the breach was or should have been discovered, but not later than three years after the right of action accrues.

Other Provisions

Neither party shall be liable to the other for any delay or failure to perform any of the services or obligations set forth in this Agreement due to causes beyond its reasonable control.

This Agreement shall be governed by and construed, interpreted and enforced in accordance with the laws of the State of Virginia, without giving effect to the provisions relating to conflict of laws.

The Wolf Group, PC is a member of Nexia International, an international network of independent accounting and consulting firms. Nexia International does not accept any responsibility for the commission of any act, or omission to act by, or the liabilities of, any of its members. Membership of Nexia International, or associated umbrella organizations, does not constitute any partnership between members, and members do not accept any responsibility for the commission of any act, or omission to act by, or the liabilities of, other members.

 

[1] Our standard hourly rates may be adjusted over time, in line with inflation and other market increases. All engagements are invoiced at the rates in effect at the time services are performed.

[2021 Gift Tax Return Engagement Letter (R)]

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