What it is
Representing a client before the IRS or a state agency is a separate engagement from preparing the return. It needs its own scope, its own authority from the client and its own fee terms, because the work depends on what the agency does next.
This letter sets out the agency, periods and issues covered, the stage of the matter, the power of attorney, the client’s duties, the firm’s standards, the limits of privilege, fees with no contingent element, and how the engagement ends.
When to use it
- A client receives an examination notice, a proposed adjustment or a collection letter.
- You are asked to prepare an appeal or a penalty abatement request.
- You want written scope limits before work starts on a notice response.
What’s inside
- Scope table with agency, periods, issue, stage and exclusions
- Authority section tied to a power of attorney and the limits on it
- Client duties, firm standards and a privilege paragraph
- Fee table with retainer and expenses, and termination terms
Standard cited
This template follows Circular 230 / IRC 7525. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
Does the engagement letter replace Form 2848?
No. The letter is the contract between the firm and the client. Form 2848 is the authorization the IRS requires before it will discuss the client’s account with a representative. The letter explains that the client will sign it and what it allows.
Does privilege cover tax controversy work?
IRC 7525 extends a privilege to communications with federally authorized tax practitioners in noncriminal tax matters before the IRS or in federal court. It does not cover state matters, return preparation or criminal matters, so the letter says so.
Can the fee depend on the outcome?
Treasury Circular 230 limits contingent fees to specific situations. This template uses time-based or fixed fees, and says that fees do not depend on the result.
Related templates
- Tax Return Preparation Engagement Letter
- Tax Advisory and Planning Engagement Letter
- Engagement Scope Change Letter (Addendum)
- Client Disengagement Letter
Last updated 11/05/2026. All free templates.