What it is
A tax return engagement letter sets out which returns will be prepared, what the client must provide, what the preparer will and will not do, and what happens on a notice or examination. It also carries the client’s consent where IRC 7216 requires one before return information is used or disclosed.
This template covers federal, state and information returns, the preparer’s duty to make reasonable inquiries under Circular 230, the standards for return positions, electronic filing and the signed authorization, extensions, penalties, records retention and fees. It leaves representation in an examination for a separate letter.
When to use it
- Before the first return for a new individual or business client.
- Each filing season for continuing clients when scope, entities or states change.
- When adding tax planning, estimated tax calculations or notice response to a return engagement.
What’s inside
- Returns and services table, with what is not included
- Client responsibilities: records, accuracy, changes and payment of tax
- Preparer responsibilities, return standards and the limits of the work
- Electronic filing, signed authorization and extensions
- IRC 7216 privacy and consent language, penalties, records retention and fees
Standard cited
This template follows Circular 230 / IRC 7216 / SSTS. 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
Is an engagement letter required for tax return preparation?
A signed letter is standard practice. It documents scope, and for taxpayers other than Form 1040-series filers the regulations allow the IRC 7216 consent to sit in an engagement letter if it has the required elements. For Form 1040-series clients the IRS prescribes additional consent requirements.
What does the preparer have to ask the client?
Circular 230 requires reasonable inquiries when information looks incorrect, inconsistent or incomplete, and the preparer may rely in good faith on client information without auditing it. The template states both.
Does this letter cover representation before the IRS?
No. Representation in an examination, appeal or collection matter changes the scope and fee, so the template points to a separate letter.
When does IRC 7216 require written consent?
Section 7216 and its regulations limit what a preparer may do with return information. Using or disclosing it beyond what the regulations allow generally needs the taxpayer’s signed and dated written consent that names the preparer and the taxpayer, the purpose and recipient, and the information covered (Treas. Reg. 301.7216-3). Unless the consent says otherwise, it lasts one year. For Form 1040-series clients, a Social Security number may not be disclosed to a preparer located outside the United States on the strength of a consent, except through an adequate data protection safeguard the IRS has defined.
Related templates
- Preparation Engagement Letter (AR-C 70)
- Audit Engagement Letter (AU-C 210)
- Compilation Engagement Letter (AR-C 80)
Last updated 11/05/2026. All free templates.