[Date]
[Client Name]
[Client Address]
[Client City, State, ZIP]

Dear [Client Name]:

This letter is to let you know we have expanded our practice to include compensation planning services. These services include evaluating your current compensation system and developing a comprehensive plan to ensure that your compensation system establishes a competitive edge to attract and keep employees while maximizing your business’s income and equity goals. We can also assist you in preparing for an IRS audit of your executive compensation and fringe benefit programs, which includes reviewing your nonqualified deferred compensation plans to ensure compliance with the Section 409A rules.

Our compensation planning staff is well trained in state-of-the-art planning and design techniques. We can assist you in maximizing your company’s tax savings as well as exploring the option of providing new benefits to your employees at the lowest cost to your company. Providing a competitive benefits package is essential in today’s workplace. We can also assist you in establishing equity-based compensation programs, such as stock options and phantom stock plans, to help align the interests of key employees with those of company owners.

As you may know, when an IRS compliance initiative that focused on executive compensation and fringe benefits revealed significant noncompliance in many of the targeted areas, the IRS incorporated these issues into routine audits and began using employment tax field specialists to look at executive compensation and fringe benefit issues when auditing businesses and their owners. The expectation is that more small businesses and their owners will be audited and employee compensation and fringe benefits as well as worker classification will be a part of the audits. Businesses need to make sure they are currently in compliance with the rules. Our compensation planning staff can assist you with identifying potentially troublesome executive compensation and fringe benefit and worker classification matters, and implementing a cost-effective solution that will withstand IRS scrutiny.

We believe in a team approach to planning. As experienced professionals, we can add value to your overall employee benefit and compensation plans. I will call you next week to discuss how a compensation planning engagement can be tailored to fit your company’s needs.

Yours truly,

 

(Planner or client contact person)

Note:

a          Regs. 301.7216-1 through -3 impose stringent rules on disclosing and using client tax return information on tax return preparers. If the client is a tax-only client (i.e., the practitioner has not been engaged to provide other services), the practitioner must obtain written consent prior to sending out materials discussing or promoting nontax services. See section 702 for a discussion of the disclosure requirements and exceptions.