Updated Sunday, May 19, 2024

Once accepted, the Business Advisory Services, Tax Patrol Services or Investor Patrol Services proposal incorporates this Master Service Agreement (MSA). The proposal outlines general scope of work including general fees, and is typically customized for each engagement, and therefore controls.

Other considerations-

1. Tax return preparation engagements incorporate relevant portions of the MSA.
2. Additional scope of work, fees, and terms and conditions are contained herein.
3. WCG may update the MSA at any time. We encourage you to visit this page and our fee page often.
4. Portions of WCG’s website, social media postings and online documentation might contradict information contained in the MSA. We reserve the right to ultimately reconcile these differences as we see fit, but make every attempt to work with you to find common ground.
5. Not everything or situation can be contemplated in this MSA.

The following definitions are used in this Master Service Agreement.

BAS
Business Advisory Services

EIN
Employer Identification Number issued by the IRS.

Foreign Qualification
The requirement of an entity to register as a foreign entity when doing busines in that state.

IPS
Investor Patrol Services

MSA
Master Service Agreement

Payroll Cash Ceiling
An established and agreed amount of cash that must be available and where if payroll processing cash needs are equal to or are less than the payroll cash ceiling, payroll is processed automatically without direct client approval.

TPS
Tax Patrol Services

The fees presented in the BAS, IPS and TPS proposals might be determined based on limited or incomplete knowledge, including unforeseen changes to your business administration needs. WCG strives to maintain the fees presented. The most current fees can be reviewed on WCG’s fee structure webpage.

If engaged, WCG will prepare the necessary filings on your behalf for the creation of your business entity, and ensure the completion of the process. We can provide this service in all fifty states plus the District of Columbia.

If you cannot act as your own registered agent because you do not live in the same state where your business is domiciled, then a third-party registered agent is typically required. We can refer you to registered agents in all states.

Articles

Depending on the state, Articles of Formation, Incorporation or Organization including Certificates of the same will be required. Typically, each state drafts this document as part of the formation process and WCG completes the process on your behalf.

There are two fees associated with entity formation. WCG’s fee for preparing the necessary documents and the Secretary of State’s filing fees which varies. Some states require an Initial Report or similar document to be prepared and filed simultaneously with formation. This incurs additional fees.

Annual Reports

The filing of Annual Reports as required by the state are your responsibility and generally are not included unless specified in the signed proposal. WCG can prepare and file these on your behalf for an additional fee.

Multi-Owner Agreements

WCG is not a law firm nor are we allowed to practice law to the extent of representing your rights beyond tax matters. All multi-member LLCs, partnerships, corporations and entities with multiple owners should have legal documents protecting the rights of all interested parties. As such, we encourage you to seek legal advice if this situation applies to you or your entity. Please contact us for a list of various professional and legal service providers.

WCG can coordinate with your attorney to ensure legal documents address tax-efficiency, tax compliance, cash flow matters, flexibility and exit strategies. This service will incur an additional fee unless included in the Business Advisory Services proposal.

Operating Agreements and Bylaws

Operating Agreements are required for limited liability companies (LLCs). WCG will provide an Operating Agreement during entity formation for single-member LLCs only.

In contrast, Bylaws are required for corporations including professional corporations. This does not include LLCs taxed as an S corporation; in this case, the underlying entity remains an LLC and uses an Operating Agreement.

WCG is not a law firm, and we cannot draft Bylaws for a corporation. Several templates are available online, and we also provide one as well should you need it.

S Corp Elections

For an entity to be taxed as an S corporation, Form 2553 is prepared and required to be filed within 2 months and 2 weeks (approximately 75 days) since of business formation or the start of the fiscal year (usually January 1). However, there are provisions for a late S Corp election and WCG can prepare and file under IRS Revenue Procedure 2013-30 provided your entity meets the requirements.

Since IRS processing times can easily exceed 16 weeks, there are times when a timely filed S Corp tax return (Form 1120S) cannot be accomplished. Therefore, late-filing penalties might be incurred and are your responsibility. To the best of our abilities, WCG will attempt a penalty abatement utilizing the First Time Abatement program. This program is specific to the IRS, and each state might or might not have similar programs.

Foreign Qualification

Should your entity be considered doing business in another state, foreign qualification will typically be required. States generally require foreign qualification when an out-of-state entity conducts business in their jurisdiction. The legal definition of conducting business varies by state and often covers a broad spectrum of activities. Common reasons why businesses foreign qualify include:

1. Hiring an employee who is a resident of a state other than the state of incorporation.
2. Purchasing property or a building.
3. Opening a new office or other facility.
4. Offering services, selling products, or bidding for a contract.
5. Applying for a professional license, as licensing agencies generally require foreign qualification.

To remain compliant, you should track your business activities by state and inform WCG. WCG will assess, and if applicable prepare the necessary filings on your behalf for the foreign registration of your business entity, and ensure the completion of the process. This service will incur an additional fee.

Articles of Dissolution

Should it be necessary to close your business entity, Articles of Dissolution are required depending on the state. WCG will prepare the necessary filings on your behalf for the dissolution of your business entity, and ensure the completion of the process. This service will incur an additional fee.

Some states require additional forms or documents to be completed including additional state filing fees.

Change in Tax Classification, Revocation of S Corp Election

Should it be necessary to change the entity classification of your business entity, including the revocation of S Corp election, WCG will prepare the necessary filings on your behalf for your business entity, and ensure the completion of the process. This service will incur an additional fee.

Immediate and long-term adverse tax consequences can occur when changing the entity classification. As such, careful tax planning and coordination is necessary.

Moving Your Entity to Another State

Should your entity need to move its headquarters or operations to another state, a formalized process must be followed to maintain the entity’s continuity of the EIN. With some exceptions, the general process is to foreign register in the new state, and then simultaneously dissolve the domestic entity in the old while converting the foreign entity to a domestic entity in the new state. Each state is different and has different requirements.

To remain compliant, you will inform WCG of all address changes. WCG will assess, and if WCG will prepare the necessary filings on your behalf for the relocation your business entity, and ensure the completion of the process. We can represent this process in all fifty states plus the District of Columbia. This service will incur an additional fee.

Address Changes

Should your entity need to change business mailing addresses, several agencies must be notified including the IRS, Secretary of State, state Department of Revenue or equivalent, state payroll agencies among other government agencies.

To remain compliant, you will promptly inform WCG of all address changes. WCG will assess, and if necessary, WCG will prepare the necessary filings and notifications on your behalf for the change of address, and ensure the completion of the process. We can represent this process in all fifty states plus the District of Columbia. This service will incur an additional fee.

Annual Meetings

Depending on the state, your entity might be required to hold and record annual meetings. Most states require that C Corporations hold a general meeting for their shareholders every year. Usually, they are also required to hold at least one annual meeting with their board of directors.

Businesses structured as a limited liability company (LLC) might need to hold an annual meeting with their members. Although states do not require LLCs to hold an annual meeting, generally an LLC must do so if its Operating Agreement requires it. If an LLC has elected S Corp status, its annual meeting obligation stays the same as its underlying business structure and governance.

WCG will not advise on the necessary actions to remain compliant, nor can we assist in the recording of the compliance matters. As such, WCG recommends all business owners to seek legal advice regarding these matters.

Accountable Plan

An Accountable Plan is an IRS-approved process for reimbursing employees for costs they incur related to their business. This includes owners or shareholders who receive a wage. WCG will draft the necessary documents.

If engaged, WCG will setup or transfer payroll services, and provide continuous payroll processing which includes payroll tax payments, payroll tax return filings and direct deposit payments for employees.

Third-Party Payroll Processors

WCG will only process payroll using ADP within our platform We cannot use any other payroll processing platform, including the consumer or retail versions of ADP, Intuit, Gusto or Paychex, and the like.

Payroll Processing Setup

WCG will apply for all federal withholding and unemployment accounts, and state withholding, unemployment and disability accounts (if required). Local payroll tax accounts are also included. These are collectively referred to as payroll accounts.

A Limited Power of Attorney (POA) will be required for us to apply for and obtain the state account numbers on the entity’s behalf, including automatically filing payroll tax returns.

Payroll Processing Transfer

If payroll accounts currently exist, this is considered a payroll transfer. This service includes-

1. Obtaining all pertinent payroll account numbers including account credentials for online access.
2. Obtaining all pertinent prior payroll details including payroll tax return filings and most recent paystubs.
3. Coordinating with the current payroll processor to determine a transfer date.
4. Coordinate and determine who is filing certain payroll tax return filings during the transition period.

A Limited Power of Attorney (POA) will be required for us to automatically file payroll tax returns on the entity’s behalf.

After the initial payroll setup is complete, there might be an onboarding fee for each new employee which will be automatically invoiced and paid with the payment information on file.

Direct Deposit

WCG requires all owners who are receiving a salary or wage to be paid via direct deposit. For non-owner employee payroll, direct deposit is not required in lieu of manual payroll checks. Should you require manual payroll checks to be printed and delivered as part of payroll processing, additional fees will be incurred.

New Employees

New employee enrollment information must be provided at least 7 days prior to the pay date. A secure online form is available for enrollment.

Timely Payroll Processing

For timely payroll process and to ensure pay dates are not missed, all payroll information including client-entered payroll information must be received at least two business days prior to pay date. For example, if the pay date is a Friday, payroll information must be received by 11:00AM mountain time on Wednesday.

WCG is not responsible for delayed payroll processing due to late payroll information.

Automatic Payroll Processing

There are two types of auto payroll processing depending on your needs. Should all employees be salaried, then payroll will be automatically processed each payroll period.

Should payroll data need to be entered for each payroll period, a payroll cash ceiling will be established. Once payroll data is received and payroll is ready for processing, should the cash required for payroll processing be at or below the establish payroll cash ceiling, payroll will be automatically processed.

Employee Separation

Certain laws apply to payroll processing when an employee separates, and the rules vary by each state. They also vary between involuntary separation (termination or laid off) and resignation. Because of the complexity of the laws, WCG cannot offer legal advice as to when paychecks are required.

Inform us immediately when an employee separates. To the best of our abilities and resources, we will promptly process a final paycheck or provide manual check instructions.

Access to Payroll Reports and Filings

WCG will automatically enroll you and your designees for access to all pertinent payroll reports, filings and other related data. WCG will also enroll employees, at your approval, for access to all pertinent employee payroll information such as paystubs and W-2’s.

Payroll Audits

At times a taxing jurisdiction, insurance carrier or third-party administrator will require certain payroll reports for audit or compliance testing. WCG will provide the requested reports in a reasonable amount of time.

Generally, WCG cannot perform calculations or enter the requested payroll data into another portal or spreadsheet for submission. There are exceptions depending on the request.

Given the complexity of payroll audit, certain services will be considered out of scope and will incur an additional fee.

Payroll Compliance Limitations

WCG is limited on the advice we can provide for payroll and human resource compliance. It is your responsibility to ensure compliance with all applicable federal, state and local labor laws.

Payroll Fraud

WCG’s ability to detect and prevent fraudulent payroll activity is limited. You are responsible to keep your payroll enrollment credentials and your general email credentials private.

It is common for payroll data to be sent via email. Should an individual employee receive compensation such as an increase in base pay or bonus or reimbursements, that exceeds historical values by more than 10%, WCG will contact you via telephone or text message to verify the changes.

WCG will also contact you via telephone or text message any time cash required to process payroll exceeds an established payroll cash ceiling.

Payroll Consultation

If WCG is only providing payroll consultation and not directly processing payroll, our engagement is limited to providing reasonable salary computations, maximum 401k and SEP IRA calculations, and assisting with basic payroll matters such as the proper recording of self-employed health insurance and HSA contributions.

We will not assist in filing or reviewing client-prepared payroll tax returns such as Form 940s, 941s, 944s, state equivalents, state unemployment and disability, W-2s and W-3s. We can, at our discretion and for additional fees, directly and solely prepare various payroll tax returns.

Third-Party Payroll Processing Fees

Monthly BAS, TPS and IPS fees paid to WCG include the payroll processing fees charged by our third-party payroll processor (ADP). If payroll tax return amendments are required for reasons that are not WCG error, separate fees will be charged. For example, you inform us to deduct 401k contributions from your paycheck, but later want to reverse these payroll deductions because of a change in cash flow or investment strategy. In this example, payroll tax return amendments would be required and will incur additional fees.

Cash Needs for Payroll Processing

Cash needs for payroll processing are required to be in your business checking account 5 days prior to the check date. Typical shareholder-only payroll is processed on the 10th of the month requiring funds to be available on the 5th of the month. We will advise you of the cash needs amount for payroll processing during onboarding, annual tax and payroll planning, and routine internal payroll audits. We will notify you twice via email and text messages of changes to your cash needs; please be sure to respond with any problems or concerns.

If payroll processing cannot be completed because of non-sufficient funds (NSF) for reasons that are not WCG’s error, an additional fee for coordinating wiring instructions with the third-party payroll processor. Should the wire transfer be delayed or should payroll fail to process again for lack of sufficient funds, the third-party payroll processor reserves the sole right to-

1. Require a deposit for one year, or
2. Require funds to be wired 5 days prior to all future payroll processing for one year (additional monthly fees apply), or
3. Terminate your account requiring you to transition all payroll processing to another provider (WCG will also terminate our payroll services and revert to payroll consultation only).

Please review the Payroll Welcome Kit which contains additional considerations.

Employee Payroll Fees

Our payroll services in connection with BAS, TPS and IPS plans include up to 3 shareholders for monthly shareholder payroll processing. Should employees be added to payroll processing, additional fees will apply-

		Bi-Weekly		Weekly
1 Employee		$100 per month		$150 per month
2-5 Employees		$175 per month		$300 per month
6-10 Employees*		$250 per month		$450 per month
11-15 Employees*		$325 per month		$600 per month

Our fees assume direct client entry into payroll system, with verification and final approval by WCG. WCG will onboard and terminate employees as necessary.

Late Payroll Event

If WCG is being engaged to prepare and file payroll tax returns for a prior year, it is common to generate late filing notices and late payment notices, including fees, penalties and interest charges which can easily exceed $1,000. We will contact the taxing agencies on your behalf and attempt to mitigate the fees, penalties and interest charges, but our efforts are not always fully successful. Ultimately, the fees, penalties and interest charges will be your responsibility.

WCG will only process a late payroll event for the previous year if engaged with us for ongoing payroll processing using our third-party payroll processor.

Payroll Tax Notices

From time to time you might receive a payroll tax notice from the IRS, state or local taxing authority. Further, it is a common misconception that the government and their respective employees are correct in their assessment. To make matters worse, these notices might contain threatening language and are routinely delivered after business hours.

You agree to-

1. Send a copy of all pages, front and back to our office via your client portal.
2. Not contact the taxing agency directly or make any payments without coordinating with us.
3. Authorize and sign a limited Power of Attorney so we may contact the agency on your behalf.
4. Send a copy of any additional correspondence received during the resolution process.
5. Be patient during the resolution process.

WCG will-

1. Let you know that we have received the payroll tax notice.
2. Advise you of the timeline for resolution which might require 12 to 16 weeks given the agency’s processing speed.
3. Forward the notice to our third-party payroll processor, and monitor their progress.
4. Notify of you of correspondence being written on your behalf, and upload a copy of the same to your client portal.

We will never make decisions on your behalf without your approval. Penalties and interest will be our responsibility if our action or omission is the cause of the tax deficiency.

If engaged, WCG will perform typical accounting services such as bookkeeping, monthly bank reconciliations, preparing financing statements and entering journal entries, collectively referred to as Accounting Services.

Scope of Work

The scope of work for Accounting Services has been determined through an accounting assessment and is outlined in the proposal. WCG only supports QuickBooks Online (QBO) for accounting services. WCG will provide the following basic accounting services plus specific services, if any, outlined in the proposal-

1. Monthly bank reconciliation.
2. Recording payroll journal entries and other recurring entries (such as depreciation or loan interest for accurate tax planning).
3. Detailed list of outstanding reconciliation items for your review and clarification.
4. Financial statement presentation delivered by the 25th of the following month for management / internal use only.
5. One on one analysis of financial statements with you (accounting = bookkeeping + analysis).

Accounting Services do not include-

1. Accounts receivable administration including collections and payment processing.
2. Accounts payable administration including paying invoices or making online payments.
3. Inventory management.
4. Payroll processing or payroll administration through QuickBooks Online or any other payroll processor unless engaged directly with WCG for payroll processing.

Our scope of work will be routinely monitored and reviewed for additional bank accounts, complexity, delivery cadence and client requests. Complexity matters include but are not limited to-

• Accounting Method
• Sales Tax
• Personal Property Tax
• Inventory Complexity
• Industry Specific Issues
• Software Integrations
• Franchise Situations
• Benefits Packages

Electronic Access

WCG’s accounting services relies on electronic access to banking and financial data. Many financial institutions have an accountant’s login for view-only access, and they additionally can create separate profiles so your personal banking and financial data are not visible to us. In other words, our accountant login and profile can be restricted to only business banking and financial data, and this is our preference.

Exclusive Control

We must maintain exclusive custody of the data set contained in QBO. As such, invoicing and collecting payments, processing payroll, and paying invoices received by you from others, must be done separately from the QBO data set used for maintaining your accounting records and generating financial statements. We suggest another QuickBooks (online or desktop) data set for these purposes.

Additionally, all other users including you will be restricted to read-only access to the QBO data set; you will not be able to enter transactions, modify existing transactions or enter adjusting journal entries directly. However, accounting services is a collaborative process, and if adjustments or corrections are required, we are happy to discuss and facilitate those.

QuickBooks Online Subscription Fee

WCG’s accounting services fee does not include the QBO subscription fee. This fee will be paid directly by you. However, we will assist in setting up the QBO data file and establishing payment for the subscription.

Basic Financial Statement Preparation

The American Institute of Certified Public Accountants (AICPA) defines various levels of finance reporting services including compilations, reviews and audits. Here is an excerpt from the AICPA’s Guide to Financial Statement Services-

The financial statement preparation service is primarily intended for your own use to have current information on the financial standing of your business and to make decisions accordingly. In essence this service is no different from what an in-house controller or CFO would provide to management in a larger company. You can share your financial statements with outside parties but on each page, your CPA will include a notice that “no assurance is provided” on the financial statements. Because your CPA will prepare your financial statements directly from the records you provide, the CPA will not verify the accuracy or completeness of the information and is not required to issue a formal report on the financial statements.

WCG’s financial statement preparation is limited, and is not considered a compilation, review or audit as those terms are defined by the accounting industry. Generally, WCG’s financial statement preparation is for management use only including operational decision-making and tax return preparation.

Financial Statement Delivery

All financial statements are delivered by the 25th of following month assuming we have access to all necessary data by the 10th. For example, January financial statements are delivered by February 25. Jan-Feb financial statements (a bi-monthly cadence) would be delivered by March 25. All deliverables are done electronically as uploads to your Sharefile portal with email and text notifications.

During financial statement preparation, questions needing clarifications including bank feed errors and other missing information will require resolution. WCG will contact you twice via email and telephone including text notifications.

Regardless of unanswered questions and missing information, financial statements are delivered by the 25th. If necessary, a watermark titled “Draft Copies – Missing Information” is stamped on the financial statements. Should you provide the necessary information after delivery, the financial statements are re-stated when preparation starts again for the next period.

Detection of Fraud or Irregularities

WCG’s responsibility for basic financial statement preparation is limited. We are not responsible for the detection of fraudulent activities, misappropriation of assets including fake vendors, or other irregularities. To the best of our abilities, we will draw attention to certain changes or trends which vary from historical data. This includes-

1. Common-size (vertical) analysis where categories are compared to revenue.
2. Year over year, or period over period (horizontal) analysis where categories are compared to themselves over time.

We cannot Audit, Review or Examine financial statements as those terms are defined by the AICPA as attestation services. We cannot review or rebuild QuickBooks data files. Our scope is limited to providing general advice in the area of financial statement analysis. However, we can provide additional accounting services (if necessary) through our Accounting Services team.

Credit Worthiness

The standards of our profession prohibit WCG from making assurances relating to solvency. While performing accounting services and specifically basic financial statement preparation, WCG is not providing assurance, fitness for a particular purpose or credit worthiness assessment of any kind.

QuickStart

QuickStart is offered to assist business owners who want to maintain their own accounting platform but need help with basic setup and instruction. QuickStart includes-

1. Set-up QBO
2. Chart of Accounts
3. Linking bank accounts
4. Company legal info in QuickBooks (Address, EIN, etc.)
5. Training to show the basics of how to use QBO (typically 90 minutes)
6. How to create invoice
7. How to apply a payment
8. How to code bank feed transactions
9. How to match transactions
10. How to reconcile bank and credit card accounts
11. How to create adjusting journal entries for external payroll data, tax return data, etc.
12. How to change system configuration
13. Answer any questions during the session
14. Three scheduled “training” sessions of general support and answering “how to” questions regarding QBO.

QuickStart does not include payroll setup within QuickBooks.

Accounting Consulting

Accounting consulting is a service for clients who prepare their own financial statements is generally limited to quick analysis, general accounting issues, questions and answers, and other basic tutorial conversations including screenshares. WCG does not make any direct changes, journal entries and similar actions in your accounting records.

Additionally, accounting consulting is limited since we do not have complete and sole custody of the data, and therefore cannot be considered an accounting services engagement.

Fractional Controller

If engaged, we will interface with your bookkeeper in a Fractional Controller role with our primary duties being-

1. Monitoring your bookkeeper’s progress on the preparing and delivery of financial statements.
2. Assist your bookkeeper in obtaining missing information and clarification from you.
3. Inspecting the financial statements for obvious errors and omissions.
4. Depreciation, amortization and interest are properly recorded
5. Adjusting journal entries including payroll entries as recommended by us are property recorded.
6. Analyzing the data for tax savings and operational opportunities.

WCG’s responsibility for fractional controller services is limited. We are not responsible for the detection of fraudulent activities, misappropriation of assets including fake vendors, or other irregularities. To the best of our abilities, we will draw attention to certain changes or trends which vary from historical data. This includes-

1. Common-size (vertical) analysis where categories are compared to revenue.
2. Year over year, or period over period (horizontal) analysis where categories are compared to themselves over time.

We cannot Audit, Review or Examine financial statements as those terms are defined by the AICPA as attestation services. We cannot review or rebuild QuickBooks data files. Our scope is limited to providing general advice in the area of financial statement analysis. However, we can provide additional accounting services (if necessary) through our Accounting Services team.

Foreign Disclosure of Accounting Services Information

WCG utilizes KMK Ventures Private Limited, a tax and accounting company in India with over 15 years of experience and 475 professionals including Chartered Accountants, to assist us with our accounting services. Many well-known and highly visible accounting firms have been offshoring tax return preparation and accounting services for more than two decades.

We realize that identity protection and security is top of mind for everyone; WCG is following the accounting industry’s best practices including IRS compliance directives to safeguard your data.

If engaged for BAS, TPS and IPS including tax-only engagements (TOE), WCG will perform typical tax return preparation services.

Prior Year Tax Returns Examinations

As part of the tax return preparation transition, we will inspect your prior tax returns for any obvious errors or omissions. If the situation is a material problem, we will present the information to you along with a variety of possible action plans.

Prior year tax return examinations are primarily designed to ensure we are continuing good accounting practices since many tax returns are “linked” together year after year. These examinations are not audits or reviews as defined by the accounting profession; additionally, we cannot provide assurance that the tax returns were prepared correctly including income reporting and expense deductions. We can also re-create your tax returns as if we were preparing them, but additional fees will apply.

Flat Fees

We attempt to provide a flat fee for tax return preparation, and we make every attempt to maintain the fees associated with our BAS, TPS and IPS plans. However, certain tax returns might be outside the usual volume and complexity, and require significant additional tax preparation time. Examples include but are not limited to-

• Multiple rental properties
• 1031 like-kind exchanges (Form 8824)
• Multiple brokerage accounts
• Day trader status, mark to market election
• K-1 volume and / or complexity (see below)
• Crypto currency mining, cost basis calcs
• Multiple state income tax returns (see below)
• Accounting records not tax ready
• Change in accounting method (Form 3115)
• Property sales, dispositions
• FBAR, FATCA (Form 8938) submittals
• Foreign documents translation

If the above situations or other situations exist, every attempt is made to advise you prior to or at the onset of tax return preparation. We will provide an explanation regarding the additional fees, and they will be added at tax return completion and delivery. We encourage you to provide the previous year’s tax returns for review and quotation if you believe you might be subject to additional tax return preparation fees.

While tax return preparation is commonly included in BAS, TPS and IPS plans, at times unforeseen events or time spent due to volume or complexity will incur additional tax return preparation fees.

K-1

There are two basic types of K-1s-

1. Common K-1’s generated from closely-held partnerships and S corporations. These are typically straightforward but can occasionally be complex (e.g, complicated qualified business income deduction calculations).
2. Publicly traded partnership (PTP) and private equity investment K-1s. These can be further divided into straightforward and complex (e.g., layered investments, multi-state apportionment, foreign subsidiary investments, disposition of the investment, etc.).

If you receive K-1s, please advise us so we can provide an assessment to determine if additional tax return preparation fees are necessary. We typically allocate 30 minutes of “K-1 bucks” as part of your tax return preparation fee. Afterwards, our additional fee is based on an hourly rate of $250. This is the only additional fee that WCG adds based on time spent. WCG is not a traditional hourly rate firm and our fees are based on value received or impact created.

K-1s and their complexity have increased, and given the variable nature of each investment, a hybrid method of fixed fee plus hourly rate is prudent.

Additional Income Tax Returns Based on Tax Jurisdictions

Each state, county, city and even school district might be a separate tax jurisdiction and require a separate tax return prepared and filed alongside the federal tax return. Common needs for this include changing residency and / or various business activities including K-1s. It is common for an investment into an entity to create a state income tax return filing obligation for its owners (investors).

As part of our BAS, TPS and IPS plans we expect 1-2 income tax returns beyond the federal tax return as a normal course of tax return preparation. Should additional income tax returns be required because of certain tax jurisdictions or if complex state income apportionment is required, additional tax return preparation fees will be incurred.

Bookkeeping, Tax Return Readiness

If you do not have an accounting services engagement with us, we expect your accounting records to be tax ready. As part of the tax return preparation process we will make limited adjusting and reconciliation entries. This is part of our tax return preparation process.

Should additional accounting services be necessary to adjust your financial records to an acceptable level of format and accuracy, your tax returns will be paused, and our Accounting Services team will perform an assessment and provide a proposal. All tax returns which require prior period accounting and cleanup will be extended for completion in June or July.

Engagement Agreements

In addition to the BAS, TPS and IPS plans, we will require separate Engagement Agreements to be reviewed, signed and returned to us prior to tax return preparation. This complies with the IRS’s and the American Institute of CPAs’ professional requirements. Since our BAS, TPS and IPS agreements are enduring and tax return engagement terms change annually, such as document and filing due dates, Tax Return Engagement Agreements will be requested annually.

Foreign Disclosure of Tax Return Information

WCG utilizes KMK Ventures Private Limited, a tax and accounting company in India with over 15 years of experience and 475 professionals including Chartered Accountants, to assist us with our accounting services. Many well-known and highly visible accounting firms have been offshoring tax return preparation and accounting services for more than two decades.

We realize that identity protection and security is top of mind for everyone; WCG is following the accounting industry’s best practices including IRS compliance directives to safeguard your data.

A separate disclosure statement and consent form will be provided annually along with the Engagement Agreement.

Tax Return Reviews

Our tax return preparation includes a comprehensive tax return review with you in-person, by telephone, or videoconferencing. However, this is not required.

Extensions, Tax Payments

If an extension of time to file your tax return(s) is required, any tax that might be due with the tax return(s) must be paid with the extension. Any amounts not paid by the filing deadline are subject to interest and late payment penalties by taxing agencies. All interest and late payment penalties are your responsibility, but we will assist in verifying the accuracy. This includes any additional fees for the extension as well as any penalties and/or interest that might be due because of the late payment.

Should a tax return extension be necessary because-

• required tax documentation and information is not received by the dates above or
• your authorization for electronic filing of your tax return is not timely received,

WCG shall prepare and electronically file all necessary tax return extensions on your behalf and notify you accordingly. Since failure to file penalties are severe, this authorization is an attempt to minimize associated penalties and interest.

Action Required

Most tax returns are delivered with two PDF files. The first file is the complete tax return. The second file is called “Action Required.” While we draw attention to certain tax payments and other required actions, it is your responsibility to read the “Action Required” file and follow its instructions. Otherwise, penalties and interest might be imposed by the taxing agencies.

Tax Notices Disclosures

From time to time you might receive a tax notice from the IRS, state or local taxing authority. Further, it is a common misconception that the government and their respective employees are always correct in their assessments. To make matters worse, these notices might contain threatening language and are routinely delivered after business hours.

When a tax notice is received, we ask that you-

1. Briefly freak out.
2. Understand that the government is fallible relying on humans.
3. Send a copy (all pages, front and back) to our office via your Sharefile portal since it contains sensitive information.
4. Email or call your Client Manager, or call the main office.
5. Rest assured that the notice is being handled.

WCG will-

1. Let you know we received it.
2. Advise you of the timeline for resolution. It is common for taxing authorities to take 4-6 months to resolve the matter however taxing agency systems escalate the problem and usually sends out more threatening letters. Please send a copy of these “crossed in the mail” notices as well.
3. If the notice is an income tax matter or some matter that is within our purview, we might need a Power of Attorney to contact the taxing authority.
4. If the notice is payroll related, we will forward to ADP, our payroll processor, and monitor their progress.
5. If we send any correspondence on your behalf, we will always let you know and provide a copy in your Sharefile portal.

We will never make decisions on your behalf without your approval. Please do not respond directly to the notice nor send payments without our explicit instructions.

Please understand that we will always make it right, right away. Penalties and interest will be our responsibility if our action or omission is the cause of the tax notice (deficiency).

Salary planning and tax planning are usually performed simultaneously during the onboarding process. They are also performed on a recurring basis during the months of May, June and July.

Tax Planning Service Levels

For tax planning, WCG CPAs & Advisors will prepare and deliver a tax plan for the household including estimated tax payments if necessary. We provide the following tax planning service levels.

Streamlined
Streamlined tax planning (household tax planning) is done annually and includes but is limited to changes in-

• W-2 wages
• portfolio income
• retirement income (household tax planning) and
• medical expenses, property taxes, mortgage interest and charitable donations.

Tax strategy is limited to review and general discussion only.

Pro-Active
Pro-active tax planning builds on Streamlined above, is done 1-2 times per year, and includes but is limited to-

• changes in rental income
• changes in business income (Schedule C or K-1) and
• shareholder salary recommendations.

Tax strategy is limited to review and general discussion only.

Pro-Active Business
Pro-active business tax planning is done 1-2 times per year, and includes but is limited to-

• Computing business entity estimated tax payments for the state and the IRS in some situations,
• Calculating backup withholdings for non-resident owners and
• Determining pass-through entity tax payments.

Pro-active Business is entity-specific and does not automatically include Streamlined or Pro-Active tax planning.

Advanced
Advanced tax planning builds on Pro-active above, and includes several taxable events such as-

• rental property sale
• primary residence sale
• changes in state residency
• tax effects of accelerated depreciation of business equipment or automobiles
• complex PTET payments (multiple owners and / or multiple states)
• cost segregation or short-term rental benefit

Advanced tax planning is usually for single events or for events that do not repeat year over year. It is not typically included in any of our Business Advisory, Tax Patrol or Investor Patrol Services. Therefore, a scope of service will be determined and quoted separately.

Tax Planning, Tax Projection Worksheets

Tax planning and projections involve the careful review of your unique financial situation and all the pieces related to potential tax savings. In addition, our tax planning strategies attempt to maximize tax savings over a lifetime and not just a singular point in time.

Tax projection worksheets (TPWs) are created by our tax return preparation software, and compare the current year to the previous year in a side-by-side comparison including tax liabilities, withholdings and estimated tax payments.

Tax planning relies on accurate data being received from the client. We understand that this is not always possible when revenue and expenses are not certain or measurable.

Tax Reduction Strategies

We can discuss several tax reduction strategies in the abstract such as borrowing against your unrealized gains, state deferrals and residency changes, 401k and retirement plans, cost segregation, adding spouse or children to payroll, 1031 exchanges, conservation easements, among other fun stuff.

However, if we want to see the actual tax savings or results in the form a tax plan, then oftentimes this will be considered comprehensive tax planning.

Small Business Tax Deductions Optimization

Business tax deductions must be carefully managed. Several tax deductions become simply unavailable because the business owner did not understand the rules and how to position his or her company to maximize a tax deduction’s utility. WCG will-

1. Survey your activities and your unique situation to flush out missing tax deductions. Along the same lines, we explore money that is already being spent that might be considered a business-related activity and then tax deductible.
2. Ensure you know all the tax deduction rules so you can position yourself correctly.
3. Examine the benefit of the tax deduction as compared to taxable income and marginal tax rates, including future marginal tax returns to ensure tax deductions are properly timed.

Salary Planning, Reasonable Salary Calculations

For S corporation shareholders who materially participate in the business activities, a reasonable salary must be paid. WCG will use all available tools including historical IRS data, Bureau of Labor Statistics data and RCReports data to synthesize a recommendation. WCG cannot guarantee or warranty that a shareholder salary will be considered reasonable by the IRS or a court.

Every attempt is made to increase income tax withholdings to account for calculated taxes and in alignment with the tax plan.

Minimum Payroll

At times you might need to process minimum payrolls. This is common for seasonal businesses such as realtors, or other businesses where income is inconsistent or unpredictable. Payroll cannot be paused since some states will close payroll accounts. As such, the minimum salary is $500 per month will be used.

The payroll plan and tax plan will reflect this activity. An off-cycle bonus will be calculated and paid in December so that the required annual salary is paid. It is your responsibility to ensure enough cash reserves are available.

Estimated Tax Payments

Should estimated tax payments be necessary, we will provide instructions including the amounts to be paid and the due dates. It is your responsibility to ensure all estimated tax payments are correctly and timely paid.

Section 199A QBI Tax and Salary Optimization

Wages are a secondary testing component for maximum Section 199A benefits, and we will ensure that salaries are correctly balanced with the reduction in payroll taxes objective as well as the increase in Section 199A benefits objective, which are inherently opposed.

Pass Through Entity Tax (PTET) Deduction

PTET allows for a business to pay a state-imposed tax based on net ordinary income of the business which becomes a business tax deduction. This results in lower federal taxes being paid by the shareholders, members or partners of the business. The PTET paid also benefits the shareholders, members or partners by either crediting the amount of tax paid on the respective individual tax return or reducing the amount of pass-through entity business income.

WCG will advise when PTET is appropriate, and will calculate the amounts including instructions as necessary.

Annual Corporate Governance, Resolutions, Meetings

For Telluride and Aspen BAS Plans, WCG will maintain your book of record including annual meetings and resolutions. This also includes your annual filings with the Secretary of State (filing fees are not included and will be collected separately prior to the preparation of the annual filings).

Aspen BAS Plans Only

The following services are included in our Aspen BAS plans and are customized per the proposal.

Situational Tax Law Research
At times additional research is required to determine if you are eligible for a particular tax deduction. This type of situational tax law research is included in our Aspen BAS plan only and is limited to 3 hours annually. Other BAS plans will be subject to additional fees.

Cash Flow Management
Cash flow management is the process of tracking how much money is coming into and going out of your business. If engaged, we build cash flow projections assuming revenue, expenditures, debt paring, working capital increases, capital expenditures, tax consequences, among other issues. This is commonly performed in December for the following year, and then re-built in July or August.

Budgeting, Forecasting, Goal Setting
In conjunction with financial statement analysis, cash flow management and KPI / benchmarking, we will develop budgets annually to hold identifiable metrics accountable.

Industry Research
For Telluride and Aspen BAS plans, First Research reports will be provided annually.

Economic Reports
National and metro economic reports will be provided annually. These reports analyze changes that have occurred in all economic sectors during the past year, and look at the opportunities and challenges that will shape population, employment, and the overall economy in the future.

KPI Analysis, Benchmarking, Hot Sheets, Trend Analysis
Key performance indicators (KPIs) are hyper-sensitive metrics that a business owner has identified as crucial for daily or weekly decision-making. Financial statements are typically used to memorialize transactions for tax and creditworthiness purposes; they don’t provide actionable items in real-time. A hot sheet is typically a customized deliverable from a point-of-sale system or some other real-time data collector. KPI and related data will be collected and presented. The data will also be benchmarked using industry data, if available. Historical trend analysis will be maintained and analyzed.

C Level Financial Advice, Strategic Planning, Fractional CFO
Using the components that make up financial analysis, we will offer strategic advice and planning similar to a Chief Financial Officer.

Succession Planning, Ownership Changes Consultation
We work with you and your estate attorney to determine the best path at a point in time, and then re-evaluate annually.

Annual Business Valuation
We will prepare a calculation of value for your business entity on an annual basis using the asset, market and income approaches.

Other exclusions and limitations will apply to our BAS, TPS or IPS engagement with you.

Consultation Exclusions and Limitations

Business consultation is based on providing consultation, advice and streamlined tax planning on common and routine issues for business owners.

All BAS plans allow for routine Complimentary Quick Chats (CQC). We want to encourage open and frequent communication with our clients. CQCs take on a variety forms-

• You call our office unscheduled.
• You use our chat service.
• You email or call your Client Manager or point of contact with a question.
• You use a mobile app to push a message to us including text messaging.

Given availability and / or complexity, a meeting might be scheduled.

Consultation is not unlimited. There might be an occasional issue that we consider to be out of scope. For our Vail BAS plans and all TPS and IPS plans, out of scope consultation and services include but are not limited to-

1. handling IRS or state notices for matters that WCG was not originally engaged to perform,
2. payroll audits beyond simply providing an Excel file of the payroll details,
3. verification letters for mortgage loans,
4. postage and delivery beyond simple letters,
5. financial planning or investment advice,
6. QuickBooks or other accounting software setup or training,
7. annual corporate governance such as filings, resolutions and meetings,
8. reviewing legal documents such as Operating Agreements, Shareholder Agreements, contracts, etc.,
9. extensive coordination with attorneys and financial advisors,
10. scenario based tax planning such as selling rentals, business interests, installment sales, etc.,
11. specific research on uncommon or irregular tax matters extending beyond one hour (unless Aspen plan), and
12. new employee setups, terminations, employment verifications, mailing W-2s, correcting 1099s.

We don’t always charge for these services. For example, adding a new employee is a normal business activity and we usually do so at no charge. However, buying another business and adding 100 employees would incur an additional fee.

For Telluride and Aspen BAS plans, the above limitations might be included depending on complexity.

If we believe the requested service is outside of scope and not included in the business consultation and services, we advise you ahead of time to outline the scope and proposed fees.

Interfacing with Lenders, Attorneys and Financial Planners

We encourage open and complete communication between all service providers. Typically, quick questions are answered complimentary similar to our CQC above. For example, a financial planner needs to know the maximum SEP IRA contribution amount; that is considered quick and routine, and is answered accordingly.

Conversely, if you want us to review your Operating Agreement (for example) for tax, distributions and valuation related issues, that is beyond the complimentary quick chat threshold. For our Vail BAS and all TPS and IPS plans, additional fees will apply. Telluride and Aspen BAS plans automatically include this interfacing service.

Audit Defense, Tax Resolution

WCG warranties that tax return preparation for both income and payroll tax returns will be free of professional errors and omissions. Should a tax return be selected for audit or challenge, WCG will assist in resolving the matter. There are limitations to our audit defense.

Streamlined
We will review the correspondence. If it is a) related to income taxes, and b) considered streamlined, we will draft a response letter and send on your behalf. We generally allocate about 30 minutes to this tax resolution tier.

Advanced
Advanced correspondence includes telephone calls to the IRS or state agency, and written responses requiring 30-60 minutes. Examples of advanced correspondence include responses regarding missing estimated or extension income tax payments, generic tax return processing delays and related issues, mismatch of payments and tax forms (usually payroll related), among other things.

An additional fee might be required. However, should more time be required and / or if the IRS or state agency escalates the tax matter, then we will discuss an extended plan of action and the associated expectations.

Comprehensive
Examinations or audits of tax returns are a way of life, and defending them can be distracting. We will assist in the defense of your federal and state corporate and individual income tax returns. Most audits are resolved with telephone calls. Should an office or field audit be required by the IRS, we will request the case to be transferred to the Colorado Springs or Denver office. Most clients lose audits due to incomplete records or documentation supporting their tax position.

We will represent you in all levels of IRS or state agency examinations except tax court. Our initial retainer is 2 hours at our published fee schedule. Most cases can be resolved in this timeframe, however some audits get extended in scope and then duration.

There are other problems that we assist with as well.

Other Tax Resolution Matters

Other tax matters can arise that might require assistance or intervention.

Delayed Refunds
Delayed refunds are more common with some taking over 6 months. Many tax returns are selected for secondary review. If it has been at least 6 months since your tax return was electronically filed and you have not received your tax refund, we will contact the IRS or the state agency via telephone. An additional fee might be required initially, and if the matter leads to other resolution efforts.

Missing Tax Documents
There are two common tax documents that are missed on individual tax returns (Form 1040)- W-2s from previous employment and 1099s from brokerage accounts. With the proliferation of digital tax forms, these documents are commonly missed by taxpayers. There are two paths to resolution-

First, the IRS or state agency accurately has computed a new tax due or tax refund. These are generally accepted as-is without the need for a tax return amendment. Should income tax be due, an online income tax payment might be required to minimize penalties and interest. We will review the correspondence and compare it with your tax return generally at no charge.

Second, the IRS or state agency is incorrectly computing the tax due. A common example is a missing brokerage statement which shows incorrect cost basis and therefore incorrect capital gains. In this example, a tax return amendment is required to accurately calculate the new taxable income. A discount for this tax return amendment is available if we prepared the tax return.

IRS or State Escalation
The IRS and some state agencies are several months behind on processing mailed or faxed responses. Therefore, their computer systems automatically escalate tax matters with increased aggressiveness and tone. At times, we must contact the IRS or state agency to either resolve the matter directly with faxed correspondence or have the escalation be paused until the response letter has been processed.

If this occurs, this is considered Advanced tax resolution, and our fees above might apply depending on your unique situation.

WCG Is At Fault
If we are at fault and created a tax notice or other correspondence requiring resolution, our fees do not apply.

WCG is a full service consultation and tax preparation firm, and we look forward to working with you!