2026 TAX RETURN DISCLOSURE & TERMS

2026 Tax Return Disclosure & Terms Addendum

Peters Tax Preparation & Consulting, PC · (800) 799-4526 · Richmond, VA

This Addendum is part of your Tax Engagement Letter and applies to all clients of Peters Tax Preparation & Consulting, PC ("the Firm," "we," "us"). If this Addendum conflicts with your Engagement Letter, the Engagement Letter controls.

Scope and limitations

Our engagement is limited to preparing the tax returns listed in your Engagement Letter. We do not audit, verify, or confirm the accuracy of the information you provide, and we do not guarantee any tax outcome or refund. We will not amend or update a return after delivery unless you engage us separately to do so.

Your responsibilities

You are responsible for giving us complete and accurate information needed to prepare your returns. This includes identifying (1) every state and foreign country where you reside (even temporarily), do business, or earn income, directly or indirectly, and (2) the extent of your business activity in each.

We may ask you to clarify or add to what you provide. You should keep all documents, books, and records that support your income and deductions, since you may need them to prove the accuracy of your returns to a taxing authority. Ask us if you are unsure what records to keep.

You are solely responsible for penalties that result from failing to give us required information.

Foreign accounts, assets, and transactions

You must tell us about all foreign financial accounts, trusts, financial assets, entities, gifts, and transfers in which you have a direct or indirect interest or signature authority. This includes accounts held through an entity you control, even if you hold no account personally.

These items may require filings with the IRS and with the Treasury Department's Financial Crimes Enforcement Network (FinCEN), such as FinCEN Form 114 (FBAR) and IRS Forms 8938, 3520, 3520-A, 5471, and 8865. Failure to file them can result in substantial civil and criminal penalties. These rules are complex; please ask us if you have any question about whether they apply to you.

By signing your Engagement Letter, you agree to give us complete and accurate information about any foreign accounts and interests. We are not responsible for penalties that result from failing to file, or late filing of, these forms when we were not given the necessary information.

Digital assets and cryptocurrency

The IRS treats virtual currency and other digital assets, including NFTs and stablecoins, as property. Selling, exchanging, or spending them, or receiving them as payment, can have tax consequences and may create foreign reporting obligations.

Brokers report digital asset sales on Form 1099-DA. For 2026 sales of digital assets acquired on or after January 1, 2026 and held in the same broker account, brokers will generally also report cost basis. For other digital assets, the broker may not report basis.

Please give us every Form 1099-DA you receive, along with your own records of acquisition dates and cost basis, since broker statements may be incomplete. Form 1040 asks whether you received, sold, exchanged, or otherwise disposed of any digital asset during the year, and we will answer that question based on what you tell us.

Corporate Transparency Act (CTA)

As of FinCEN's final rule effective August 2026, U.S.-formed companies and U.S. persons are permanently exempt from beneficial ownership reporting under the CTA. Reporting still applies to certain entities formed under foreign law that have registered to do business in a U.S. state or tribal jurisdiction.

If you own or control such a foreign entity, you are responsible for determining whether it must report and for filing any required reports with FinCEN. Our services do not include CTA advice or filings. We recommend consulting qualified legal counsel; any CTA services we agree to provide will be covered by a separate engagement letter.

Tax law changes for 2026

The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, made significant changes that govern your 2026 tax liability. These include, among others:

Permanent extension of the individual income tax rate structure
An expanded phase-in range for the qualified business income (QBI) deduction
A permanent increase in the estate and gift tax basic exclusion amount to $15 million per individual, indexed for inflation in later years
A new floor of 0.5% of adjusted gross income on itemized charitable contribution deductions
A modified limitation on business interest expense

We will apply these provisions as current law. Taxing authorities continue to issue regulations, forms, and other guidance, and we will apply that guidance as it exists when we perform our services. Later changes in law or guidance may affect advice we have already given, and the effect may be material.

Tax positions and disclosure

We will use our professional judgment in preparing your returns. When the law is unclear or authorities interpret it differently, we will explain the positions that could be taken. We will follow the position you choose if it meets applicable professional standards and the law.

If a taxing authority later challenges a position, you may owe additional tax, interest, and penalties, and we are not liable for those amounts. If you ask us to take a position that, in our professional judgment, does not meet applicable standards, we may stop work and will not be liable for damages resulting from our withdrawal.

The law imposes a penalty for a substantial understatement of tax. You may be able to avoid all or part of it by showing (1) reasonable cause and good faith, (2) substantial authority for the position, or (3) a reasonable basis for the position along with adequate disclosure on the return. Let us know if you want a position disclosed, or if you want us to research whether substantial authority exists for a material issue.

Sales tax and multi-state nexus (business activity on your return)

Since South Dakota v. Wayfair, Inc. (2018), states may require out-of-state sellers to collect and remit sales and use tax based on economic presence, not just physical presence. Employees working remotely in another state, locality, or country, even temporarily, can also create tax obligations there, including income, franchise, sales and use, and payroll taxes.

Our engagement does not include assessing your sales and use tax or nexus exposure. You are responsible for tracking where you sell and where your employees live and work, and for complying with the resulting requirements. We can assist under a separate engagement letter.

Deadlines, extensions, and e-filing

Document deadlines. Please submit all documents by March 15, 2027 for individual returns and February 28, 2027 for business returns.
Automatic extensions. On March 1, 2027, we will file an extension for any return not yet complete. The extension fee is included in your flat-rate fee. An extension extends the time to file, not the time to pay. If information arrives after March 15, we will estimate any tax due so that you can pay it by April 15, 2027; you are responsible for making that payment.
E-filing. Federal law requires us to e-file your returns unless you choose to opt out. If you do not want your returns e-filed, tell us right away, and we will provide IRS Form 8948 and paper-filing instructions.
Your authorization. We will send your returns for review before filing. We cannot transmit them until you return your signed e-file authorization (Form 8879 and any state equivalent). If we do not receive your signed authorization in time to file by the due date, your returns will remain on extension even if they are complete.
Transmission. We will use our best efforts to transmit your returns successfully. We are not financially responsible for errors that occur after the taxing authority accepts the transmission.

Notices, audits, and IRS correspondence

Our fee covers only the returns listed in your Engagement Letter. It does not include responding to notices, inquiries, or examinations from taxing authorities. We are available to represent you at our standard rate of $250 per hour under a separate engagement letter.

Service providers and confidentiality

We use third-party service providers, some of them cloud-based, such as tax software, a secure document portal, cloud hosting, and IT support. Treasury regulations permit us to share your tax return information with these providers in the United States to help us prepare your return. Each provider must agree in writing to keep your information confidential, and we take reasonable steps to confirm they have appropriate safeguards.

We will ask for your separate written consent before disclosing your tax return information to anyone located outside the United States, or for any purpose other than preparing your return. No method of electronic data transfer is completely secure, and we make no warranty, express or implied, about the security of electronic transfers. See our Privacy Policy for details.

Communications and privilege

Federal law (IRC § 7525) extends a limited confidentiality privilege to some communications between you and a federally authorized tax practitioner. It applies only to tax advice in non-criminal tax matters before the IRS or in federal court. It does not cover communications made solely to prepare a tax return.

You can waive the privilege by sharing a privileged communication with a third party, such as a lender, friend, or business associate. Please contact us before releasing any privileged information.

If someone asks us to disclose a privileged communication, we will not do so, unless the law requires it, until you have had an opportunity to assert the privilege. You agree to pay reasonable expenses we incur, including legal fees, to protect a communication as privileged.

Email. We may communicate with you by email. Email can be intercepted, misdirected, or fail to arrive, and we cannot guarantee that it will be read only by the intended recipient. We are not liable for loss or damage resulting from the interception, unauthorized use, or failed delivery of email we send in connection with this engagement. Please use our secure client portal, not email, to send Social Security numbers, account numbers, and tax documents.

Use of technology and artificial intelligence

We may use technology, including artificial intelligence tools, to assist with our work. A qualified professional reviews all work before it is delivered to you, and we remain fully responsible for it. See our AI Disclosure for details on how we use these tools and protect your information.

Record retention

We keep copies of your returns, our workpapers, and engagement records for seven years, then securely destroy them. We do not keep your original records; we return them to you when our services are complete.

We are not your records custodian. You are responsible for keeping your own records, including the returns and other work product we provide, for possible future use, including examination by a government or regulatory agency.

Dispute resolution

Mediation. If a dispute arises, both parties agree to first try in good faith to resolve it through mediation before a mutually agreed mediator, under the applicable rules for professional accounting and related services disputes, before resorting to litigation. The parties will share the costs of mediation equally.

Arbitration of fee disputes. Any dispute over fees charged by the Firm will be resolved by binding arbitration under the American Arbitration Association's rules for professional accounting and related services disputes. The arbitrator must apply Virginia law. By agreeing to arbitration, both parties give up the right to have a fee dispute decided in court by a judge or jury. The prevailing party will be entitled to reasonable attorneys' fees and costs, in an amount determined by the arbitrator.