Are Engagement Letters Important?

Avoid Problems and Save Time and Money Using Them

by Jon A. Hayes, MTAP Executive Director 


As tax season approaches and you scramble to complete your preparations, the issue of using engagement letters often comes up. Many practitioners tell me its a time-consuming, necessary evil they do not enjoy. I’m sure many simply ignore the issue to avoid dedicating staff time to doing it.

At a recent MTAP ethics webinar, I found it very interesting that the presenters spent almost two hours walking participants through the myriad of Circular 230 provisions, and then spent the last 5 minutes making an impassioned plea to use engagement letters and ”avoid 99 percent of the potential client problems you (the practitioner) can encounter from misunderstandings.” 

Absolutely correct. Nobody is immune to the problems caused by misunderstandings, and the vast majority of those misunderstandings occur in verbal communications because no record exists. Some, as we know, end up in costly legal contests that drain valuable resources and often bankrupt a business. 

And remember, when you utilize proper engagement and report letters, you can reduce your professional liability premiums. Make it a point to call your carrier prior to tax season and review your policy to insure you are rewarded for using engagement letters. 

So where can you find engagement letter templates? You guessed it . . . right here at www.michigantap.net in the members only section! We’ve uploaded many templates you can customize to fit almost every practice need! 

Here is MTAP's Library of Sample Engagement Letters:

Generic Engagement Letters
Accounting Engagement Letters
Tax Engagement Letters