Engagement letter for tax services template (and getting every client to sign it before you start)

Step 1: Write your engagement letter for tax services template

Start in Word or Google Docs. This template covers the sections most firms put in a tax engagement letter. It's a starting point, not legal advice. Have the firm's attorney review it, and check it against AICPA guidance, your state board's rules and your professional liability insurer's requirements before you use it.

[FIRM NAME] - ENGAGEMENT LETTER FOR TAX SERVICES - TAX YEAR [YEAR]

Dear [CLIENT NAME],

Thank you for choosing [FIRM NAME]. This letter confirms the terms of our engagement.

1. Services we will provide
We will prepare your [YEAR] [FEDERAL FORM, e.g. Form 1040] and [STATE] income tax returns
from information you provide. [LIST ANY OTHER SERVICES, e.g. estimated tax calculations.]

2. Services not included
Unless agreed in writing, this engagement does not include [e.g. audit or notice
representation, bookkeeping, amended prior-year returns, other state returns].
We will not audit or verify the information you give us.

3. Your responsibilities
You are responsible for the accuracy and completeness of the information you provide,
for keeping records that support your return, and for reviewing the return before signing.

4. Timing and deadlines
We need your complete documents by [DATE] to file by the regular deadline.
Documents received after that date may require an extension.

5. Fees and payment
Our fee is [FEE OR FEE BASIS]. [PAYMENT TERMS, e.g. due when the return is delivered.]
Work outside this scope will be billed at [RATE] after we tell you in advance.

6. Records and confidentiality
[YOUR RECORDS-RETENTION AND CONFIDENTIALITY LANGUAGE, as approved by your attorney.]

7. Ending the engagement
Either of us may end this engagement in writing. [WHAT HAPPENS TO FEES AND RECORDS.]

8. Term
This letter covers tax year [YEAR] only. A new letter is required each year.

Please sign below to accept these terms. We will begin work once we receive your signature.

[SIGNATURE BLOCK - added by your e-sign tool]

Keep one master version. Every client gets the same terms. Only the bracketed fields change.

Step 2: Save the template in TaxDome or Karbon

Moving the letter into your practice software is what lets clients sign online and lets you see who hasn't.

In TaxDome: go to Templates, then Firm templates, then the Proposals & ELs tab, and click Create template. Paste your letter into the Terms page. That page is where TaxDome puts the engagement letter text. TaxDome's help center suggests pre-filling the introduction and terms, then adjusting services and billing per client when you send. A signature field is added to the proposal automatically, and the date fills in when the client signs.

In Karbon: use Engagements. It lets you build reusable proposal and engagement letter templates, send them in bulk and have clients sign digitally. Check Karbon's help center for the current menu path in your account.

No practice software? Save the letter as a Word template and send it through any e-signature tool your firm already pays for.

Step 3: Let AI tailor the scope paragraph

The terms stay fixed. The scope section is what changes, for example a new rental property or a second state. Use ChatGPT, Claude or Copilot to draft that paragraph from your notes. Don't paste names, Social Security numbers or account details. Describe the situation in general terms.

You help a small CPA firm tailor the "Services we will provide" and "Services not included"
sections of a tax engagement letter. Keep our wording style. Do not add legal terms,
guarantees or fees.

Last year's scope: [PASTE LAST YEAR'S SCOPE SECTION]
What changed this year: [e.g. client sold a rental property; added a second state]
Services we will NOT do: [e.g. no audit representation, no bookkeeping]

Write:
1. A revised "Services we will provide" paragraph, plain English, under 80 words.
2. A revised "Services not included" paragraph, under 60 words.
3. A list of anything in my notes that is unclear, marked [CHECK].
Do not invent forms, dates or amounts. If something is missing, write [MISSING].

Read the output line by line. A partner or reviewer signs off on any scope change before it goes in the letter.

Step 4: Send every engagement letter in one batch

Send the letters as soon as your fees for the year are set, before the first documents arrive. In TaxDome, you can select several clients in the Accounts list and click Send proposal. You can also trigger it from a pipeline automation. In Karbon, use the bulk send in Engagements.

One TaxDome detail matters here. You can't send a proposal to a contact who doesn't have portal access turned on. Check client logins before you send the batch. For clients who don't use email, TaxDome Kiosk lets them sign in person on a tablet.

Step 5: Get clients to sign engagement letters with two scheduled reminders

Most unsigned letters are just forgotten. Two short, friendly reminders on fixed days fix most of them. Ask AI to write them once in your firm's voice, then save them as email templates in Outlook or Gmail, or as reminder messages in your practice software.

Write two short reminder emails from [FIRM NAME] to a tax client who hasn't signed
this year's engagement letter. Friendly, plain English, under 70 words each.
Reminder 1 (day 5): a gentle nudge with the reason we need it before we start.
Reminder 2 (day 12): mention that we start work in the order letters are signed,
and offer help if they can't find the email. No threats, no legal language.
Use [CLIENT FIRST NAME] and [PORTAL OR SIGNING INSTRUCTIONS] as placeholders.

After day 12, a person calls or emails the client directly. Don't send a third automated message.

How the signing flow runs each season

Day 0: every returning client gets the letter in one batch. Day 5: reminder 1 goes to anyone who hasn't signed. Day 12: reminder 2 goes out. Day 14 and later: a team member follows up personally, and work waits until the letter is signed.

Example (illustrative): a three-office tax practice on TaxDome

This is a walkthrough, not a real client. A three-office firm used to email a Word engagement letter to each client when their documents arrived. Signatures trickled in through March, and preparers often started returns before a letter was on file.

The firm saved one master letter as a TaxDome proposal template. In mid-January, it sent the letter to all returning clients from the Accounts list. Scope changes were drafted with the AI prompt and checked by a partner. Two reminder templates went out on day 5 and day 12. Anyone still unsigned after that got a personal email from their preparer.

At a glance:

• Problem: engagement letters sent late and signed even later.
• What was built: one proposal template, an AI scope prompt and two reminder templates.
• Tools it lives in: TaxDome, Word and an AI chat tool.
• What the owner still does: approves scope changes and decides when work starts.
• Payoff: not measured here.

Mistakes to avoid

• Letting AI write legal terms. AI drafts the scope paragraph and reminders only. Your attorney owns the terms.
• Starting work "just this once" before the letter is signed. That's exactly the gap the letter closes.
• Pasting client identifiers into an AI tool. Describe the situation instead. Use only tools your firm has approved.
• Reusing last year's letter without changing the year. Put the tax year in the title and in the term section.
• Sending a third, fourth and fifth automated reminder. After two, a person should reach out.

If it still doesn't work

If a client still hasn't signed, find out why. Usually it's one of three things. The email went to spam, the client can't log in to the portal, or they disagree with the fee or scope. Check the portal login first. Then call or email them personally and ask. If the fee is the problem, the partner handles it, not the reminder sequence. For clients who won't sign online, use in-person signing or a printed copy.

Doing this inside the tools you already use

Deeplathe is a team of developers and solution builders who build custom AI inside the tools a business already uses. For this job, a custom build could compare each client's prior-year return notes with this year's changes and draft the scope paragraph in your letter template. It could flag anything unclear for a partner and queue the letter in TaxDome or Karbon, waiting for your approval. It could also list who hasn't signed each morning, with a reminder drafted for each. You approve every scope change and every send, and your terms stay exactly as your attorney wrote them. See how a custom build works.

FAQ

What should a tax engagement letter include?

Most tax engagement letters cover the services you'll provide, the services that aren't included, the client's responsibilities, deadlines, fees, records and confidentiality, how either side can end the engagement and which tax year it covers. The exact language should come from your attorney and match AICPA guidance, your state board's rules and your insurer's requirements.

Do I need a new engagement letter every year?

Many firms send a new letter each tax year, so the scope, fees and deadlines are current and clearly signed. Your insurer or attorney may have a firm view on this. Putting the tax year in the letter's title and term section makes it obvious which letter covers which return.

How do I get clients to sign engagement letters?

Send the letter early, before documents arrive, and make signing one click in your client portal. Follow up with two short reminders on fixed days, then a personal message. Tell clients plainly that work starts once the letter is signed. Most unsigned letters are forgotten, not refused.

Can AI write my engagement letter?

AI can help draft the parts that change, like the scope paragraph and reminder emails. It shouldn't write or change your legal terms. Keep one attorney-reviewed master letter, use AI only for the variable sections, and have a partner review every change before it's sent.

Keep these

• One master letter, reviewed by your attorney, for every client.
• Send it before documents arrive, in one batch.
• Two reminders, then a person.
• No signed letter, no work.

Sources

• TaxDome Help Center: Create and apply proposal templates
• TaxDome Help Center: Send proposals
• TaxDome Help Center: Proposal field reference
• Karbon: Engagements for accounting firms
• IRS Publication 4557: Safeguarding Taxpayer Data

Related reading

• Part of The process that only lives in your head
• Remind clients to send their tax documents
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• How small accounting and bookkeeping firms can use AI
• Ask AI about a contract before you sign it
• Is customer data safe with AI tools?