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This template shows the points a complete fee disclosure for an R&D tax credit engagement could cover, set out so that a business can read them in one place before it signs. Words in square brackets are fields to complete or options to choose. Delete any option that does not apply. The wording is a starting point for discussion between an adviser and a client.
1. Parties and scope
Client: [Legal name of business]
Adviser: [Legal name of adviser] [Firm address]
Engagement: Preparation of [an original return claim / an amended return or refund claim] for the federal credit for increasing research activities under Section 41 of the Internal Revenue Code, using IRS Form 6765, for the tax year(s) [Tax years].
Work included: [List of services, for example: identification of business components, interviews with technical staff, calculation of qualified research expenses, preparation of Form 6765 including Section G, preparation of supporting documentation]
Work not included: [List of services excluded, for example: state credits, representation in an examination, appeals]
2. Fee basis
The fee for this engagement is calculated on the following basis: [Fee basis]
Choose one and complete it:
- Fixed fee. A fee of [Amount], agreed in advance for the work described in section 1. The fee does not change with the size of the credit claimed or allowed.
- Hourly fee. A rate of [Hourly rate] per hour for [Role or grade], with an estimated total of [Estimated hours] hours and [Estimated total]. We will tell you in writing before the estimate is exceeded.
- Percentage of the credit claimed. [Percentage] percent of the credit shown on the return or claim as filed.
- Percentage of the credit allowed. [Percentage] percent of the credit finally allowed by the IRS, as defined in section 4.
- Other. [Describe the arrangement in full, including any minimum fee, cap, bonus or success element]
Cap or minimum (if any): [Maximum fee] / [Minimum fee]
Expenses charged in addition to the fee: [List, or "None"]
When the fee is payable: [On signing / On delivery of the claim / On filing / On receipt of the refund / Other: describe]
Illustration of the fee: On a credit of [Example credit amount], the fee under this agreement would be [Example fee amount]. If the fee basis is a percentage, also show the fee at [Lower credit amount] and [Higher credit amount], so that the client can see how the fee changes with the size of the claim.
3. How the fee relates to the size of the claim
State plainly which applies:
- [The fee does not depend on the amount of credit claimed or allowed.]
- [The fee rises as the amount of credit claimed rises.]
- [The fee depends on the amount of credit finally allowed.]
4. If the credit is reduced or disallowed
Definition of "allowed": [For example: the credit as filed, unless and until the IRS reduces it in a final determination]
If the IRS reduces or disallows the credit after the fee has been paid: [The fee is not refunded / The fee is refunded in proportion to the reduction / Other: describe]
Time limit for any refund of fees: [Period, or "Not applicable"]
Costs that remain with the client in any event: The client remains responsible for any tax, interest and penalties that result if the credit is reduced or disallowed, unless this agreement states otherwise here: [Any exception, or "No exception"]
5. Audit and examination support
Is support in an IRS examination included? [Yes / No]
If yes, what it covers: [For example: responding to information document requests, attending meetings, preparing written explanations]
If yes, for how long: [Period, for example until the statute of limitations for the tax year expires]
Who will provide it: [Name and credential of the person or team]
Fee for examination support: [Included in the fee above / Charged at [Hourly rate] per hour / Fixed fee of [Amount] / Other: describe]
Not included: [For example: appeals, litigation, payment of any tax, interest or penalty]
6. Who prepared and who reviewed the claim
Preparer: [Full name], [Credential, for example CPA, enrolled agent or attorney, or "No professional credential"], [PTIN, if applicable]
Technical reviewer: [Full name], [Relevant qualification or experience]
Final reviewer and signatory: [Full name], [Credential]
Use of subcontractors or third parties: [None / Name and role of each]
Will the adviser's name appear on the return or claim as paid preparer? [Yes / No, with the reason]
7. Documentation provided to the client
At the end of the engagement the client will receive:
- [The completed Form 6765 and any statements filed with it]
- [A written report describing each business component, the research activities and how each meets the four-part test]
- [The calculation of qualified research expenses, with the source records relied on]
- [Copies of interview notes and other evidence gathered]
- [Other: describe]
Format and delivery date: [Format] [Date]
Records the client should keep, and for how long: [List and period]
8. Other fees and interests
Other fees connected with this engagement (referral fees, commissions or payments from third parties): [None / Describe and give the amount]
Any other relationship between the adviser and the client: [None / Describe]
9. Acknowledgment
The client confirms that it has read this fee disclosure and has had the opportunity to ask questions about it before signing.
Signed for the client: [Name] [Title] [Date]
Signed for the adviser: [Name] [Title] [Date]