Drop-in addendum language for existing engagement letters covering IRS §7216, AICPA §1.150.040, confidentiality, and general offshore service-provider disclosure – all in one structured section. Save your firm the work of drafting from scratch.
When a CPA firm uses offshore staff on tax engagements, three disclosure obligations typically apply: IRS §7216 (tax return info to offshore preparer, specific statutory format), AICPA §1.150.040 (third-party service provider disclosure), and general professional services engagement disclosure. These can be handled in three separate documents, but most firms find it cleaner to fold all three into one well-structured addendum appended to the standard engagement letter.
The drop-in addendum on this page addresses all three obligations in one document. Designed to be appended to your existing engagement letter (which continues to cover scope, fees, timeline) rather than replace it.
ADDENDUM A: OFFSHORE SERVICE PROVIDER DISCLOSURE AND CONSENT
This Addendum supplements and forms part of the engagement letter dated [DATE] between [FIRM NAME] ("Firm") and [CLIENT NAME] ("Client"). In the event of conflict between this Addendum and the engagement letter, this Addendum controls for matters relating to third-party service providers and disclosure of confidential information.
1. Use of Third-Party Service Providers (AICPA §1.150.040 Disclosure). In connection with services under this engagement, Firm may engage third-party service providers, including offshore accounting and tax preparation staff, to assist in the performance of those services. Firm remains fully responsible for the engagement and work product delivered to Client regardless of which personnel perform specific tasks. Before disclosing any confidential Client information to a third-party service provider, Firm has entered into (or will enter into) a confidentiality agreement requiring the provider to maintain confidentiality in accordance with the AICPA Code of Professional Conduct.
2. Confidentiality. All Client information provided to Firm in connection with this engagement is confidential. Firm will not disclose Client's confidential information to any party other than (a) its own personnel and contracted third-party service providers bound by confidentiality obligations, (b) as authorized in writing by Client, or (c) as required by applicable law.
3. IRS §7216 CONSENT TO DISCLOSURE OF TAX RETURN INFORMATION.
Federal law requires this consent form to be provided to Client. Unless authorized by law, Firm cannot disclose Client's tax return information to third parties for purposes other than the preparation and filing of Client's tax return without Client's consent. If Client consents to the disclosure, Federal law may not protect Client's tax return information from further use or distribution.
Client is not required to complete this form to engage Firm's tax return preparation services. If Firm obtains Client's signature on this form by conditioning Firm's services on Client's consent, Client's consent will not be valid.
This consent to disclose may result in Client's tax return information being disclosed to a tax return preparer located outside of the United States. If Client consents, Client's tax return information may not be protected by the same laws that protect Client's information within the United States.
Client authorizes Firm to disclose to [OFFSHORE PROVIDER NAME, located in COUNTRY], for the purpose of assisting with the preparation of Client's [TAX YEAR] federal and state income tax returns, all tax return information necessary for such preparation. This consent is valid for a period of [DURATION] year(s) from the date of Client's signature below.
If Client believes Client's tax return information has been disclosed or used improperly in a manner unauthorized by law, Client may contact TIGTA at 1-800-366-4484, or by email at [email protected].
4. Acknowledgment. By signing below, Client acknowledges receipt of this Addendum, consents to Firm's use of third-party service providers including offshore providers as described above, and provides the consent required by IRS §7216 to the disclosure of tax return information to the provider named in Section 3.
Client: _____________________________ Date: _____________
Firm Representative: _____________________________ Date: _____________
Signed addendums should be retained with other engagement documentation for the duration required by your firm's document retention policy (typically 7 years minimum for tax engagements). In the event of a §7216 inquiry, AICPA peer review, or state board disciplinary proceeding, the ability to produce the signed addendum is the single most important compliance evidence.
For the underlying requirements each section addresses: §7216 detail, §1.150.040 detail, NDA template. State-specific rules in our state matrix.
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