CPA Firm Terms and Conditions Template (United States)

The clause a US firm must not copy from a British template: a lien over client records

UK and Commonwealth accountants' terms routinely reserve a lien over papers in the firm's possession until fees are paid. Putting that clause in a US CPA firm's terms is a professional-conduct problem, not a negotiating position.

The AICPA's revised "Records Requests" interpretation (ET sec. 1.400.200), effective 31 July 2021 under the Acts Discreditable Rule, is explicit: a member may not withhold client-provided records in response to a client's initial request for them, and may not withhold them while waiting for payment of copying, retrieval or shipping fees. Client-provided records must be made available to the person or entity that provided them as soon as practicable and, absent extenuating circumstances, no later than 45 days after the request. The firm may charge for copying, retrieval and shipping — it simply cannot hold the records hostage to that charge.

What the interpretation does distinguish is categories of record. Client-provided records are the accounting and other records the client gave you, in any format. Member-prepared records are records the firm was not specifically engaged to prepare and which are not in the client's own books, where withholding them would leave the client's financial information incomplete. Working papers — the firm's internal schedules and analyses — are a third thing again, and are the firm's property.

So this template's records section is built the opposite way round from a British one: an undertaking to return client-provided records on request within the interpretation's timescale, a permitted charge for copying and delivery, and a clear statement that working papers remain the firm's. If you need leverage on unpaid fees, it has to come from the fee and billing terms, not from the client's own documents.

There is no statutory late-payment interest here — the rate is yours to set, within state limits

British and EU practitioners work with a statutory late-payment regime that implies an interest rate into a commercial contract. US practice has no general federal equivalent for professional services. If you want interest on an overdue invoice, it has to be a term of your agreement, stated as a rate, and it is constrained by the usury and finance-charge rules of the state whose law governs the engagement — which vary widely and which treat a business client and a consumer client differently.

That makes the interest clause a place to be specific rather than aspirational. This template asks for a monthly or annual rate and a governing state, and states that the rate is reduced to the maximum the governing state permits if it would otherwise exceed it — a saving provision that keeps the clause enforceable at the highest lawful figure instead of risking the whole term.

Dispute resolution is a real choice in US terms, and most templates never offer one

Standard terms drafted for a US CPA firm typically make an election that British terms do not: courts, or arbitration, or a mediation step before either. Each has consequences a firm should choose deliberately. Litigation is public and slow but preserves appeal rights. Arbitration is private and usually faster, and is often paired with a jury-trial waiver and a bar on class or consolidated proceedings. A mediation-first clause adds a cheap off-ramp that resolves a large share of fee disputes before anyone files anything.

This template makes that a selector, so the terms print one coherent mechanism rather than the common muddle of a jury-trial waiver sitting next to an exclusive-jurisdiction clause pointing at a court. It also includes a clause shortening the period for bringing a claim to a stated number of years from the date the services were provided — a common feature of US professional-services terms, subject to the governing state's limits on shortening a limitations period.

Two things it does not do. It does not attempt to exclude liability for fraud or for anything a state's law does not permit to be limited. And it does not include a fee-shifting clause as a default, because a one-way "client pays our costs" provision is exactly the sort of term that attracts scrutiny when the client is an individual.

Tax and attest work each add a section, and the tax one is a federal statute

Where the engagement includes tax return preparation, Internal Revenue Code section 7216 makes it a criminal offense for a return preparer to knowingly or recklessly disclose or use tax return information other than in connection with preparing the return, unless an exception applies or the taxpayer has given consent that meets the regulations' form requirements. Consent has to be knowing and specific — a general permission buried in standard terms will not do the work. This template's tax section therefore states the restriction and points to a separate consent, rather than pretending the terms themselves are a section 7216 consent.

Where the firm also performs attest services for the same client, the independence question arrives with it. Non-attest services such as bookkeeping, payroll or disbursement authority create self-review and management-participation threats that have to be evaluated and safeguarded, and multiple non-attest services compound. The attest section here records that the firm will evaluate those threats before accepting additional work and will decline where no safeguard is sufficient — which is a commitment worth making visible to the client, because it explains in advance why you may say no to something they ask for.

The clauses worth keeping, and the one to stop copying

Keep the electronic-communication and wire-fraud provision. A statement that your firm will never change its banking instructions by email alone, and that any unconfirmed email or call purporting to do so should be treated as fraudulent, is the cheapest control available against a fraud that specifically targets accounting firms at payment time.

Keep the internal-dispute provision. Where the owners of a closely held business fall out, your client is the entity, not whichever owner calls first. Saying in advance that you will not act on conflicting instructions and will refer the matter back to the governing body avoids being used as one side's instrument.

Stop copying the clause that reserves the right to pursue "the individual who gave us instructions" for an entity's unpaid fees. An officer does not become personally liable for their company's debt because your terms assert it. If you want that recourse, take a guaranty — an actual signed obligation, which this template includes as an optional block.

The terms, explained

Scope, precedence and acceptance

States that these terms attach to and are incorporated in each engagement letter, that the engagement letter prevails on conflict, and that signing the engagement letter accepts these terms — so a client cannot say they never agreed to an attachment.

Professional standards and licensing

Names the state board licensing the firm and the professional standards it works to, and — where the engagement involves federal tax practice — the firm's obligations as a return preparer, including holding a current PTIN.

Client responsibilities

Accurate, complete and timely information; management's responsibility for its own records, internal control and the representations it makes; and the client's obligation to disclose rather than leave the firm to discover.

Fees, billing and interest

Fee basis, out-of-pocket costs, payment period, a window to raise a fee query, and a stated interest rate for overdue amounts with a saving provision capping it at the governing state's maximum. There is no statutory rate to fall back on.

Records requests and working papers

Built to the AICPA records-request interpretation: client-provided records are returned on request, within 45 days absent extenuating circumstances, without being held for copying or retrieval charges — which may still be charged. Working papers remain the firm's property.

Retention and destruction

Your own retention period for files and working papers, with destruction on notice, stated separately from the client's own obligation to retain its records for tax and regulatory purposes.

Confidentiality and tax return information (conditional)

General confidentiality, plus — where the engagement includes return preparation — the Internal Revenue Code section 7216 restriction on disclosing or using tax return information, and a pointer to the separate consent that section requires.

Attest services and independence (optional)

Where the firm also performs attest work, records that non-attest services are evaluated for self-review and management-participation threats before acceptance, and that the firm will decline work it cannot safeguard.

Client funds (optional)

Switch on only if the firm holds client money. Segregated account, no commingling, prompt return, and how any interest is treated.

Outsourcing, subcontractors and cloud systems (optional)

Discloses that work may be performed by subcontractors or third-party providers and that data may be held in cloud systems, with confidentiality obligations passed down — the disclosure clients increasingly ask about directly.

Limitation of liability and time to bring a claim

A cap stated as a figure or formula, the carve-outs that cannot be excluded, and an agreed period after the services are provided within which any claim must be brought, subject to the governing state's limits.

Dispute resolution

One coherent mechanism, chosen: courts, arbitration with a jury-trial waiver and no class proceedings, or mediation first. Not a jury-trial waiver sitting next to a court-jurisdiction clause.

Guaranty (optional)

A real signed guaranty by an individual for an entity client's fees, instead of a term asserting that the firm may pursue whoever gave instructions.

Electronic communication and wire fraud

Allocates email risk and adds the undertaking never to change banking instructions by email alone, with a request that the client verify any change by voice using a number already on file.

Internal disputes, termination and governing law

The entity is the client where its owners disagree; a notice period plus immediate-termination triggers; and the governing state's law, matched to the dispute-resolution choice.

Rules that shape US CPA terms

Confirm the current position with your state board and the AICPA before relying on any of this — state accountancy rules vary and are not identical to the AICPA Code.

• Do not withhold client-provided records over unpaid fees

  Under the revised "Records Requests" interpretation (ET sec. 1.400.200) under the Acts Discreditable Rule, effective 31 July 2021, a member may not withhold client-provided records in response to an initial request, including while awaiting payment of copying, retrieval or shipping fees, which may still be charged. Client-provided records should be made available as soon as practicable and, absent extenuating circumstances, no later than 45 days after the request.

  AICPA — revised Records Requests interpretation (ET sec. 1.400.200)

• Distinguish client-provided records, member-prepared records and working papers

  Client-provided records are what the client gave the firm. Member-prepared records are records the firm was not specifically engaged to prepare and which are not in the client's books, where withholding would leave the client's financial information incomplete. Working papers are the firm's own internal analyses and remain its property. The three categories carry different obligations, and a single "our files are ours" clause misstates all of them.

  Journal of Accountancy — PEEC addresses records requests

• Get a compliant consent before disclosing or using tax return information

  Internal Revenue Code section 7216 makes it an offense for a return preparer to knowingly or recklessly disclose or use tax return information other than in connection with preparing the return, unless an exception applies or the taxpayer has consented in the form the regulations require. Standard terms are not a section 7216 consent; a separate, specific consent is needed.

  26 U.S. Code § 7216

• Evaluate independence before adding non-attest services for an attest client

  Non-attest services provided to an attest client — bookkeeping, payroll, disbursement authority and similar — create self-review and management-participation threats that must be evaluated and safeguarded, and multiple non-attest services compound the threat. Where no safeguard reduces the threat to an acceptable level, the work cannot be accepted.

• State the interest rate, and cap it at the governing state's maximum

  There is no general federal statutory late-payment interest for professional services, so any right to interest must be a stated contractual term. State usury and finance-charge rules limit the rate and often treat business and consumer clients differently, so a saving provision reducing the rate to the state maximum keeps the clause enforceable rather than void.

• Keep exclusions within what the governing state allows

  Liability for fraud cannot be excluded, and states differ on the enforceability of clauses limiting liability for professional negligence, shortening a limitations period, or waiving a jury trial. Choose the governing state deliberately and confirm that the cap, the claim-period clause and the dispute-resolution election are each enforceable there.

How to use this template

1. Identify the firm and the licensing state. Firm name, entity type, the state board that licenses the firm, the effective date of this version and a version reference.
2. Set fees, interest and the claim period. Payment days, the window to query an invoice, your interest rate, and the number of years within which a claim must be brought.
3. Choose how disputes are resolved. Courts, arbitration with a jury-trial waiver, or mediation first. The governing-law and venue wording follows your choice instead of contradicting it.
4. State a real liability cap. A fixed sum, a multiple of the fees for the engagement, or the fees actually paid. Enter the figure here rather than cross-referring to a letter that may not carry one.
5. Switch on only the sections you need. Attest and independence, tax return information, client funds, outsourcing and cloud, and the optional guaranty are separate switches.
6. Attach it to your engagement letter and download. These terms are accepted through the engagement letter that incorporates them, so issue both together. Download as Word to keep editing, or PDF to send.

Frequently asked questions

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