What to put in a tax preparation business package, explained

What to take away

This article covers business operations for a tax practice. It is not tax, legal or accounting advice. Requirements depend on the tax year, the return, the jurisdiction and the preparer's credential. Confirm current rules with the IRS, the state tax authority, or a licensed CPA or enrolled agent.

Why a package is a scope document

A tax preparation package answers three questions at once: what the client gets, who is allowed to do it, and when it is finished. Most practices write only the first and discover the other two in March.

The IRS sets the floor. Anyone who prepares or substantially assists with a federal return for compensation generally needs a current preparer tax identification number, and credentials and representation rights are separate questions. The PTIN requirements for tax return preparers state the rule; your tier list has to reflect it.

That distinction decides staffing. A bookkeeper who only gathers, organizes and records client information generally does not need a PTIN, while a person paid to prepare or substantially assist does, and each preparer needs an individual number. The IRS answers on who needs a PTIN draw that line. Put the line in the package, not in a training deck.

Name the deliverable in the client's terms

Write each tier as a sentence a client can repeat. "Federal and one state return, prepared and e-filed, with a preparer review before filing" is a package. "Full service" is not.

State the forms and schedules included, the states covered, whether the return is e-filed or printed, and who signs. State what the client must deliver and by what date. State the review step and who performs it.

Then state the exclusions in the same paragraph, not in a footnote. Prior-year amendments, notices, bookkeeping cleanup, entity returns and representation before the IRS are the usual items that arrive uninvited.

Price the review step, not the form count

Form count is the client's variable. Review time is yours. A tier priced per form rewards the client for sending a shoebox and punishes you for opening it.

Price on the work you control: the number of review passes, the seniority of the reviewer, the turnaround commitment, and whether the engagement includes planning or a mid-year check-in. A return that needs one reviewer costs a different amount than one that needs two.

If you cannot state a figure, state the arithmetic. Let R be the hourly cost of the reviewer, H the hours the tier typically consumes, and M the target margin. The floor price is R x H / (1 - M). Substitute your own numbers; do not borrow another practice's.

Decide who may touch each tier

Map every tier to a role, and map every role to a credential. A preparer with a PTIN, an enrolled agent, a CPA and an uncredentialed assistant have different lawful scopes, and the package should read as if that were true.

The assistant gathers and organizes. The preparer prepares. The reviewer signs off. The owner handles the escalation. When a return crosses from one column to the next, that is a handoff, and handoffs are where April goes wrong.

Write the escalation trigger into the tier. A client who mentions a notice, a foreign account, a business sale or a payroll problem moves up a level, and the package says so before the season starts.

Make the advertising claim match the file

The FTC expects advertising claims to be truthful and supported, and endorsements to reflect honest experience with material connections disclosed. The advertising guide for small business is the plain-language version of that standard.

In this trade the risky claims are refund size, turnaround speed, audit protection and "maximum refund." Each one is a promise about an outcome you do not control. If you cannot show the basis, cut the line.

Testimonials need the same treatment. A client who received a discount for a review, or who is a relative, is a material connection, and the disclosure belongs next to the quote.

Keep records that prove the tier was delivered

A package is only defensible if the file shows what was agreed and what was done. The IRS guidance on what records to keep covers the general principle: a system that shows income and expenses, with documents supporting purchases, sales, payroll and assets.

For a tax practice, extend that to the engagement itself. Keep the signed engagement letter, the scope as sold, the client's document log, the reviewer's notes and the filing confirmation. Keep the record of what was declined.

That file is what you read when a client says the package included something it did not. It is also what you read when you are deciding next year's tiers.

Worked example: one tier, written out

Take a mid-level individual tier and write it the way the file needs it.

The table is the package. Everything else is marketing copy around it.

Retire a tier on purpose

Review each tier once a year against three numbers you can pull: how often it was sold, how long it actually took, and how many scope arguments it produced. A tier that sells well and argues constantly is mispriced or miswritten.

Retire it in writing. Tell existing clients what replaces it and when the change takes effect. A menu that grows every year and never shrinks is a menu nobody can quote from.

If you are rebuilding the menu from scratch, the sequence in how to package tax preparation services for clients covers the order of decisions.

Common questions

Does a receptionist who answers tax questions need a PTIN?

Generally no, if the person only gathers, organizes and records information. The line is substantial assistance in preparing a federal return for compensation, and the IRS states it directly. When in doubt, check the current guidance rather than guessing.

Can I advertise a specific refund amount?

Only if you can substantiate the claim, which is difficult because the refund depends on the client's facts. The FTC standard applies to advertising in this trade as it does anywhere else. Safer to advertise the process and the review step.

How many tiers should a practice offer?

Enough to cover the work you actually do, and few enough that staff can quote them without checking. Three to five is common. The number matters less than whether each tier states its deliverable, its exclusions and its escalation trigger.

What belongs in the engagement letter that is not in the package?

The package is the offer; the engagement letter is the contract, and it should be reviewed by a licensed attorney for your jurisdiction. Keep the two consistent. A client who reads both should not find two different scopes.