Terms and Conditions

SDO CPA LLC

Terms and Conditions

Last updated: 2025-12-10

Overview

This addendum to the engagement letter describes our standard terms and conditions (“Terms and Conditions Addendum”) related to our provision of services to you. This addendum, and the accompanying engagement letter, comprise your agreement with us (“Agreement”). If there is any inconsistency between the engagement letter and this Terms and Conditions Addendum, the engagement letter will prevail.

For the purposes of this Terms and Conditions Addendum, any reference to “firm,” “we,” “us,” or “our” is a reference to SDO CPA LLC, and any reference to “you,” or “your” is a reference to the party or parties that have engaged us to provide services.

Tax Preparation Services

The provisions in this section apply to all tax preparation engagements unless specifically modified in the engagement letter.

Standard of Care

It is our duty to prepare your returns based on the same standard of care that a reasonable tax return preparer would exercise in this type of engagement. Unless otherwise noted, the applicable standard of care for a “reasonable tax return preparer” shall be based upon the following pronouncements: the Statements on Standards for Tax Services (“SSTS”) issued by the American Institute of Certified Public Accountants (“AICPA”); U.S. Treasury Department Circular 230 (“Circular 230”); and the Internal Revenue Code, Treasury Regulations, and any applicable state/local corollaries (collectively, “the Code”).

As tax return preparers, these pronouncements restrict our ability to sign a tax return when the tax positions you report do not comply with tax law. We will be unable to sign your return and may terminate the Agreement if you: request that we report a tax position on your return which we feel is contrary to published guidance, frivolous, or a willful attempt to evade tax; request that we include a deduction, credit or refund on your return that we believe you do not qualify for; or decline to disclose a position where in our professional judgment tax law requires disclosure.

No Management Decisions

SDO CPA LLC will not make any management decisions or perform management functions on your behalf.

Arguable Tax Positions

If there are conflicting interpretations of tax law, or if tax law is unclear, we will explain the possible positions that may be taken in order for us to sign your return. We will follow the position you request, provided it is consistent with our understanding of tax reference materials and our professional standards. Tax reference materials include, but are not limited to, the Code, Revenue Rulings, Revenue Procedures, court cases, and similar state and local guidance. If the IRS, state or local tax authorities later contest the position you select, additional tax, penalties, and interest may be assessed. You will be responsible for any additional tax, penalties, interest, and related professional fees you may incur to respond to the tax authority.

Tax Planning Services

Our engagement does not include tax advice which affects the calculation of tax due or the filing of tax forms and schedules for previous or future tax years. However, we may communicate potential tax strategies to you, and you may ask high-level questions of us. It is your responsibility to communicate to us, in writing, any interest in pursuing a tax strategy identified, or if you require more than a cursory response to your question. If you do not request our assistance in writing, we will infer that you do not wish to pursue any suggestion made to you. If you do request our assistance and we agree, we will confirm our understanding with you in a separate agreement prior to proceeding.

We shall not be liable for any forgone tax or other benefits if you fail to advise us of your desire to investigate or pursue any tax strategy communicated to or by us.

Government Inquiries

Our engagement does not include responding to inquiries by any governmental agency or tax authority. If you are contacted by a tax authority, either for an examination or other inquiry, you may request our assistance in responding. Such assistance will be subject to a separate agreement.

Third Party Requests

Our services are not intended to benefit or influence any third party, including any entity or investment which may seek to evaluate your creditworthiness or financial strength. We will not respond to any request from banks, mortgage brokers or others for verification of any information reported on these tax returns. Except where compelled by court order or subpoena, we do not communicate with third parties or provide them with copies of tax returns.

Reliance on Other Advisors

There may be times when you engage another advisor to assist you. If you wish to take a tax position based upon the advice of another advisor, before we are able to sign your tax return, we must comply with the applicable provisions of the Code and the SSTS. We will review the other advisor’s work and may require a written statement from the advisor describing the statutory basis for the position and the suggested disclosure needed to appropriately report the position. If we believe additional research is required, we will discuss the matter with you. You agree to pay for the additional charges necessary to complete the disclosure or research as this is not included in the scope of our service.

Moreover, you understand that the IRS, state or local tax authority may disagree with the position taken on the return. If this occurs, you will be responsible for any additional tax, penalties and interest, as well as any related professional fees, you may incur. If, after review of the work prepared by your other advisor, we determine that we are unable to sign the tax return, we will be unable to proceed and may terminate the Agreement.

Abusive Tax Strategies

Certain tax positions or strategies, while not currently identified as “abusive” by the IRS, may ultimately be determined to be so in the future. Consequently, you agree to advise us of any transaction you have entered into that entitles you to disproportionate tax benefits (deductions, credits, or refunds), that generates significant income deferral or non-recognition, or that generates significant tax losses without corresponding cash impacts (“abusive tax strategy”). If you fail to timely notify us, in writing, of any abusive tax strategy you have entered into, you will be responsible for any liability, including but not limited to, additional tax, penalties, interest and related professional fees.

Prior Year Return Analysis

Our analysis of prior year tax returns, whether prepared by us or another preparer, will necessarily be limited and may not find errors. We will, however, bring to your attention errors that we do find. Similarly, if you become aware of any information affecting prior year tax returns, please contact us. If an error or information affecting a prior year tax return comes to our attention, we will advise you and provide a recommendation. You are responsible for the decision whether or not to amend a prior year return.

Bookkeeping Assistance

We may deem it necessary to provide you with limited accounting and bookkeeping assistance solely for the purpose of helping you organize your information. This assistance is intended to be nominal and is not a separate accounting or bookkeeping service. In the event we conclude that bookkeeping or accounting assistance is necessary to prepare your tax returns, we will advise you in writing before proceeding. Any assistance will be billed at our standard hourly rates and will be subject to the terms of this Agreement.

Client Responsibilities for Tax Services

Electronic Payments Requirement

IMPORTANT: The Modernizing Payments To and From America’s Bank Account Executive Order, signed on March 25, 2025, mandated that all payments from the U.S. government after September 30, 2025, must be made electronically. All payments to the U.S. government, including quarterly estimated tax payments, should be made electronically as soon as practicable. We do not process tax payments on your behalf. You are solely responsible for initiating and completing all tax payments by the applicable due dates. Payments can be made via IRS Direct Pay at irs.gov/payments/direct-pay or other authorized methods. We shall not be liable for any tax, penalties, interest, or other expenses you may incur as a result of late payment or non-payment.

IRC §7216 Consent

The engagement letter does not replace any consent required under Internal Revenue Code §7216 regarding the disclosure or use of your tax return information. A separate §7216 consent form will be provided where required.

Corporate Transparency Act (BOI Reporting)

Assisting you with your compliance with the Corporate Transparency Act (“CTA”), including beneficial ownership information (“BOI”) reporting, is not within the scope of this engagement. You have sole responsibility for your compliance with the CTA, including its BOI reporting requirements and the collection of relevant ownership information. We shall have no liability resulting from your failure to comply with CTA. Information regarding the BOI reporting requirements can be found at https://www.fincen.gov/boi. Consider consulting with legal counsel if you have questions regarding the applicability of the CTA’s reporting requirements.

Documentation Responsibility

You are responsible for maintaining adequate documentation to substantiate the accuracy and completeness of your tax returns. Our workpapers do not satisfy your documentation responsibility. You should retain all documents that provide evidence and support for reported income, credits, deductions, and other information on your returns, as required under applicable tax laws and regulations. The IRS recommends that you maintain this documentation for as long as it may be relevant to your taxes. You represent that you have such documentation and can produce it, if necessary, to respond to any examination or inquiry by tax authorities. You will be responsible for any liability resulting from the disallowance of tax deductions due to inadequate documentation.

Personal Expenses

In general, personal expenses are not deductible for income tax purposes. You are responsible for ensuring that personal expenses, if any, are separated from business expenses and that expenses such as meals, travel, vehicle use, gifts, and related expenses are supported by documentation and records required by the IRS and other tax authorities.

State and Local Filing Obligations

The preparation of any state or local tax return not listed in the Engagement Objective and Scope section of the engagement letter is not within the scope of our engagement. You are responsible for fulfilling your filing obligations with any state or local tax authorities, including but not limited to, income, franchise, sales, use, and property taxes or abandoned and unclaimed property. If you are unsure if you have any other filing obligation with other state or local tax authorities, you are responsible for alerting us and requesting assistance. You will be responsible for tax due and penalties associated with the failure to file or untimely filing of any form for which we were not engaged to prepare.

U.S. Filing Obligations Related to Foreign Investments and Activities

U.S. citizens, residents, and entities generally must report income and activities related to both domestic and foreign assets (worldwide income). You are responsible for fulfilling your filing obligations related to foreign activity where required. U.S. reporting requirements related to foreign activity are very complex. Contact us immediately if you have:

  • Ownership of, investment in, or officer responsibilities for a corporation, partnership, or other business entity formed under the laws of another country
  • Fiduciary, grantor, or beneficiary relationships in connection with an entity formed under the laws of another country
  • Ownership of, signature authority over, or control over any financial account held in a financial institution located in another country
  • Citizenship or government-approved employment/visa status with a country other than the U.S.
  • Transferred property, including cash, offshore either directly or through investment in a foreign entity
  • Received property, including cash, from a trust, business, or investment formed under foreign laws
  • Conducted business with any entity or person physically located in another country
  • Received income from a source outside of the U.S. not reported on a brokerage statement
  • Any other activity or economic arrangement which takes place outside of the U.S.

Failure to timely file the required forms may result in substantial civil and/or criminal penalties. If you do not alert us or request assistance, we will infer that you do not have foreign activity. You will be responsible for tax due, penalties, and interest associated with the failure to file any form for which we were not engaged to prepare.

Foreign Filing Obligations

You are responsible for complying with the tax filing requirements of any non-U.S. country. You acknowledge and agree that we have no responsibility to raise these issues with you and that any foreign filing obligation is not within the scope of this engagement.

Digital Assets

There are specific tax implications of investing in digital assets (e.g., virtual currencies, non-fungible tokens, virtual real estate and similar assets). The IRS considers these to be property for U.S. federal income tax purposes. As such, any transactions in, or transactions that use, digital assets are subject to the same general tax principles that apply to other property transactions. If you transacted in digital assets during the tax year, you may have tax consequences and/or additional reporting obligations. You are responsible for providing us with complete and accurate information, including basis, regarding any digital asset transactions.

Compensation and Withholding Compliance

If you or your business compensates individuals for services performed, there are various federal, state, and/or local payroll tax and income tax obligations. We will not provide employment, labor, or immigration law advice, including the classification of workers as employees or independent contractors. You should seek the advice of an employment attorney to address classification questions. You agree to indemnify and hold us harmless for any claims related to misclassification of individuals whom you compensate for services, excepting claims arising from our gross negligence or intentional wrongful acts.

You acknowledge it is your responsibility to timely comply with all payroll tax filing and remittance obligations. Preparation of payroll forms and calculation of any withholding amount due is not within the scope of this engagement unless specifically stated in the engagement letter.

Ultimate Responsibility

You are ultimately responsible for complying with any substantive or procedural tax law which applies to you, and for ensuring your tax returns and any required tax payments are timely received by the appropriate tax authority. Notwithstanding any term of the Agreement, this responsibility cannot be delegated to us.

You have final responsibility for the accuracy of your tax returns. We will provide you with a copy of your draft tax returns for review. You agree to review and examine them carefully for accuracy and completeness. You will be responsible for the payment of any additional tax, penalties, and interest charges imposed by tax authorities.

Filing, Extensions, and E-Filing

Tax Return Extensions

It may become necessary to apply for an extension of the filing due dates if there are unresolved issues or delays in processing, or if we do not receive all of the necessary information from you on a timely basis. Applying for an extension of time to file may limit your ability to make certain elections, extend the time available for a government agency to undertake an examination of your return and/or extend the statute of limitations to file a legal action. You have sole responsibility for the filing of any extension, and you agree to hold our firm harmless from any consequences, including waived elections, where the extension is not timely filed. All taxes owed are due by the original filing due date.

E-Filing

We are an Electronic Return Originator (ERO) and may prepare your return(s) and/or extension(s) in a format that permits us to electronically transmit (“e-file”) those forms to the appropriate tax authority on your behalf. The e-filing of any form is a separate service from the preparation of that form.

If return(s) are e-filed, including requests for extensions of time to file, the IRS and states require you to sign and return to us the appropriate governmental form(s) before your returns can be filed electronically. If you fail to timely sign and return e-file authorization, we cannot and will not e-file any form on your behalf. In those situations, you will be solely responsible for any penalties or interest assessed against you.

If your return(s) or extension(s) cannot be e-filed, we will deliver to you a paper copy suitable for mailing to the taxing authorities. Once delivered to you, you bear full responsibility for reviewing the paper returns for accuracy, signing and timely filing them, along with any payments due.

Entity-Specific Provisions

The following provisions apply to specific entity types as indicated.

BBA Partnership Adjustments (Partnerships, S-Corps, and Individuals Receiving K-1s)

If you are or were a partner at any time in a partnership and receive(d) Schedule K-1 (1065), you may receive a Form 8986, Partner’s Share of Adjustments to Partnership-Related Items. Form 8986 is used by partnerships to correct errors on previously filed partnership returns. Recipients of Form 8986 must report this information and any additional tax due to the IRS on Form 8978, Partner’s Additional Year Reporting Tax, within a specified timeframe.

Our services do not include assisting you with anything pertaining to Form 8986 and/or Form 8978 unless specifically identified in the engagement letter. If you receive a Form 8986 prior to the filing of your tax return, you are responsible for alerting us and requesting assistance.

Schedule K-1 and K-3 Distribution (Pass-through Entities)

You are responsible for distributing a copy of the Schedule K-1s and K-3s, including any attachments, to each partner, member, shareholder, or beneficiary.

Pass-through Entity Tax Election (Pass-through Entities)

Several states now permit eligible entities to elect to pay income tax on passed through income for the benefit of their owners (“pass-through entity tax” or “PTET”). A PTET election may be beneficial for entity owners whose maximum amount of deductible state taxes for federal income tax purposes is limited. The timing and requirements for each state’s pass-through entity tax regime varies and may be fact-specific. Analysis related to making a PTET election is not within the scope of this engagement. You are responsible for deciding whether to opt in or out of any PTET which may apply to you.

Salaries and Wages for S Corporation Shareholders

If an S corporation treats payments to a shareholder as non-taxable distributions rather than wages subject to employment taxes, the IRS may recharacterize those payments. You are responsible for determining that any salary paid to a shareholder is reasonable compensation for services performed for the S corporation. If the IRS recharacterizes payments to a shareholder, the shareholder and S corporation may be responsible for employment taxes on the recharacterized amounts, as well as underpayment penalties and interest.

Tax Basis Schedules (S Corporations)

The S corporation return discloses historic and adjusted balances in the Accumulated Adjustment Account (AAA), Other Adjustments Account (OAA) and Accumulated Earnings and Profits (E&P). However, it does not disclose each shareholder’s tax basis in S corporation stock or tax/at-risk basis in loans made to the S corporation. The IRS may examine any or all of these tax attributes to determine whether a shareholder is entitled to reduce their taxable income by some or all tax losses allocated from the S corporation, or avoid tax on certain distributions of cash from the S corporation.

Properly understanding and calculating these attributes is necessary for preparation of both S corporation and shareholder tax returns. We will rely upon the historical balances disclosed on last year’s tax return. You are responsible for providing any necessary documentation to support transactions between the S corporation and its shareholders, including sale/redemption of S corporation stock and loans between the S corporation and its shareholders. Additional analysis, such as recreating historical balances or analyzing proposed shareholder transactions, is not within the scope of this engagement.

S Corporation Distributions

Distributions from the S corporation to shareholders should be made according to IRS rules and regulations. This is generally on a per share/per day basis. Other factors, such as stock transfers, purchases of S corporation stock by the S corporation, state non-residency withholding, incentive compensation plans, and shareholder notes, may affect distributions for one or several shareholders. If distributions do not comply with IRS rules and regulations, the IRS may take corrective action, including the revocation of the entity’s S corporation election. Revocation of an entity’s S corporation election may result in unfavorable tax consequences, including double taxation, underpayment penalties, and interest. It is your responsibility to ensure that shareholder distributions are made in conformity with S corporation rules.

Reasonable Compensation (S-Corps)

You are responsible for determining the appropriate salary or wages to pay shareholder-employees. If the IRS disagrees with the characterization of a payment to a shareholder-employee, it may recharacterize the payment as wages. The shareholder and/or the corporation may be responsible for additional employment taxes, penalties, and interest.

Reasonable Compensation (C-Corps)

You are responsible for determining the appropriate salary or wages to pay shareholder-employees. If the IRS disagrees with the characterization of a payment to a shareholder-employee, it may recharacterize the payment as a dividend, constructive dividend, or capital gain. As a result of the recharacterization, the corporation may lose its salary deduction, and the shareholder and/or the corporation may be responsible for additional tax, penalties, and interest. Assistance with determining reasonable compensation is not within the scope of this engagement.

Change in Ownership (S-Corps and C-Corps)

A change in ownership of corporation shares may have unanticipated tax consequences if that change is not analyzed prior to completing the transaction. You are responsible for advising us of any change in ownership so that it may be properly reflected on the tax returns. Assistance with analysis of any change in ownership transaction is not within the scope of this engagement unless specifically stated in the engagement letter.

Individual Tax Return Provisions

The following provisions apply to individual (Form 1040) tax returns.

Confidentiality for Joint Filers

If the tax returns prepared in connection with this engagement are filed using the married filing jointly filing status, both spouses are deemed to be clients of the firm under the terms of the Agreement. Both spouses acknowledge that any tax return information, including supporting documents provided to us, used in the preparation of your joint return, and any communications made to us by either of you in connection with the preparation of your joint return, may ultimately be shared with either spouse, without prior consent of the other.

All Income Disclosure

You are responsible for identifying and communicating to us all income earned and received by you from any U.S. or non-U.S. source. This includes income earned from gambling and online wagers, gig or hobby work, and activity for which you should receive a Form 1099-K (online sales) whether or not you actually receive a 1099-K.

Gifts from Foreign Persons

The preparation of IRS Form 3520 or Form 3520-A is not within the scope of this engagement. If you transferred property to or received property from a foreign person or trust, or are a U.S. person who “owns” assets in a foreign trust, you may be required to file a separate IRS Form 3520 or Form 3520-A. You are responsible for providing us with details of any cash, property, or value exchanged with foreign persons or trusts.

Estate, Trust, and Gift Tax Provisions

The following provisions apply to estate (Form 706), trust (Form 1041), and gift (Form 709) tax returns.

Trust Accounting Income

You are responsible for the calculation of trust accounting income. We will not audit or otherwise verify the data you submit, although we may ask you to clarify your calculations.

Appraisals and Valuations

Determining the value of property to be reported on estate or gift tax returns, other than cash or publicly traded securities, may require an appraisal or valuation. You acknowledge that you are responsible for both engaging a qualified independent third party to determine values of assets other than cash or publicly traded securities, and for obtaining formal, complete written appraisals as may be required by law.

In preparing the tax returns, we will rely on the appraisal you provide. However, our reliance shall not be unreasonable. If you do not provide a formal appraisal where we believe IRS rules require, or if we, in our professional judgment, determine that the appraiser used is not professionally qualified for the type of asset being appraised, we may be unable to proceed with filing your tax returns.

Tax Return Elections

Estate, trust, and gift tax returns include elections that may affect both the taxes owed now and the future income and estate taxes owed by heirs and beneficiaries. We will explain tax return elections and provide recommendations based upon the information you provide. However, you remain responsible for consulting with any necessary attorney, as well as the heirs and beneficiaries, as needed, regarding the advisability of making such elections. You agree to instruct us in writing regarding the tax return elections to be made or declined.

Crummey Notices

A Crummey trust is created for the purpose of making annual exclusion gifts to beneficiaries while retaining the assets in trust. The beneficiary recipient must be notified of the temporary right to withdraw from the trust all or a portion of the gift (a Crummey notice) at the time the gift is made. The notification letter is sent by the trustee to the beneficiary of the trust. You acknowledge that it is your responsibility, as trustee, to send and retain such notices in the event of a future examination.

Estate or Trust Expense Deductions

In the year of death, certain expenses may be deductible on either the estate tax return (Form 706) or on the estate’s income tax return (Form 1041). While we will explain the options to you, you should discuss the options with the estate’s attorneys, other advisors, heirs and beneficiaries. You must notify us, in writing, of your election of where to take these deductions.

Gift Tax Statute of Limitations

The IRS can assess a gift tax liability within three (3) years after the due date of the return, or three (3) years after the return is actually filed, whichever is later. If a gift is determined not to have been adequately disclosed per Treasury Regulations, the three (3) year statute of limitations on assessment does not begin to run, meaning the IRS may assess gift tax and/or penalties at any time. You should retain copies of all previously filed gift tax returns until the date of your death to substantiate the usage of your lifetime exclusion.

Portability Election

If an estate tax return is filed so that a surviving spouse may receive the benefit, for estate tax purposes, of using the decedent’s unused lifetime gift exemption (“portability”), the statute of limitations for the decedent’s estate tax return does not expire until the statute of limitations expires for the estate tax return of the surviving spouse.

Paper Filing Requirements

Estate tax returns (Form 706) and gift tax returns (Form 709) may not be filed electronically. We will deliver to you a paper copy suitable for mailing to the taxing authorities. Once delivered to you, you bear full responsibility for reviewing the paper returns for accuracy, signing and timely filing them, along with any payments due.

Amended Tax Return Provisions

The following provisions apply to amended tax return engagements.

No Guarantee of Acceptance

The IRS and state tax authorities are not required to accept an amended tax return. Our preparation of your amended return does not constitute a guarantee that the IRS or state tax authority will accept, process, or ultimately agree with the positions taken on the return.

Statute of Limitations Impact

If an amended return assessing additional tax is filed within 60 days of the day the statute of limitations would otherwise expire, the statute of limitations is extended an additional 60 days.

State Notification Requirements

Several states require notification when an amended federal tax return is accepted, as a change to federal taxable income may affect state taxable income. Similarly, an amendment to a flow-through entity (partnership or S corporation) return may produce an amended K-1 which affects the tax liability of partners, members, or shareholders. You are responsible for ensuring that all impacted parties are notified of changes to their K-1s.

Tax Consulting Services Provisions

The following provisions apply to tax consulting engagements.

Consulting Standard of Care

Tax consulting services will be performed in accordance with the AICPA Statement on Standards for Consulting Services, Circular 230, and the SSTS.

No Guarantee of Outcome

With any tax consulting, it is possible that the IRS or other revenue authorities may disagree with tax positions taken or tax benefits claimed. We do not guarantee, either expressly or impliedly, any outcome or success of any examination of your tax filings by revenue authorities.

Implementation Responsibility

You have final responsibility for the use and implementation of the tax consulting services. We will provide you with a draft copy of the deliverable(s) for review prior to finalization. You agree to review and examine deliverables carefully for accuracy and completeness. You are solely responsible for determining the suitability of any recommendations and ensuring proper implementation.

Billing and Payment Terms

If our Agreement requires a retainer upon execution, you agree that the retainer will be earned as our professional time to complete the engagement is incurred. The retainer will be applied to the final billing, and any unused balance will be refunded at the end of the engagement.

We will bill you for our professional fees and out-of-pocket costs. Payment is due within 15 days of the date on the billing statement. If payment is not received by the due date, you will be assessed interest charges of 1.5% per month on the unpaid balance. You have thirty (30) days from the invoice date to review the invoice and to communicate to us, in writing, any disagreement with the charges, after which you waive the right to contest the invoice.

All outstanding invoices must be paid prior to the release of the work-product(s) specified in the Agreement.

We reserve the right to suspend or terminate our work for non-payment of fees. In the event that work is discontinued, either temporarily or permanently, as a result of delinquent or non-payment, we shall not be liable for any loss you may incur as a result of the work stoppage, including penalties and interest. In such cases, you assume all risk associated with your failure to meet any governmental or other deadlines.

Termination and Withdrawal

Either party may terminate this Agreement at any time and for any reason.

If this Agreement is terminated before services are completed, you agree to pay all fees and expenses we incur through the effective date of termination.

Proprietary Information

You acknowledge that proprietary information, documents, materials, management techniques and other intellectual property are a material source of the services we perform and were developed prior to our association with you. Any new forms, software, documents or intellectual property we develop during this engagement for your use shall belong to us, and you shall have the limited right to use them solely within your business. All reports, templates, manuals, forms, checklists, questionnaires, letters, agreements and other documents which we make available to you are confidential and proprietary to us. Neither you, nor any of your agents, will copy, electronically store, reproduce or make available to anyone other than your personnel, any such documents. This provision will apply to all materials whether in digital, “hard copy” format or other medium.

Conflicts of Interest

If we, in our sole discretion, believe a conflict of interest has arisen affecting our ability to deliver services to you in accordance with either the ethical standards of our firm or the ethical standards of our profession, we may be required to terminate our services without issuing our work product.

Portals

We will utilize TaxDome Inc., a collaborative, virtual workspace in a protected, online environment. TaxDome Inc. permits real-time collaboration across geographic boundaries and time zones and allows SDO CPA LLC and you to share data, engagement information, and deliverables in a protected environment. In order to use TaxDome Inc., you may be required by the provider of TaxDome Inc. to execute a portal agreement and agree to be bound by the terms, conditions and limitations of such agreement. You agree that we have no responsibility for the activities of TaxDome Inc. and agree to indemnify and hold us harmless with respect to any and all claims arising from your misuse of TaxDome Inc.

SDO CPA LLC is not a host for any of your information. You are responsible for maintaining your own copy of this information. We do not provide back-up services for any of your data or records, including information we provide to you. Portals are utilized solely as a method of transferring data and are not intended for the storage of your information. Information on a portal may be deleted by SDO CPA LLC with or without notice to you.

If you decide to transmit your confidential information to us in a manner other than a secure portal, you accept responsibility for any and all unauthorized access to your confidential information. If you request that we transmit confidential information to you in a manner other than a secure portal, you agree that we are not responsible for any liability, including but not limited to, (a) any loss or damage of any nature, whether direct or indirect, that may arise as a result of our sending confidential information in a manner other than a secure portal, and (b) any loss arising as a result of any virus being passed on or with, or arising from any alteration of, any email message.

Client Responsibility for Security

Clients are responsible for maintaining the security of their bank and financial accounts, including the use of two-factor authentication where available. SDO CPA strongly recommends that clients do not share login credentials directly and instead use secure platform features, such as QuickBooks Online’s user permissions, to grant access. Clients acknowledge that they are responsible for ensuring the protection of their financial information through adequate security measures.

Acknowledgement of Unencrypted Email Risks

If you choose to provide SDO CPA your financial information via electronic transmission (email), the email may be sent to SDO CPA unencrypted. Unencrypted email is not a secure form of communication. You understand there may be some risks that unencrypted emails may be misdirected, disclosed to, or intercepted by unauthorized third parties.

Data Confidentiality for Financial Access

SDO CPA will treat all client financial data as confidential and will not share it with unauthorized third parties. However, we cannot be held responsible for data breaches or misuse of information caused by the client’s sharing of login credentials or failure to follow recommended security practices. Clients should not provide access to their accounts through insecure methods such as unencrypted email.

Third-Party Service Providers or Subcontractors

We may use third-party service providers, subcontractors, commercially-available artificial intelligence, or software tools, some of which may utilize or offer artificial intelligence capabilities (collectively, “external party” or “external parties”), to assist us where necessary to help provide professional services to you or support the needs of our firm. You consent to our use of external parties. Our firm remains responsible for exercising reasonable care in providing our services, and our services and work product will be subjected to our firm’s customary quality control procedures.

We may provide your confidential information to external parties in support of our services. You consent to the disclosure of your confidential information to those external parties. We take reasonably prudent business care consistent with our professional standards to prevent the unauthorized release of your confidential information.

In certain circumstances, we may require a separate, written consent from you before your information is transmitted to an external party or parties.

Client Authorization

By granting SDO CPA access to your bank and credit card accounts through QuickBooks Online or other financial software, you authorize us to view and download transaction data solely for the purpose of providing bookkeeping and accounting services. This access is strictly for read-only purposes, and no funds will be transferred, managed, or otherwise manipulated by our firm unless part of the engagement, like Back-Office services.

Records Management

Record Retention and Ownership

We will return any original records and documents you provide to us. Our copies of your records and documents are solely for our documentation purposes and are not a substitute for your own record-keeping obligations under any applicable laws or regulations. You are responsible for maintaining complete and accurate books and records, which may include financial statements, schedules, tax returns and other deliverables provided to you by us. If we provide deliverables or other records to you via an information portal, you must download this information within 30 days. Professional standards may preclude us from being the sole repository of your original data, records, or information.

Workpapers and other items created by us to support the delivery of our services are our property and will remain in our control. We will consider requests for copies of workpapers and other items created by us in accordance with the AICPA Code of Professional Conduct. Our workpapers will be maintained by us in accordance with our firm’s record retention policy and any applicable legal and regulatory requirements.

Our firm destroys workpaper files after a period of 6 years. Catastrophic events or physical deterioration may result in damage to or destruction of our firm’s records, causing the records to be unavailable before the expiration of the retention period, as stated in our record retention policy.

Working Paper Access Requests by Regulators and Others

State, federal and foreign regulators may request access to or copies of certain workpapers pursuant to applicable legal or regulatory requirements. Requests also may arise with respect to peer review, an ethics investigation, the sale of your organization, or the sale of our accounting practice. If requested, access to such workpapers will only be provided under the supervision of firm personnel. Regulators may request copies of selected workpapers to distribute the copies or information contained therein to others, including other governmental agencies.

If we receive such a request, we agree to inform you of it as soon as practicable unless we are prohibited from doing so by applicable laws or regulations. You may, within the time permitted for our firm to respond to any request, initiate such legal action as you deem appropriate, at your sole expense, to attempt to limit the disclosure of information. If you take no action within the time permitted for us to respond, or if your action does not result in a judicial order protecting us from supplying requested information, we may construe your inaction or failure as consent to comply with the request.

If we are not a party to the proceeding in which the information is sought, you agree to reimburse us for our professional time and expenses, as well as the fees and expenses of our legal counsel, incurred in responding to such requests.

Summons or Subpoenas

All information you provide to us in connection with this engagement will be maintained by us on a confidential basis.

If we receive a summons or subpoena which our legal counsel determines requires us to produce documents from this engagement or testify about this engagement, provided that we are not prohibited from doing so by applicable laws or regulations, we agree to inform you of such summons or subpoena as soon as practicable. You may, within the time permitted for our firm to respond to any request, initiate such legal action as you deem appropriate, at your sole expense, to attempt to limit discovery. If you take no action within the time permitted for us to respond, or if your action does not result in a judicial order protecting us from supplying requested information, we may construe your inaction or failure as consent to comply with the request.

If we are not a party to the proceeding in which the information is sought, you agree to reimburse us for our professional time and expenses, as well as the fees and expenses of our legal counsel, incurred in responding to such requests.

Confidentiality

In providing services to you, we may require information that is considered confidential and may include Personally Identifiable Information (PII), i.e. information that can be used to distinguish or trace an individual’s identity such as address, bank account and social security information. We will maintain all client information, including PII, on a confidential basis and have a duty to do so based on the standards promulgated by the American Institute of Certified Public Accountants as well as applicable laws and regulations. You assume the risk of loss if you provide us with information, including PII, which differs from the information we request in order to provide services to you in accordance with the Agreement.

Referrals

In the course of providing services to you, you may request referrals to products or professionals such as attorneys, brokers, or investment advisors. As a courtesy, we may identify professional(s) or product(s) for your consideration. However, you are responsible for evaluating, selecting, and retaining any professional or product and determining if the professional or product meets your needs. You agree that we will not oversee the activities of and have no responsibility for the work product of any professional or suitability of any product we refer to you or that you separately retain.

Limitations on Oral and Email Communications

We may discuss with you our views regarding the treatment of certain items or decisions you may encounter. We may also provide you with information in an email. Any advice or information delivered orally or in an email (rather than through a memorandum delivered as an email attachment) will be based upon limited research and a limited discussion and analysis of the underlying facts. Additional research or a more complete review of the facts may affect our analysis and conclusions.

Due to these limitations and the related risks, it may not be appropriate to proceed with a decision solely on the basis of any oral or email communication from us. You accept all responsibility for any liability, including but not limited to additional tax, penalties or interest resulting from your decision (i) not to have us perform the research and analysis necessary to reach a more definitive conclusion and (ii) to instead rely on an oral or email communication. The limitation in this paragraph will not apply to an item of written advice that is a deliverable of a separate engagement. If you wish to engage us to provide formal advice on a matter on which we have communicated orally or by email, we will confirm this service in a separate agreement.

Brokerage, Investment Advisory or Digital Asset Statements

If you provide our firm with copies of brokerage, investment advisor, or digital asset statements, we will use the information solely for the purpose described in the Engagement Objective and Scope section of this Agreement. We will not monitor transactions, investment activity, provide investment advice, or supervise the actions of the entity or individuals entering into transactions or investment activities on your behalf.

Disclaimer of Legal and Investment Advice

Our services under this Agreement do not constitute investment advice unless specifically engaged in the Engagement Objective and Scope section of this Agreement. Our services under this Agreement do not constitute legal advice.

Electronic Data Communication and Storage

In the interest of facilitating our services to you, we may send data over the Internet, temporarily store electronic data via computer software applications hosted remotely on the Internet, or utilize cloud-based storage. Your confidential electronic data may be transmitted or stored using these methods. In using these data communication and storage methods, our firm employs measures designed to maintain data security. We use reasonable efforts to keep such communications and electronic data secure in accordance with our obligations under applicable laws, regulations, and professional standards.

You recognize and accept that we have no control over the unauthorized interception or breach of any communications or electronic data once it has been transmitted or if it has been subject to unauthorized access while stored, notwithstanding all reasonable security measures employed by us. You consent to our use of these electronic devices and applications during this engagement.

Marketing and Educational Communications

If we send you newsletters, updates, explanations of technical developments or similar communications, it is strictly for marketing or general educational purposes and should not be construed as professional advice on which you may rely. These communications, by themselves, do not create a contractual relationship between us and you, a binding obligation for us to provide services to you, nor a requirement on our part to monitor issues for you.

Federally Authorized Practitioner – Client Privilege

Internal Revenue Code §7525, Confidentiality Privileges Related to Taxpayer Communication, provides a limited confidentiality privilege applying to tax advice in taxpayer communications with federally authorized tax practitioners in certain limited situations.

While we will cooperate with you with respect to the privilege, asserting the privilege is your responsibility.

Mediation

If a timely dispute arises out of or relates to this Agreement, including the scope of services contained herein, or the breach thereof, and if the dispute cannot be settled through negotiation, the parties agree first to try to settle the dispute by mediation administered by the American Arbitration Association (“AAA”) under the AAA Accounting and Related Services Arbitration Rules and Mediation Procedures before resorting to arbitration, litigation, or any other dispute resolution procedure. The mediator will be selected by mutual agreement of the parties. If the parties cannot agree on a mediator, a mediator shall be designated by the AAA. The mediation will be conducted in Texas.

The mediation will be treated as a settlement discussion and, therefore, all discussions during the mediation will be confidential. The mediator may not testify for either party in any later proceeding related to the dispute. No recording or transcript shall be made of the mediation proceedings. The costs of any mediation proceedings shall be shared equally by all parties. Any costs of legal representation shall be borne by the hiring party.

This provision shall not apply to any dispute of fees owed, billed or due.

Limitation of Liability

SDO CPA LLC’S AND SDO CPA LLC’S OWNERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR ASSIGNS (COLLECTIVELY “SDO CPA LLC STAKEHOLDERS”) LIABILITY FOR ALL CLAIMS DAMAGES AND COSTS ARISING FROM NEGLIGENT ACTS, ERRORS, OR OMISSIONS COMMITTED BY US IN THE PERFORMANCE OF THIS ENGAGEMENT IS LIMITED TO 2 TIMES THE TOTAL AMOUNT OF FEES PAID BY YOU TO SDO CPA LLC FOR THE SPECIFIC SERVICE GIVING RISE TO THIS LIABILITY. IF THERE ARE NO FEES CHARGED TO YOU BY SDO CPA LLC, SDO CPA LLC’S LIABILITY FOR ALL CLAIMS, DAMAGES, AND COSTS ARISING FROM THIS ENGAGEMENT IS LIMITED TO $0.

Limitation of Damages

NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, SDO CPA LLC AND SDO CPA LLC STAKEHOLDERS SHALL NOT BE LIABLE FOR ANY LOST PROFITS, INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, CONSEQUENTIAL, OR SIMILAR DAMAGES, TO THE EXTENT SUCH DAMAGES MAY BE LAWFULLY LIMITED OR EXCLUDED, OF ANY NATURE EVEN IF WE HAVE BEEN ADVISED BY YOU OF THE POSSIBILITY OF SUCH DAMAGES.

Indemnification of SDO CPA LLC

The following is applicable to audit and attest engagements only:

You agree to hold us harmless from any and all claims which arise from knowing misrepresentations to us, or the intentional withholding or concealment of information from us by your management. You also agree to indemnify us for any claims made against us by third parties, which arise from any of these actions by your management. The provisions of this paragraph shall apply regardless of the nature of the claim.

The following applies to non-attest engagements only:

You agree to indemnify, defend, and hold harmless SDO CPA LLC and any SDO CPA LLC Stakeholders with respect to any and all claims made by third parties arising from this engagement, regardless of the nature of the claim, and including the negligence of any party, excepting claims found to have arisen from the gross negligence or intentional acts of SDO CPA LLC.

Designation of Venue and Jurisdiction

In the event of a dispute, the courts of the state of Texas shall have exclusive jurisdiction, and all disputes will be submitted to the District Courts of Dallas County, Texas. We also agree that the law of the state of Texas, except for laws governing the choice of law, shall govern all such disputes.

Timing for Disputes

You agree that any claim arising out of this Agreement shall be commenced within 1 year from the date our services conclude as outlined in the Timing of the Engagement section of the Agreement, regardless of any longer period of time for commencing such claim as may be set by law. A claim is understood to be a demand for money or services, the service of a suit, or the institution of arbitration proceedings against SDO CPA LLC.

Independent Contractor

When providing services to your company, we will function as an independent contractor and in no event will we or any of our employees be an officer of you, nor will our relationship be that of joint venturers, partners, employer and employee, principal and agent, or any similar relationship giving rise to a fiduciary duty to you.

Our obligations under this Agreement are solely obligations of SDO CPA LLC, and no SDO CPA LLC Stakeholder shall be subjected to any personal liability whatsoever to you or any person or entity.

Severability

If any portion of this Agreement is deemed invalid or unenforceable, said finding shall not operate to invalidate the remainder of the terms set forth in this Agreement.

Survivability

The following sections of this Terms and Conditions Addendum shall survive termination of the Agreement: Limitation of Liability, Limitation of Damages, Indemnification, and Timing for Disputes.

Assignment, No Third Party Beneficiaries

All parties acknowledge and agree that the obligations and responsibilities of this Agreement cannot be assigned to any third party except as agreed to in writing. This Agreement has been entered into solely between you and SDO CPA LLC, and no third-party beneficiaries are created hereby.

Force Majeure

Neither party shall be held liable for any delays resulting from circumstances or causes beyond our reasonable control, including, without limitation, fire or other casualty, act of God, strike or labor dispute, war or other violence, epidemics or pandemics as defined by The Centers for Disease Control and Prevention, or any law, order or requirement of any governmental agency or authority. However, no Force Majeure event shall excuse you of any obligation to pay any outstanding invoice or fee or from any indemnification obligation under this Agreement.

Document Retention Policy

Our firm operates as a paperless office. All documents are maintained in electronic format on secure systems. We do not provide long-term storage of your source documents.

Physical Documents You Provide: Any physical documents you provide (W-2s, 1099s, bank statements, etc.) will be scanned and the originals securely shredded within thirty (30) days of receipt. If you require return of original documents, you must request this in writing at the time you provide them. Per Texas State Board of Public Accountancy Rule 501.76, we will return requested originals within ten (10) business days at no charge.

Digital Uploads: Documents you upload to our portal (source documents, statements, receipts, etc.) may be deleted from our systems within ninety (90) days after your tax return is filed and accepted. You are responsible for retaining your own copies of all source documents. The IRS recommends taxpayers retain records for at least three (3) years, and in some cases up to seven (7) years or longer.

What We Retain: Consistent with IRS requirements under 26 CFR § 1.6107-1 and AICPA guidance, we retain only: (1) a copy of your filed tax return; (2) e-file authorization forms; and (3) our work papers. These records are retained for seven (7) years from the filing date, after which they may be securely destroyed without notice.

Client Portal Access: A copy of your filed tax return is available through your client portal. You are responsible for downloading and retaining this copy for your records.

Work Papers: Work papers developed by our firm during this engagement are and remain the property of SDO CPA LLC per Texas State Board of Public Accountancy Rule 501.76(b). Work papers that constitute client records (such as adjusting journal entries incorporated into your return) will be provided upon written request.

Electronic Signatures and Counterparts

Each party hereto agrees that any electronic signature intended to replicate a written signature, shall be presumed valid, and we may reasonably rely upon it. For purposes hereof, “electronic signature” includes, but is not limited to, a scanned copy of a manual signature, an electronic copy of a manual signature affixed to a document, a signature incorporated into a document utilizing touchscreen capabilities, or a digital signature. Documents may be executed in one or more counterparts, each of which shall be considered an original instrument, but all of which shall be considered one and the same agreement.

Entire Agreement

This Agreement, including this Terms and Conditions Addendum, represents the entire agreement of the parties and supersedes all previous oral, written or other understandings and agreements between the parties.

Modification of Terms

We reserve the right to modify these Terms at any time by posting the updated version at sdocpa.com/terms. Changes are effective upon posting. The version of the Terms in effect at the time you sign an engagement letter will govern that engagement. We encourage you to review the Terms periodically.