A. Legal Terms of Service
Date of Last Revision: June 05, 2020
READ THESE TERMS CAREFULLY. This agreement (“Legal Terms of Service” or “Terms of Service”) is entered into by and between ScaleFactor, Inc., and its subsidiaries (collectively “ScaleFactor”), and you and your affiliated entities (“Customer”), each a “Party” and collectively the “Parties”. Customer’s authorized representative confirms that he/she accepts and agrees to all of the terms and conditions set forth below upon making such a purchase. Customer may authorize additional users (“Authorized Users”) to access or use the products and services, and all Authorized Users must accept these Terms of Service. Customer is solely responsible for compliance with these Terms of Service by Authorized Users, including security breaches resulting from acts or omissions by Authorized Users.
These Terms of Service contain the terms and conditions that govern your access to and use of the ScaleFactor Services.
1. Definitions. In these Terms of Service the following definitions will apply:
“Affiliate” means any entity that controls, is controlled by, or is under common control with Customer, and where control means ownership or control, directly or indirectly of at least a 50% interest.
“Anonymized Data” means data cleansed of all personal data so that it can no longer identify a Customer, user or individual person.
“API” means application programming interface.
“Applications” mean the hosted software applications, user interfaces, mobile applications, platform, and related documentation and programming, to which ScaleFactor provides access pursuant to an Order, as part of the ScaleFactor Services.
“Customer Data” means all data Customer enters or uploads to the ScaleFactor Services.
“Order” means an executed order form for a Scalefactor product or service, an executed engagement letter or Statement of Work for professional services available through ScaleFactor, or an executed agreement to provide a product or service available through ScaleFactor on behalf of a partner of ScaleFactor. Orders include additional terms and conditions specific to each product or service on an Order or specific to features within products and services on an Order (collectively, “Other Agreements”).
“Results” mean the results derived by ScaleFactor Services from Customer Data.
“ScaleFactor Services” means a predefined combination of access to Applications, support and managed services provided by ScaleFactor to Customer as identified through an Order.
2. Acceptance and Modification of Terms of Service
By executing an Order or accessing the ScaleFactor Services, Customer agrees to be bound by these Terms of Service and all other policies, procedures, and rules that ScaleFactor may publish from time to time, as well as any additional terms and conditions the Parties may agree to in writing and Other Agreements.
Subject to applicable laws, ScaleFactor may refuse to offer the ScaleFactor Service to any person or entity, and use of the ScaleFactor Service is not authorized in any jurisdiction that does not give effect to all provisions of the Terms of Service. ScaleFactor reserves the right to modify or replace any provision in the Terms of Service, or change, update, suspend, or discontinue the ScaleFactor Service at any time. It is Customer’s responsibility to review the Terms of Service periodically. Customer’s continued use of the ScaleFactor Service following any changes to these Terms of Service constitutes acceptance of those changes to the Terms of Service.
3. ScaleFactor Services
(a) Subject to the terms and conditions of the Terms of Service, ScaleFactor grants to Customer (including its authorized employees, affiliates, contractors, and Authorized Users) a temporary, limited, non-exclusive, non-transferable right to access and use the ScaleFactor Services and APIs identified in the applicable Order.
(b) Customer shall not, nor attempt to (i) sell, resell, rent, or lease the ScaleFactor Service or use it in a service provider capacity unless specifically provided in writing; (ii) use the ScaleFactor Service to store or transmit infringing, unsolicited marketing emails, libelous, or otherwise objectionable, unlawful or tortious material, or to store or transmit material in violation of any third-party rights; (iii) interfere with or disrupt the integrity or performance of the ScaleFactor Service; (iv) gain unauthorized access to the ScaleFactor Service or any related systems or networks; (v) reverse engineer, decompile, obtain the source code or algorithms of the ScaleFactor Service; or (vi) access the ScaleFactor Service to copy any feature, function, or graphic for any purposes.
(c) The Customer Data and Results remain Customer property. ScaleFactor shall
use Customer Data solely for purposes of fulfilling its obligations pursuant to these Terms of Service. During the term of these Terms of Service, Customer may export Customer Data and Results through the ScaleFactor Service. During and after the term of these Terms of Service, ScaleFactor owns all Anonymized Data. ScaleFactor shall use Anonymized Data to enhance the products & services, aggregate statistical analysis, provide technical support, and other business purposes. Customer hereby waives any and all rights it might have to the Anonymized Data or any portion thereof.
(d) ScaleFactor may offer Customer the ability to use third-party applications in combination with the ScaleFactor Services. In connection with any such third-party application, Customer acknowledges and agrees that ScaleFactor may allow the third-party providers access to Customer Data as required for the interoperation of such third-party application with ScaleFactor Services. The use of a third-party application with the ScaleFactor Services may also require Customer to agree to a separate agreement or terms and conditions with the provider of the third-party application, which will govern Customer’s use of such third-party application. For example, ScaleFactor contracts with Bill.com and Yodlee Inc., for certain functionality. By agreeing to these Terms of Service and continued use of the ScaleFactor Service, Customer agrees to be bound by those additional terms of service.
(e) Customer shall provide ScaleFactor with all information, access, and good faith cooperation reasonably necessary to facilitate the provision of the ScaleFactor Services, and, without limiting the generality of the foregoing, shall perform any obligation identified as Customer’s responsibility. If Customer delays or fails to comply with the foregoing provision, ScaleFactor’s obligations shall be excused to the extent, and/or for the duration, such obligations are dependent upon such Customer performance and as further described on the Order.
4. Payment of Fees
(a) During the term of the applicable Order, Customer shall pay all fees as specified in the Order. In the event payment is not specified in the Order or Other Agreements, payment is due upon Customer’s execution of an Order and upon receipt of each invoice thereafter, payable via credit card, ACH, or other acceptable means. If Customer, in good faith, disputes the accuracy of an invoice, Customer shall provide detailed, written notice of such dispute within 10 days of invoice receipt. Customer is responsible for the payment of all sales, use, withholding, VAT, and other similar taxes. All payment obligations are non-cancelable, and all amounts paid are non-refundable except as otherwise expressly stated in these Terms of Service, an Order, or Other Agreements.
(b) Nonpayment or late payment of undisputed fees is a material breach of these Terms of Service. In the event penalties for late payment are not specified on the Order or Other Agreements, ScaleFactor reserves the right to charge interest on any undisputed invoice that is not paid within 30 days of the invoice date. Further, ScaleFactor may, in its sole discretion, terminate any Order for Customer’s material breach or suspend Customer’s access to any ScaleFactor Services without limiting ScaleFactor’s other rights and remedies, until such past due amounts are paid in full. If a collection action is required to collect any past due amount, Customer shall reimburse ScaleFactor for collection costs, including attorneys’ fees.
5. Mutual Confidentiality
(a) “Confidential Information” means all non-public information disclosed by a party (“Discloser”) to the other party (“Recipient”) in connection with these Terms of Service, whether orally or in writing, that is designated as confidential or that reasonably should be understood to be confidential given the nature of the information and the circumstances of disclosure. ScaleFactor’s Confidential Information includes, without limitation the ScaleFactor Service, its user interface design and layout, product roadmap, operating policies & procedures, and pricing information.
(b) Confidential Information excludes information that: (i) is or becomes generally known to the public without breach of any obligation owed to Discloser, (ii) was known to the Recipient prior to its disclosure by the Discloser without breach of any obligation owed to the Discloser, (iii) is received from a third party without breach of any obligation owed to Discloser, or (iv) was independently developed by the Recipient without use or access to the Confidential Information. The Recipient may disclose Confidential Information to the extent required by law or court order, but will provide Discloser with advance notice sufficient to provide Discloser the opportunity to seek a protective order.
(c) The Recipient will not disclose or use any Confidential Information of Discloser for any purpose outside of the scope of these Terms of Service, and shall use commercially reasonable efforts to limit access to Confidential Information of Discloser to those of its employees and contractors who need such access for purposes consistent with these Terms of Service and who have signed confidentiality agreements with Recipient no less restrictive than the confidentiality terms of these Terms of Service. These Terms of Service and related Orders and Other Agreements may be disclosed in confidence to legal counsel or other professional advisors with a need to know in the context of a merger, financing or similar transaction or for securities or other regulatory filings. Each Party acknowledges that unauthorized disclosure of the other Party’s Confidential Information would cause irreparable harm to the other Party and would entitle the other Party to seek injunctive relief upon disclosure or threatened disclosure, without a requirement to prove irreparable harm or the posting of a bond.
6. IP Ownership
The Parties acknowledge and agree that no ownership interest in intellectual property or other rights are assigned or otherwise transferred under these Terms of Service and disclaim any and all implied licenses. The software, workflow processes, procedures, user interface, designs, and other technologies provided as part of the ScaleFactor Service are proprietary property of ScaleFactor and its licensors, and all right, title, and interest in and to such items, including all associated intellectual property rights, remain only with ScaleFactor. ScaleFactor reserves all rights unless expressly granted in this Term of Service. Customer may not remove or modify any proprietary marking or restrictive legends in the ScaleFactor Service. Any feedback or suggestions Customer provides about the ScaleFactor Services is owned by ScaleFactor, and ScaleFactor may use such information without obligation to Customer.
7. Data Security
(b) Customer shall be responsible for maintaining the security of Customer log-in credentials to the ScaleFactor Service. Customer shall immediately notify ScaleFactor of any suspected unauthorized use of Customer’s account, or other account-related security incident. To the extent applicable, Customer shall promptly change the password and revoke the applicable user id. Customer shall not use another customer’s log-in credentials without their express written permission.
(c) As necessary, Customer agrees to provide ScaleFactor with remote access to Customer’s accounting and bank feed systems to provide the ScaleFactor Service. Customer shall remain solely responsible for the adequacy of its security measures for any remote access users. Customer hereby represents and warrants that its use of the ScaleFactor Service will not violate any agreement or terms to which it is subject.
(d) ScaleFactor Services may link to other websites, and other websites may link to ScaleFactor Services. Such third party sites and services are not under ScaleFactor control, and Customer acknowledges and agrees that ScaleFactor shall not be responsible or liable, directly or indirectly, for any damage or loss in connection with the use of or reliance on any such content, products, or services available from any such third party.
(e) In the event of a security incident, ScaleFactor shall provide notice to Customer without undue delay after confirmation of a security incident that involves Customer’s Confidential Information.
8. Term, Termination, Suspension
(a) These Terms of Service shall remain in full force and effect until all valid Orders have expired, or as provided below. Either Party may terminate these Terms of Service immediately (i) for a material breach of these Terms of Service if such breach is not cured within 30 days after receipt of written notice thereof (including details sufficient to identify the material breach), or (ii) immediately if a Party ceases to conduct business in the ordinary course without a successor.
(b) For up to 30-days after termination, and upon request, ScaleFactor will make the ScaleFactor Service available for Customer to export Customer Data. At the end of the 30-day period, ScaleFactor has no obligation to maintain the Customer Data, Customer and its users shall cease using the ScaleFactor Services and ScaleFactor shall cease providing the ScaleFactor Services.
(c) Upon any termination for cause by ScaleFactor, Customer will pay all unpaid fees for all ScaleFactor Services to which Customer subscribed under the Order being terminated. Termination shall not relieve Customer’s obligation to pay all undisputed charges accrued before the effective date of termination.
(d) ScaleFactor may temporarily suspend or revoke the ScaleFactor Service at any time if ScaleFactor, in good faith, believes that Customer violated a law, or that a conflict of interest exists that prevents ScaleFactor from providing the ScaleFactor Service in accordance with applicable ethical rules.
(e) Non-Disparagement: Other than as necessary to respond to any legal or regulatory process or proceeding or as may be required by law, each Party shall not make, or cause or encourage others to make, any public or private statements (including on social media) that disparage, denigrate, criticize or malign the other Party.
(f) Any terms that by their nature must survive termination of these Terms of Service to enable a Party to assert its rights and receive the protections of these Terms of Service, will survive (including without limitation, Payment of Fees, Confidentiality, IP Ownership and Indemnification).
(g) Either Party may terminate an Order upon 30 days prior written notice to the other party. Such termination shall be effective on the 31st day, however ScaleFactor shall provide any outstanding Deliverables for the month where notice was provided, even if those Deliverables are due in the subsequent month (i.e., ScaleFactor will deliver January’s financial close in February where termination notice was provided 5 January). Upon termination by Customer under this Section, Customer will pay all unpaid fees for any Services provided up to the date of termination, and Customer shall not be entitled to any refund for prepaid Services beyond the date of termination. Upon termination by ScaleFactor pursuant to this Section, ScaleFactor will refund Customer a pro-rata portion of any prepaid fees that cover the remainder of the term after the effective date of termination. Termination shall not relieve Customer’s obligation to pay all undisputed charges accrued before the effective date of termination.
9. Warranty Disclaimer and Limitation of Liability
ScaleFactor represents and warrants that all professional services performed under these Terms of Service shall be performed in a workmanlike and professional manner. SCALEFACTOR DISCLAIMS ALL WARRANTIES, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE, AND FITNESS FOR A PARTICULAR PURPOSE. WHILE SCALEFACTOR TAKES REASONABLE PHYSICAL, TECHNICAL, AND ADMINISTRATIVE MEASURES TO SECURE THE SCALEFACTOR SERVICE, SCALEFACTOR DOES NOT GUARANTEE THAT THE SCALEFACTOR SERVICE CANNOT BE COMPROMISED. CUSTOMER UNDERSTANDS THAT THE SCALEFACTOR SERVICE MAY NOT BE ERROR FREE, AND USE MAY BE INTERRUPTED.
SCALEFACTOR IS NOT LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR RELATED TO THESE TERMS OF SERVICE (INCLUDING, WITHOUT LIMITATION, COSTS OF DELAY; LOSS OF OR UNAUTHORIZED ACCESS TO DATA OR INFORMATION; LOST PROFITS, REVENUE, OR ANTICIPATED COST SAVINGS), EVEN IF IT KNOWS OF THE POSSIBILITY OF SUCH DAMAGE OR LOSS OR IF THE DAMAGE OR LOSS IS FORESEEABLE.
EXCEPT FOR SCALEFACTOR’S INDEMNITY OBLIGATIONS PROVIDED IN SECTION 10, SCALEFACTOR’S TOTAL LIABILITY ARISING OUT OF OR RELATED TO THESE TERMS OF SERVICE (WHETHER IN CONTRACT, TORT, OR OTHERWISE) SHALL NOT EXCEED THE AMOUNT PAID OR PAYABLE BY CUSTOMER WITHIN THE 12 MONTH PERIOD PRIOR TO THE EVENT THAT GAVE RISE TO THE LIABILITY.
(a) ScaleFactor will defend or settle any third party claim against Customer to the extent that such claim alleges that the ScaleFactor Services, used within the scope of the Terms of Service, violate a copyright, patent, trademark, or other intellectual property right, if Customer, (i) promptly notifies ScaleFactor of the claim in writing, (ii) cooperates with ScaleFactor in the defense, and (iii) allows ScaleFactor to solely control the defense or settlement of the claim. ScaleFactor will pay infringement claim defense costs it incurs in defending Customer, any ScaleFactor negotiated settlement amount, and court awarded damages. If such a claim appears likely, ScaleFactor may (iv) modify the ScaleFactor Service, (v) procure the necessary rights for Customer’s continued use of the ScaleFactor Service, (vi) replace it with the functional equivalent, or (vii) terminate the functionality and refund any prepaid and unused fees.
(b) ScaleFactor has no obligation to indemnify any claim arising from: (i) ScaleFactor’s compliance with Customer’s specifications; (ii) a combination of the ScaleFactor Service with other technology or aspects where the infringement would not occur but for the combination; (iii) ScaleFactor’s use of Customer Data; or (iv) technology or aspects not provided by ScaleFactor.
(c) THIS SECTION 10 (INDEMNIFICATION) CONTAINS CUSTOMER’S EXCLUSIVE REMEDIES AND SCALEFACTOR’S SOLE LIABILITY FOR INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS.
(d) Customer hereby irrevocably agrees to indemnify, defend, and hold ScaleFactor, its affiliates, directors, officers, employees, and agents harmless from and against any and all loss, costs, damages, liabilities, and expenses (including attorneys’ fees) arising out of or related to (i) any third party claim resulting from a breach by Customer of any covenant, representation, or warranty contained in these Terms of Service and/or (ii) Customer’s use of the ScaleFactor Service.
11. Governing Law and Venue
These Terms of Service are governed by the laws of the State of Texas (without regard to conflicts of law principles). Any suit or legal proceeding must be exclusively brought in the federal or state courts located in Austin, Texas. Each Party submits to the exclusive jurisdiction of such courts. Nothing in these Terms of Service prevents either Party from seeking injunctive relief in a court of competent jurisdiction. The losing Party in any dispute shall pay all court costs, expenses and reasonable attorneys’ fees of the prevailing Party.
12. General Provisions
(a) Customer may not assign or transfer these Terms of Service or an Order to a third party. Customer, however, may assign these Terms of Service with all Orders, without ScaleFactor’s consent, as part of a merger, or sale of substantially all Customer’s assets, provided Customer provides prompt written notice of the assignment and the assignee agrees to assume all obligations in writing. ScaleFactor may assign its rights and obligations under these Terms of Service (in whole or in part) without Customer consent. ScaleFactor may also permit its affiliates, agents and contractors to exercise ScaleFactor’s rights or perform its obligations under these Terms of Service, in which case ScaleFactor will remain responsible for their compliance with these Terms. Subject to the foregoing, these Terms of Service will inure to the parties’ permitted successors and assigns.
(b) The Parties are each independent contractors with respect to the other, and neither Party is authorized to act for the other as an agent, representative, or partner.
(c) Customer agrees to allow ScaleFactor to use Customer trademarks, logos, trade names, and describe the business relationship, in ScaleFactor marketing and sales promotion materials and website in compliance with Customer’s written guidelines. ScaleFactor may from time to time send newsletters, mails, explanations of tax law developments, or similar communications to selected customers, former customers, or other interested parties. These communications are of a general nature and are not definitive advice. ScaleFactor does not send all such communications to all customers, former customers, or interested parties. These newsletters do not establish or continue a client relationship with any person, and they do not constitute an undertaking on ScaleFactor’s part to monitor tax or other issues for Customer or for any other party.
(d) The Order shall prevail in the event of an inconsistency between these Terms of Service and an Order.
(e) If a provision of these Terms of Service is held by a court to be void or unenforceable, such provision shall be changed and interpreted so as to best accomplish the objectives of the original provision to the fullest extent allowed by law, and the remaining provisions shall remain in full force and effect.
(f) Neither Party shall be deemed to be in breach of these Terms of Service for any failure or delay in performance caused by reasons beyond its reasonable control (a force majeure event).
(g) No failure or delay by either Party in exercising any right under these Terms of Service will constitute a waiver of that right. Other than as expressly stated herein, the remedies provided herein are in addition to, and not exclusive of, any other remedies of a Party at law or in equity.
(h) Any notices required under these Terms of Service shall be sent to the addresses of the Parties stated below and shall be deemed to have been received if delivered personally, on the day of delivery; if sent by mail or courier, three (3) days after dispatch; if sent by electronic mail, upon successful completion of transmission or date sent:
to the Customer: at the address listed in the applicable Order,
to ScaleFactor: 979 Springdale, Suite 110, Austin Texas 78702
(i) These Terms of Service constitute the entire agreement between the Parties and supersede any prior or contemporaneous negotiations or agreements, whether oral or written. Customer is not relying on any representations, oral or written, not in these Terms of Service. All payments are nonrefundable, and Orders are noncancelable
B. Tax and 1099 Services Terms & Conditions
These Tax and 1099 Terms and Conditions (“Tax and 1099 Terms”) are pursuant to and in accordance with the Legal Terms of Service. In the event of a conflict between the Terms of Service and these Tax and 1099 Terms, the latter shall control.
In the course of delivering services relating to tax return preparation, tax advisory, assistance in tax controversy matters and 1099 matters, ScaleFactor applies customary practices intended to provide these services in a cost-effective manner. These Tax and 1099 Terms describe certain customary practices, as well as other standard terms, conditions, and limitations relating to ScaleFactor’s provision of tax and 1099 services. All services that ScaleFactor provides relating to tax return preparation, tax consultation and advice, representation in any tax controversy matter, any 1099 matter or any other federal, state, local, or foreign tax matter (collectively the “Selected Services”), are subject to the Legal Terms of Service and these Tax and 1099 Terms. References to the “Code” mean the Internal Revenue Code of 1986, as amended and “IRS” means the Internal Revenue Service. “Tax Advice” means ScaleFactor’s investigation to confirm or verify any facts described in any letter, memorandum, or opinion addressing the application of tax laws to a particular situation
1. Terms Regarding Tax Return Preparation
(a) Scope of Return Preparation Services. ScaleFactor’s services in preparing tax returns are limited to tax return preparation (“Tax Return Services”). ScaleFactor’s preparation of a return should not be viewed as assurance that any particular reported position is correct. ScaleFactor will notify Customer if ScaleFactor becomes aware of a return position for which it believes a penalty under the Code is likely to apply. Contact ScaleFactor to amend the Order if Customer wants Tax Advice concerning specific tax return matters. Any Tax Advice rendered in connection with the preparation of any tax return is subject to the provisions described under Section 2 (Terms Regarding Tax Advice) below. ScaleFactor will prepare the tax returns and other tax related filings and documents and schedules as specified in the Order. It is Customer’s responsibility to carefully examine and approve the completed tax returns before signing and sending them to the tax authorities.
(b) Reliance on Information. ScaleFactor will rely on the financial statements or other financial information as provided by Customer. ScaleFactor will not investigate or verify any facts underlying the transactions reported on the tax return. If the actual facts differ from the facts represented to or understood by ScaleFactor, or if there are related facts of which ScaleFactor is unaware, the reporting of the transactions could be materially different than that reported on the returns prepared ScaleFactor.
(c) Accuracy. ScaleFactor will exercise due professional care and judgment to include all required information in Customer tax returns. The Code provides that by signing the returns, Customer is verifying that they are true, correct and complete. Accordingly, review each tax return carefully before signing it, and bring any questionable items or omissions to ScaleFactor’s attention.
(d) Jurisdictions for Returns. ScaleFactor will prepare tax returns for those federal, state, and local jurisdictions identified in an Order. ScaleFactor will advise Customer if, based on the information provided, a tax return should be filed in another jurisdiction. ScaleFactor will not prepare any such tax return without Customer approval of the expansion of services, described in an Order.
(e) Level of Assurance and Return Disclosures. The Code prohibits tax preparers from signing any tax return known to report any position (i) that is not supported by “substantial authority” unless certain disclosures are made concerning the position, or (ii) attributable to certain “tax shelters” that the preparer does not reasonably believe is more likely than not correct. Because of the limited scope of analysis in evaluating a reporting position, a conclusion that disclosure is not required to enable ScaleFactor to sign a return may not be sufficient to avoid the application of tax penalties under the Code. ScaleFactor will not review any reporting position or perform any tax research for the purpose of either (iii) determining whether a position can be reported without disclosure or (iv) determining whether tax penalties may apply, unless agreed upon in writing. If Customer wishes to report a position without disclosure on the return, or is concerned about the potential application of tax penalties, contact ScaleFactor in order to discuss a revised scope of the Tax Return Services (to include applicable Tax Advice).
(f) Disclosure of Reportable Transactions. The Code and state laws require that specified “reportable transactions” or “listed transactions” be disclosed on a tax return. There are significant financial penalties for failure to disclose these transactions, and these penalties may apply even if the transaction does not lead to an understatement of tax. ScaleFactor’s Tax Return Services do not include any investigation to evaluate whether there are any reportable transactions that are required to be disclosed on Customer returns. If ScaleFactor concludes that such disclosure is required, Customer will be notified. Tax Return Services can include a specific review for potentially “reportable transaction” or “listed transaction,” and such additional services will be reflected in an Order.
(g) Unclear Tax Laws or Conflicting Interpretations. There may be instances where the tax law is unclear, or where there may be conflicts between the taxing authorities’ interpretations of the law and other supportable positions. In those instances, ScaleFactor will outline each reasonable alternative course of action, including the risks and consequences of each. At Customer’s direction, ScaleFactor will adopt the alternative Customer selects after having considered the information provided by ScaleFactor.
(h) Reasonable Beliefs. Without disclosure in the return itself of the specific position taken on a given issue, ScaleFactor must have a reasonable belief that the position(s) satisfies the substantial authority standard and that the position will be held to be the correct position upon examination by taxing authorities. Absent such belief, ScaleFactor must be satisfied that there is at least a reasonable basis for the position, and the position must be formally disclosed on Form 8275 or 8275-R, filed as part of the return. If ScaleFactor does not believe there is a reasonable basis for the position, either the position cannot be taken or the return will not be signed.
(i) Penalties and Interest. The law provides various penalties and interest that may be imposed when taxpayers underestimate their tax liability. Customer acknowledges and agrees that any such understated tax, and any imposed interest and penalties, are its sole responsibility.
(j) Foreign Accounts. Any person or entity subject to the jurisdiction of the United States (includes individuals, corporations, partnerships, trusts, and estates) having a financial interest in, or signature or other authority over, bank accounts, securities, or other financial accounts having a value exceeding $10,000 in a foreign country, shall report such a relationship. Although there are some limited exceptions, filing requirements also apply to taxpayers that have direct or indirect control over a foreign or domestic entity with foreign financial accounts, even if the taxpayer does not have foreign account(s). For example, a corporate-owned foreign account would require filings by the corporation and by the individual corporate officers with signature authority. Failure to disclose the required information to the U.S. Department of the Treasury may result in substantial civil and/or criminal penalties. Customer shall provide ScaleFactor with all the information necessary to prepare Form TD-F-90-22.1 required by the U.S. Department of the Treasury on or before June 30th of each tax year if Customer has a financial interest in any foreign account. ScaleFactor will not prepare the above referenced disclosure statements if Customer does not timely provide the requisite information.
(k) Review. Customer returns may be selected for review by one or more taxing authorities. Any proposed adjustments by the examining agent are subject to certain rights of appeal. In the event of such government tax examination, ScaleFactor will be available upon Customer’s written request to represent Customer during the examination and/or during any appeal. Any such representation will be the subject of, and governed by, the Agreement, these Terms and any additional terms and conditions as agreed in writing between the parties.
(l) Substantiation. ScaleFactor relies on the Customer for compliance with all IRS substantiation requirements. ScaleFactor shall not be responsible for the disallowance of doubtful deductions or inadequately supported deductions, nor any resulting additional tax, penalties and interest. In the event ScaleFactor or the Customer are assessed additional tax, penalties and interest due to ScaleFactor’s reliance on inaccurate, incomplete or misleading information provided to ScaleFactor (with or without the Customer’s knowledge or intent), Customer will indemnify and defend ScaleFactor and hold ScaleFactor harmless as to any additional tax, penalties and interest.
2. Terms Regarding Tax Advice
(a) Limitations on Oral, Messaging and Email Communication. ScaleFactor may discuss its interpretation of the tax treatment of certain items or provide Customer with tax information in the body of an email. Any advice or information delivered orally or in the body of an email (as opposed to a memorandum delivered as an email attachment) will be based upon limited tax research and limited discussion and analysis of the underlying facts. Additional research or more complete review of the facts could affect ScaleFactor’s analysis and conclusions. Because of these limitations and the related risks, it may not be appropriate to proceed with any transaction or any tax return reporting position solely on the basis of any oral, messaging or email communication. Customer accepts all responsibility for any loss, cost, or expenses resulting from its decision to not have ScaleFactor perform the requisite research and analysis necessary to reach a more definitive conclusion but rather rely on an oral or email communication. The limitation in this Section 2(a) will not apply to an item of written Tax Advice that is delivered as a document attached to an email.
(b) Facts and Assumptions. ScaleFactor’s Tax Advice will be limited to the investigation described in the body of the Tax Advice, and ScaleFactor will rely on those assumptions and representations described in the Tax Advice. Any change in or addition to these facts, assumptions, or representations could materially and adversely affect ScaleFactor’s analysis and conclusions. Customer shall notify ScaleFactor immediately if Customer believes any of the facts, assumptions or representations in the Tax Advice are incorrect or incomplete. Customer should not rely upon any item of Tax Advice that is based on facts, assumptions, or representations that Customer believes incorrect or incomplete.
(c) Applicable Law. Unless expressly stated in the Tax Advice, ScaleFactor’s analysis and conclusions will relate solely to federal income tax consequences under the Code as of the date of the Tax Advice. Tax consequence analysis under any other applicable tax law is available and will be described in the applicable Order.
(d) Issues Addressed. Tax Advice will be specifically limited to advice concerning the tax issues described in the Tax Advice; it may not consider all of the issues that may arise in connection with a transaction. Except as expressly stated in the Tax Advice, ScaleFactor’s advice is not an endorsement of any particular transaction structure, nor is it a recommendation that any addressee proceed with the transaction structure described in the Tax Advice.
(e) Reportable Transactions. As described above, the Code and state laws require that Customer disclose certain “reportable transactions” or “listed transactions” in a tax return. ScaleFactor will not review any transaction to determine whether it is a “reportable transaction” or a “listed transaction” except as expressly provided in the Tax Advice. ScaleFactor can include a review of specific transactions to determine whether it is a “reportable transaction” or “listed transaction,” and such additional services will be reflected in an Order.
(f) Level of Assurance for Tax Advice; No Guarantee. Many areas of tax law are unclear, and the application of the tax law to any particular facts may be subject to more than one interpretation. ScaleFactor’s Tax Advice will be based upon its interpretation of applicable law and regulations, and certain case and ruling authority as of the date of the Tax Advice. The level of assurance for any particular item of Tax Advice will depend on the underlying facts, the clarity of applicable law, regulations, rulings, and court cases, and the extent of factual due diligence and tax research performed. The conclusions in the Tax Advice will be based on a good faith belief that they meet the level of assurance stated in the Tax Advice. Obtaining Tax Advice at a particular level of assurance may in some cases provide a defense to certain tax penalties, but Customer should not assume that an item of Tax Advice will provide protection from penalties, except as expressly stated in the Tax Advice. ScaleFactor’s analysis and conclusions will be based upon professional judgment, are not a guarantee of the ultimate tax consequences of the transactions described in the Tax Advice, and are not binding on the IRS, any tax authority, or any court. Contact ScaleFactor to discuss the possibility of obtaining a ruling from the appropriate taxing authority if greater certainty is required.
(g) Reliance and Distribution. Each item of Tax Advice is rendered only for the benefit of the named addressee(s), and does not address the tax consequences to any other person or entity that is not an addressee. No person or entity other than the named addressee(s) may rely on the Tax Advice. Customer may deliver a copy of any Tax Advice to the IRS or any tax authority for the purpose of demonstrating good faith and reliance on the analysis and conclusions expressed therein. The delivery of any item of Tax Advice to a third party may act as a waiver of any otherwise available claim of privilege.
3. Terms Applicable to All Tax and 1099 Services
(a) Scope of Services. ScaleFactor services are limited to the Selected Services as described in an Order. Tax Advice or Tax Return Services do not include representation in the event of an examination by the IRS or other tax authorities. Should Customer require tax services beyond those specifically described in the Order, those additional services would constitute either a separate engagement or an expansion of an existing engagement at an additional cost. ScaleFactor’s agreement to provide services for one engagement in no way obligates ScaleFactor to accept any other Customer engagement.
(b) Customer Responsibilities. In order for ScaleFactor to provide effective services, Customer must timely cooperate and provide any information ScaleFactor reasonably requests. Likewise, Customer must cause its employees and contractors to cooperate fully and timely. Customer must designate a point of contact authorized to make or obtain all management decisions with respect to the Selected Services, on a timely basis. ScaleFactor will rely in good faith on all information and management decisions communicated to ScaleFactor by Customer, its employees, or contractors, and will not be responsible for any loss or other obligation arising from that reliance. Any Customer failure to fulfill its responsibilities will be grounds for suspending or terminating the applicable Selected Services or other services, as further described in the Order.
(c) Decisions. ScaleFactor may provide Customer with advice concerning tax return reporting and the tax consequences of certain transactions. Customer will retain all authority and responsibility for any and all decisions based on that advice.
(d) Independent Contractor. For all Selected Services, ScaleFactor will be an independent contractor and not an employee, agent, or partner of Customer. ScaleFactor will determine the method, details and means of performing the Selected Services. ScaleFactor assumes full and sole responsibility for the payment of all compensation and expenses its employees and applicable withholdings.
(e) Confidentiality. ScaleFactor will maintain the confidentiality of Customer Confidential Information in accordance with the Agreement.
(f) Engagement of Other Parties. In performing any tax services, ScaleFactor may engage the services of seasonal preparers, independent contractors, or other third party personnel. By engaging ScaleFactor, Customer has authorized such third party engagement and authorized those third parties’ access to Customer files, financial information and other confidential information. ScaleFactor engagement of any third party does not affect its obligations to Customer.
(g) Changes in Law. Subsequent changes to applicable law or regulations, or the issuance of new case or ruling authority, could materially and adversely affect the analysis and conclusions in an item of Tax Advice or a position reported on a tax return. Neither the delivery of any Tax Advice nor the preparation of a tax return is an undertaking by ScaleFactor to advise Customer of any changes in law.
(h) Possibility of Litigation. If the IRS or other tax authority adopts a position contrary to any analysis or conclusions in the Tax Advice or to any position reported on a tax return, it might be necessary to pursue administrative appeals or litigation. Decisions of whether and how to pursue administrative appeals or litigation may be based on considerations of cost, publicity, and other matters unrelated to the technical merits of a tax position. In some cases, taxpayers elect not to pursue appeals or litigation even though a reported position may ultimately be sustained on appeal or in litigation.
(i) Disclaimer of Legal and Investment Advice. ScaleFactor services under the Agreement and these Terms do not constitute legal or investment advice. Customer should retain competent legal counsel and investment advisers as appropriate.
(j) Record Retention. Notwithstanding the terms of Section 8(b) of the Agreement, Federal tax law requires ScaleFactor to retain either copies of tax returns it prepares or specified information relating to those returns, as well as certain other documents related to the Selected Services for varying time periods. ScaleFactor’s current policy (which ScaleFactor may revise at any time and in its sole discretion) is to retain copies of tax returns and certain related workpapers for seven years after the return is filed, subject to casualties beyond our control. ScaleFactor provides customers with a file copy of each federal income tax return for which ScaleFactor is a signing preparer. ScaleFactor recommends that Customer retains this copy for at least seven years. Although taxpayers are not required to retain their tax records for longer than our seven-year recommendation, there are situations in which tax returns older than seven years may contain information useful in future tax planning. Because decisions regarding document retention may involve a variety of legal considerations (e.g., statutes of limitations, rules of evidence), Customer should consult its legal counsel to address these legal considerations.
(k) Savings Clause. In the event any provision herein violates a tax jurisdiction’s Standard of Conduct specifically applicable to a client, as to that client, such provision shall be (i) modified to the extent necessary to be in compliance with that specific standard, or (ii) rendered void if modifying the provision cannot result in compliance with the specifically applicable standard. In the event any portion of the Agreement, including these Terms, is found to be void, illegal or unenforceable, all remaining provisions shall remain in full force and effect.
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