Estate Tax Return

Dear Client:

HTJ.TAX (“firm,” “we,” “us,” or “our”  (which includes Hayden T Joseph CPA LLP registered in Singapore as a Limited Liability Partnership LLP Registration No: T14LL2028A, Hayden T Joseph CPA Limited incorporated under the Companies Act 2006 as a private company with its registered office in England and Wales, company number – 8075983 and Advanced American Tax LLC registered in the State of Florida in the United States of America) ) is pleased to provide you with the professional services described below. This letter, and the attached Terms and Conditions Addendum[1] 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 not prepare any tax returns without your written request, and our written consent to do so. We will rely upon the completeness and accuracy of the information and representations you provide to us to prepare the estate’s tax returns. 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 tax returns solely for filing with the Internal Revenue Service (“IRS”) and applicable state and local tax authorities. 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 returns for any purpose other than filing with the IRS, state and local 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 estate tax returns listed above. It includes tax advice provided to you, as executor, regarding elections that can be made on the estate tax returns.

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. In addition, we are not responsible for identifying or communicating deficiencies in your internal controls. You are responsible for developing and implementing internal controls applicable to your operations.

This engagement is limited to the professional services outlined above.

Firm Responsibilities

Unless otherwise noted, we will perform our services in accordance with the Statements on Standards for Tax Services (“SSTSs”) 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 tax return 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 the estate tax returns based upon the information and representations that you provide to us. We may make inquiries of you and your attorneys or advisors on issues related to the estate tax returns. By signing this Agreement, you agree to permit us to discuss the returns with your attorneys and advisors in order to prepare them. You should discuss the returns with your attorneys or advisors before filing the returns with the IRS, state and local tax authorities, as applicable.

HTJ.TAX, in its sole professional judgment, reserves the right to refuse to take any action that could be construed as making management decisions or performing management functions on your behalf.

Arguable positions

We will use our professional judgment to resolve questions in your favor where a tax law is unclear, provided that we have a reasonable belief that there is substantial authority 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 tax reference materials. Tax reference materials include, but are not limited to, the Internal Revenue Code (“IRC”), tax regulations, Revenue Rulings, Revenue Procedures, Private Letter Rulings, court cases, and similar state and local guidance. If the IRS, state or local tax authorities later contest the position you select, additional tax, penalties, and interest may be assessed. We assume no liability, and you hereby release us from any liability, including but not limited to, additional tax, penalties, interest, and related professional fees you may incur.

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 the estate, and we agree to represent you, we will confirm this engagement in a separate agreement.

Third-party requests

We will not respond to any request from banks, mortgage brokers or others for verification of any information reported on these tax returns. We do not communicate with third parties or provide them with copies of tax returns.

Tax advice

Any advice we may provide is based upon tax reference materials, facts, assumptions, and representations that are subject to change. We will not update our advice after the conclusion of the engagement for subsequent legislative or administrative changes or future judicial interpretations. To the extent we provide written advice concerning federal tax matters, we will follow the guidance contained in Circular 230, §10.37, Requirements for Written Advice.

Reliance on others

If you wish to take a tax position based upon the advice of another tax advisor, we must comply with Circular 230, §10.37(b) and AICPA SSTS No. 1 and related Interpretations 1-1 and 1-2, which requires the position to meet the “realistic possibility,” “substantial authority,” or “more likely than not” standard, as applicable. You agree to obtain a written statement from the advisor confirming the standard that should apply so the position may be properly disclosed. If additional research or disclosure is required, you agree to pay for the additional charges necessary to complete the disclosure or such research.

Client Responsibilities

You represent to us that you are the executor.

You agree to provide us with all information and documentation requested by our firm. This information and documentation is necessary to prepare the estate tax returns.

In addition, you must complete the attached tax organizer, which we utilize to compile information needed to prepare the returns.

This information includes, but is not limited to:

• A copy of the will, codicils and other related governing documents,
• Copies of any trust instruments naming the decedent, and the tax returns filed on behalf of such trusts for the most recent tax year,
• Copies of any gift tax returns previously filed on behalf of the decedent,
• A list of any taxable gifts of money or property made by the decedent to others, whether or not the gift was reported on a gift tax return,
• A list of all estate liabilities and assets, such as debts owed, cash, real estate, stocks, bonds, mortgages, notes, life insurance policies, jointly owned property, miscellaneous tangible and intangible property, annuities and retirement benefits,
• Any income attributable to the decedent if his or her final income tax returns have been filed and it was not included on the returns,
• Marshalling assets so that sufficient cash is available to pay the estate tax due nine months after the date of death,
• Arranging for timely appraisals of estate property whose valuation requires appraisal,
• Funeral and estate administration expenses,
• Foreign and state death taxes paid by the estate, and
• A copy of the decedent’s final income tax return, if it has been filed.

You agree to provide us with all preliminary information to prepare the return within six (6) months of the date of death to permit the return to be completed by the original filing due date, nine months after the date of death. Due to the complexity associated with the generation skipping transfer tax and various estate tax return elections, we require additional review procedures for all estate tax returns that we prepare. In addition, we may request that the estate’s attorney review the estate tax returns before filing.

Please provide us with available information and a list of outstanding information, including the anticipated date any outstanding information will be available.

You are responsible for providing our firm with all information necessary to enable us to advise you regarding estate tax return filing obligations and to prepare complete and accurate returns for filing within these time limits.

Elections

Estate tax returns include elections that may materially affect both the taxes owed by the estate, and the future income and estate taxes owed by the heirs and beneficiaries of the estate. Preparation of the estate tax return requires you to make decisions on behalf of the estate regarding these elections.

We will explain tax return elections that you may make as the executor and provide recommendations based upon the information you provide. However, you remain responsible for consulting with your attorney, as well as the heirs and beneficiaries of the estate as needed, regarding the advisability of making such elections. The heirs and beneficiaries of the estate should consult with their own attorneys and professional advisors regarding income and estate tax matters. After all discussions are completed, the decision of whether or not to make an election is yours, as the executor.

You agree to instruct us in writing regarding the tax return elections to be made by the estate. You agree that any elections reflected on the completed return are made at your instruction following your consultation with your attorneys, heirs, and beneficiaries.

Estate or trust expenses

In the year of death, certain expenses may be deductible by the estate on Form 706 or the trust on Form 1041. While we will explain the options to you, you should discuss the options with the executor, attorneys, other advisors, heirs and beneficiaries of the estate. After all discussions are completed, the decision of where to deduct applicable expenses is yours. You agree to instruct us in writing whether or not to deduct the expenses on this tax return.

Appraisals and valuations

Determining the value of property, other than cash or publicly traded securities, may require an appraisal or valuation. You acknowledge that you are responsible for timely engaging a qualified independent third party to determine values of assets other than cash or publicly traded securities. Appraisals and valuations may take a significant amount of time. If a required appraisal or valuation is not timely received, the estate tax returns may require an extension of the filing deadline. In preparing the tax returns, we will not determine values nor will we review or investigate the values provided to us. You agree to hold us harmless from any liability including but not limited to, additional tax, penalties, interest and professional fees resulting from any change to an appraisal or valuation determined by third party appraisers or other valuation professionals.

Documentation

You are responsible for maintaining adequate documentation to substantiate the accuracy and completeness of your tax returns. You should retain all documents that provide evidence and support for reported assets, liabilities, expenses, credits, deductions, and other information on the returns of the estate, as required under applicable tax laws and regulations.

If a return is filed to elect portability using the deceased spousal unused exclusion amount, the statute of limitations does not expire until the statute of limitations expires for the surviving spouse’s estate tax return. As a result, documentation supporting this return should be retained until that time.

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 from any liability including but not limited to, additional tax, penalties, interest, and professional fees resulting from the disallowance of tax deductions due to inadequate documentation.

Gift taxes

Gifts of money or property made by the decedent to others are subject to tax in excess of certain amounts, which vary based upon the rules of applicable taxing authorities. If, upon review of the information you provide to us, we believe that you have an obligation to file gift tax returns on behalf of the decedent, we will notify you of this responsibility in writing and ask you to contact us. If you ask us to prepare these returns, and we agree to prepare these returns, we will confirm this engagement in a separate agreement.

State and local filing obligations

You are responsible for determining tax filing obligations with any state or local tax authorities, including, but not limited to income, estate, gift, franchise, sales, use, property or unclaimed property taxes. If upon review of the information you have provided to us, including information that comes to our attention, we believe that you may have additional filing obligations, we will notify you. You acknowledge that the scope of our services under this Agreement does not include any services related to your compliance with tax obligations other than those identified in the Engagement Objective and Scope section of this Agreement. If you ask us to prepare any other returns, and we agree to do so, we will confirm this engagement in a separate agreement.

Foreign filing obligations

You are responsible for complying with any other country’s income and estate tax reporting and filing requirements. 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.

Virtual currency

The IRS considers virtual currency (e.g., Bitcoin) as property for U.S. federal income tax purposes. As such, any transactions in, or transactions that use, virtual currency are subject to the same general tax principles that apply to other property transactions.

If you had virtual currency activity during the tax year, you may be subject to tax consequences associated with such transactions and may have additional reporting obligations. You agree to provide us with complete and accurate information regarding any transactions in, or transactions that have used, virtual currency during the applicable tax year.

Consultations

It is your responsibility to consult with your attorneys and estate planning professionals, as needed, prior to filing the returns with taxing authorities. Positions taken on estate tax returns may affect estate taxes owed by the beneficiaries of your estate.

Ultimate responsibility

You have final responsibility for the accuracy of the estate tax returns. We will provide you with a copy of the estate tax returns and accompanying schedules and statements for review prior to filing with the IRS, state and local tax authorities, as applicable. You agree to review and examine them carefully for accuracy and completeness prior to signing them and filing them timely with the tax authorities.

If you want us to contact the IRS for you that would be separately chargeable and out of the scope of the engagement for preparing returns.  We respond to queries about our calculations but queries about source documents or follow up on returns that are late in being processed are your responsibility only.

Timing of the Engagement

We expect to begin our services upon receipt of this executed Agreement, and all information and documentation requested in the Client Responsibilities section of this Agreement.

Our estate tax return services will conclude upon the earlier of:

• mailing or delivery of the estate tax returns to you for your review and your filing with the appropriate tax authorities,
• written notification by either party that the engagement is terminated

Our services related to Form 8971, Information Regarding Beneficiaries Acquiring Property from a Decedent, will conclude upon the earlier of:

• mailing or delivery of the Forms 8971 to you for your review, your filing with the IRS, and your distribution to beneficiaries,
• written notification by either party that the engagement is terminated, or
• fifteen months from the execution date of this Agreement.

If the return is being filed in accordance with Revenue Procedures 2017-34 solely for the purpose of electing portability, our services will conclude upon the earlier of:

• mailing or delivery of the estate tax returns for your review and your filing with the appropriate tax authorities,
• written notification by either party that the engagement is terminated, or
• one year (1) from the execution date of this Agreement.

Extensions of Time to File Tax Returns

The original filing due date for the IRS Form 706 tax return is nine (9) months from the date of death.

If the return is being filed in accordance with Revenue Procedures 2017-34 solely for the purpose of electing portability, the due date for the IRS Form 706 tax return is the second anniversary of the decedent’s date of death

It may become necessary to apply for a one-time, six-month 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 extensions of time to file tax returns 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 required 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 returns, and can be substantial.

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 executor of the estate, 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 on the open market. Taxing authorities closely scrutinize excessive valuation discounts from fair market value. IRC §6662, Imposition of Accuracy-Related Penalty on Underpayments, imposes significant penalties on substantial estate tax valuation understatements and gross valuation misstatements. You agree to hold us harmless for any liability, including but not limited to, additional tax, penalties, interest, and professional fees resulting from changes to valuations.

Professional Fee

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. You agree to pay all fees and expenses incurred whether or not we prepare the tax returns. We do not issue refunds.

We require that all outstanding invoices be paid prior to releasing the completed tax returns. We do not release incomplete tax returns.

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

We appreciate the opportunity to be of service. Please date and execute this Agreement and return it to us to acknowledge your acceptance. We will not initiate services until we receive the executed Agreement and retainer.

 

Very truly yours,

HTJ.TAX

___________________

Derren Joseph

 

 

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