Email template
Engagement letter for tax services: Form 1040
This is the letter a firm sends before it touches a client's tax year 2026 documents. It states what the firm will and will not do, what the client owes the firm, when documents are due and how records come back. The section 7216 consent is deliberately not inside it, because consent has to stand on its own.
When to use it
Send this after the client agrees to hire the firm and before the organizer or any documents move, once per tax year, for returns that will be filed in 2027.
Engagement letter for your [tax_year] tax return: please sign by [signing_deadline]
Hi [client_name],
Thank you for choosing [firm_name]. This letter sets out what we will do for your [tax_year] tax return and what we need from you. Please review it and sign at [signing_link] by [signing_deadline]. We start work once we have it back.
What we will do. We will prepare your [tax_year] federal Form 1040 and your [state_name] individual return from the documents and answers you give us, and we will e-file them after you approve. The fee is [fee_amount] for the return as described, and we will quote any extra work before we do it: [included_schedules].
What is not included. This letter does not cover tax planning, bookkeeping, amended returns for earlier years, [fbar_and_foreign_forms], estimated tax vouchers for [next_tax_year] unless you ask us to prepare them, or speaking to the IRS or a state agency for you. If you receive a notice, forward it to us the same day. We can handle it under a separate letter and a signed Form 2848. A Form 8821 only lets us see your IRS records, not speak for you.
What we need from you. Please send every tax document by [document_deadline] through [upload_method], including anything you received late or corrected. We rely on what you give us and do not audit it, but if something looks incomplete or inconsistent with last year's return, we will ask. Missing a document can mean an amended return later, and our fee for that is [amended_fee].
Deadlines. Your return is due April 15. If your documents arrive after [document_deadline], we cannot promise to finish by April 15 and we may file a Form 4868 extension. An extension gives you until October 15 to file, but it does not extend the time to pay. Any tax you owe is due April 15 either way, and we will give you an estimate to pay.
Your signature on the return. You must review the return before we file it. We will send a Form 8879 or a link to sign it, and we cannot e-file until we have your signed authorization or you enter your own PIN. If you file jointly, both spouses sign.
Your records. Your original documents are yours. If you ask for them, we will return them promptly, even if an invoice is open. We keep copies for [retention_years] years in [storage_system].
Your privacy. We use your information only to prepare your return. If we ever want to use it for another purpose, such as [other_use], or share it with a third party, we will ask for your written consent on a separate form. You do not have to sign it for us to prepare your return, and you can decline.
If this looks right, please sign. If anything is wrong, reply to this email and we will fix it before you sign.
Thank you, [preparer_name] [firm_name]
Replace the placeholders in braces with the client's details. Keep the client's tax ID or account number out of the email.
Notes before you send
- Keep the section 7216 consent out of this letter. Treasury Regulation 301.7216-3 requires it signed and dated before any use or disclosure, and conditioning your services on it makes it involuntary. Without a stated duration it lasts one year.
- Never ask a Form 1040 client to consent to sending their SSN to a preparer outside the U.S. The regulation bars a U.S. firm from obtaining that consent, with a narrow data-protection exception. If you outsource, say so and strip the SSN.
- Match the records paragraph to Circular 230 section 10.28: return what the client needs for federal compliance promptly, even in a fee dispute. Never write 'we hold your records until you pay.' Only work product held for unpaid fees is excluded.
- Send a new letter every tax year, naming 2026, the state, the quoted schedules and the document deadline. Set that deadline at least three weeks before April 15, and state it in the letter instead of leaving it to the organizer.
Questions about this template
Does an individual tax client need a signed engagement letter?
No federal rule requires a written engagement letter for a Form 1040 client, but the firm needs one to prove scope, fee and the document deadline. The AICPA publishes a sample individual letter for Form 1040 that firms adapt.
Can the engagement letter include the section 7216 consent?
Keep it separate. The regulation requires a written consent signed and dated by the taxpayer, and conditioning services on it makes it involuntary. Penalties are a misdemeanor under section 7216 with a fine of up to $1,000 and up to 1 year in prison, and $250 per unauthorized disclosure or use under section 6713, capped at $10,000 a year. Rev. Proc. 2013-14 has the IRS consent formats.
How long should we keep Form 8879 and the engagement letter?
The IRS requires an ERO to keep Form 8879 for three years from the return due date or the IRS received date, whichever is later. Form 8879 is not required when the client personally enters their own PIN on the return. The engagement letter has no federal retention period, so many firms keep it with the return file for the same period or longer.
What happens if the client signs the letter but misses the document deadline?
Say in the letter that the firm cannot promise an April 15 filing for late documents and may file a Form 4868 instead. An extension gives until October 15 to file, but tax owed is still due April 15, so tell the client to pay an estimate.
When should the letter mention Form 8867?
When the client may claim the earned income credit, child tax credit, credit for other dependents, American opportunity credit or head of household status. Say you will ask extra questions and complete Form 8867. The section 6695(g) penalty was $635 per failure for returns filed in 2025 and $600 for 2024, so check the IRS penalties page for returns filed in 2027.