AMERICAN TAX PREPARERS PURCHASING GROUP (ATP) TAX PREPARERS PROFESSIONAL LIABILITY PROGRAM. Program Overview, Frequently Asked Questions & Application

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1 AMERICAN TAX PREPARERS PURCHASING GROUP (ATP) TAX PREPARERS PROFESSIONAL LIABILITY PROGRAM Program Overview, Frequently Asked Questions & Application You can feel confident that you have the necessary coverage in place for your unique risks when you purchase your insurance through the American Tax Preparers Purchasing Group. This insurance program is administered by Target Insurance Services, with coverage provided by The Hartford. ATP s Professional Liability Insurance Program for Tax Preparers is endorsed by the National Society of Tax Professionals (NSTP). This program offers: Coverage for tax preparation, duties as a notary public, and client representations. Coverage limits from $10,000/$20,000 up to $100,000/$200,000.* *Coverage for these limits may not be available in all states. In New York, maximum paid per policy period equals maximum paid per claim. Affordable premiums and a low $100 deductible. Optional prior acts and bookkeeping coverage. WHO IS ATP? The American Tax Preparers Purchasing Group was formed as a corporation in 1981 to allow tax preparers to purchase individual E & O insurance contracts at group rates. Target Insurance Services was selected to administer the ATP Program in 1996, and The Hartford has provided coverage since The Hartford is rated A+ (Superior) by A.M. Best for its financial stability and claim-paying ability. WHO IS TARGET INSURANCE SERVICES? Target Insurance Services is a full-service commercial insurance facility. Staffed by a team of insurance industry experts, Target draws on many decades of experience in designing, underwriting, and delivering quality insurance programs for various groups of professionals. Additional information about Target Insurance Services can be found at: HOW TO APPLY FOR COVERAGE STEP ONE: STEP TWO: Complete the Calculating Your Premium form on the next page. Complete the Application attached, and only if you ve had prior claims, also complete the Supplemental Claim / Error Reporting Form. STEP THREE: Enclose your application and check, payable to Target Insurance Services. If you d like to pay by credit card, complete the enclosed Credit Card Authorization Form and enclose it with your application. If paying by credit card, you re welcome to fax the completed application, Claim/Error Reporting Form (if needed), and Credit Card Authorization Form to: PLEASE NOTE: If you reside in Kentucky, please do not include payment. Due to KY State surcharges that vary by municipality, we will need to send you an invoice for the appropriate amount. Answers to Frequently Asked Questions are included on the last page of this package. For additional information, you re invited to contact John Haugner, Jr: Address: S. 15 W Willow Springs Drive Dousman, WI Phone: (262) Fax: (262) jhaugner@wi.rr.com Page 1

2 CALCULATING YOUR PREMIUM If you are not applying for bookkeeping coverage, complete lines A - C only. If you are applying for bookkeeping coverage, please complete lines A F. PLEASE NOTE: If you reside in Kentucky, please do not use this information to calculate your payment. Due to KY State surcharges that vary by municipality, we will need to send you an invoice for the appropriate amount. A. From Table 1 or Table 2 on the next page, find the desired limits and corresponding number of staff in your office to determine the base premium. Use Table 2 only if you reside in the states of AK, CA, and NY, or are renewing your policy in HI. Write this base premium amount on Line A. B. If you currently have E&O liability insurance, write 1.00 on line B. If you do not currently have E&O liability insurance, write on line B. C. Multiply line A by line B. Write the result on line C. This is your annual premium for E&O liability insurance if you are not applying for the optional bookkeeping coverage and do not live in Kentucky, New Jersey, or West Virginia. If you live in one of these states, please see line F. Round this number to the nearest dollar. D. Bookkeeping coverage option From Table 3 on page 3, determine the charge factor for your percentage of bookkeeping activities. Write the charge factor in line D. E. Multiply line C by line D. Round the number to the nearest dollar. This is your annual premium for E&O liability insurance, including bookkeeping coverage. F. NJ, WV, & KY BUSINESSES ONLY: Your state requires that we surcharge your premium. In NJ, multiply Line C or E by 1.75% and enter result on Line F. In WV multiply by 1%. KY RESIDENTS, please see note at top of page! Subtotal Subtotal A. $ B. C. $ D. E. $ F. $ Add Line C or E plus F, plus Purchasing Group Fee (below), and enter the total. Purchasing Group Fee: $ TOTAL PREMIUM: $ PAGE 2

3 BASE PREMIUM TABLES TABLE 1 (ALL STATES, EXCEPT AK, CA, *HI, *LA AND NY): A $100 DEDUCTIBLE APPLIES TO ALL RATES. NUMBER OF PEOPLE TO BE COVERED $10,000 EACH CLAIM $20,000 AGGREGATE PREMIUM AMOUNT $25,000 EACH CLAIM $50,000 AGGREGATE PREMIUM AMOUNT $50,000 EACH CLAIM $100,000 AGGREGATE PREMIUM AMOUNT $100,000 EACH CLAIM $200,000 AGGREGATE PREMIUM AMOUNT 1-3 $165 $330 $495 $ *COVERAGE IS NOT AVAILABLE IN HAWAII OR LOUISIANA TABLE 2 (AK, CA, AND NY RESIDENTS ONLY): A $100 DEDUCTIBLE APPLIES TO ALL RATES. AK and CA $10,000 EACH CLAIM $20,000 AGGREGATE $25,000 EACH CLAIM $50,000 AGGREGATE $50,000 EACH CLAIM $100,000 AGGREGATE $100,000 EACH CLAIM $200,000 AGGREGATE NY ONLY $10,000 EACH CLAIM $10,000 AGGREGATE $25,000 EACH CLAIM $25,000 AGGREGATE $50,000 EACH CLAIM $50,000 AGGREGATE $100,000 EACH CLAIM $100,000 AGGREGATE NUMBER OF PEOPLE TO BE COVERED PREMIUM AMOUNT PREMIUM AMOUNT PREMIUM AMOUNT PREMIUM AMOUNT 1-3 $181 $362 $543 $ TABLE 3 BOOKKEEPING COVERAGE OPTION CHARGE FACTORS PLEASE NOTE: IF YOU HAVE MORE THAN 15 PEOPLE TO BE COVERED, A PREMIUM QUOTE WILL BE SENT TO YOU AFTER WE RECEIVE YOUR COMPLETED APPLICATION. BOOKKEEPING PERCENTAGE (%) CHARGE FACTOR 1-10% % % OR MORE 1.33 IF WE ARE UNABLE TO PROVIDE COVERAGE, YOUR PREMIUM WILL BE FULLY REFUNDED. IF YOU CANCEL YOUR POLICY, THE MINIMUM PREMIUM WE WILL RETAIN IS YOUR ANNUAL PREMIUM OR $250, WHICHEVER IS LESS. AT THIS TIME WE ARE NOT ABLE TO OFFER COVERAGE IN HAWAII OR LOUISIANA. PAGE 3

4 TAX PREPARERS ERRORS AND OMISSIONS LIABILITY INSURANCE APPLICATION FOR A CLAIMS MADE POLICY This is an application for a policy in which all coverages are CLAIMS MADE. The policy, if issued, applies only to a claim (a) for errors or omissions that occur between the retroactive date and the end of the policy period, and (b) for Please which a complete claim is first in made. ink. 1. Firm Name: Contact Name: Address: Street City State ZIP Telephone: Fax: Address: 2. A. Firm is: Individual Partnership Corporation Other B. Date firm was established: (If less than 3 years experience, please attach resumes for firm principal(s).) 3. Is this a part-time business? Yes No 4. Total number of staff: (Please include yourself and all personnel, including clerical, who are involved in tax preparation & bookkeeping.) 5. Has the name of the APPLICANT been changed, or has the APPLICANT merged with or acquired another practice unit within the past 5 years? Yes No (If yes, please attach explanation) 6. Have you or your employees had a claim, or become aware of any circumstances which could give rise to a claim? Yes No (If yes, please complete the Supplemental Claim / Error Reporting Form.) 7. The policy provides coverage for tax preparation and notary public work. Bookkeeping coverage is available for an extra charge. A.) Do you want coverage for bookkeeping activities? Yes No B.) What percentage of your business gross receipts is bookkeeping? % 8. Please select desired coverage limits by checking one box from either Table A or Table B below: Table A U.S. (excluding New York) $10,000 each claim/$20,000 aggregate $25,000 each claim/$50,000 aggregate Table B New York only $10,000 each claim/$10,000 aggregate $25,000 each claim/$25,000 aggregate $50,000 each claim/$100,000 aggregate $100,000 each claim/$200,000 aggregate $50,000 each claim/$50,000 aggregate $100,000 each claim/$100,000 aggregate 9. Effective date desired: (NOTE: If you have not carried insurance in the past two years, we can include Prior Acts Coverage at your request (at no extra cost). It will cover you for one year prior to the effective date above. Yes Please provide Prior Acts Coverage for a period of one year prior to my effective date. Application, P. 1 of 2 J - C

5 10. List all prior E&O liability coverage. If none, please state None. INSURANCE COMPANY POLICY NUMBER LIMITS INCEPTION DATE EXPIRATION DATE I HEREBY DECLARE that all statements and answers herein are full, complete and true to the best of my knowledge and belief and that no material circumstances or information concerning the subject matter of the questions asked has been withheld or omitted. SIGNATURE OF APPLICANT* DATE PRINT OR TYPE NAME AND TITLE *Signing this form, or deposit of the remittance, does not bind the APPLICANT, company or underwriting manager to complete the insurance. Application must be signed and dated to be considered for coverage. IMPORTANT: Please check one answer to the question below. Where did you learn about the American Tax Preparers Purchasing Group and/or Target Insurance Services? Internet Search Engine NSTP Web Site or literature NAEA Web Site Advertisement (Where? ) 2007 IRS Forum / NSTP Conference Anaheim, CA Chicago, IL New York City Orlando, FL Atlanta, GA Las Vegas, NV Card Pack Other (Please explain: ) Application, P. 2 of 2

6 TAX PREPARERS SUPPLEMENTAL CLAIM / ERROR REPORTING FORM 1. Full name of individual(s) or firm involved in the claim: 2. Current policy number: 3. Full name of claimant: 4. Indicate whether: Claim/suit Incident 5. Date of alleged error: Date of claim: 6. Additional defendants: 7. If closed, total loss paid, including deductible: Indicate whether: Court judgment Out of court settlement 8. Type of damages demanded or paid: Taxes Penalties Punitive Other Compensatory $ $ $ $ 9. Description of claim (provide enough information to allow evaluation). DO NOT ATTACH COPIES OF SUIT PAPERS. a.) Alleged act, error or omission upon which claimant based claim: b.) Description of events: c.) Description of the type and extent of injury or damage allegedly sustained: 10. Category of loss or error (complete a, b or c): a.) Tax (1) Type of loss: (2) Type of error: Federal income Mathematical error Foreign income Unsubstantiated deduction State income Failure to take deduction City income Misinterpretation of tax law Social Security Inaccurate or misunderstood data from client Federal unemployment Failure to timely file State unemployment Other (attach explanation) Other (attach explanation) b.) Bookkeeping Mathematical error Inaccurate or misunderstood data from client c.) Notary public Given false identification Other (attach explanation) Entry in wrong category Other (attach explanation) Error in certification procedure PRINCIPAL S SIGNATURE DATE PRINT OR TYPE NAME TITLE Application Addendum

7 For your convenience, we now accept VISA and MasterCard. If you choose this option please complete the following and return it to the address below: VISA Account # Expiration Date: / M/C Account # Expiration Date: / Cardholders Name (Please print) Amount $ Policy NO. I hereby authorize Target Insurance Services to charge my full premium amount, including all fees, taxes and a service charge of 2.25% to the above credit/debit card. Signature Date / / Please send to: Target Insurance Services 35 Tower Lane Avon, CT Fax:

8 ANSWERS TO FREQUENTLY ASKED QUESTIONS What is Claims-Made Coverage? This Program provides coverage for claims made when your policy is in force. For a claim to be covered, you must not have known about it when you applied for coverage. Your mistake, or supposed mistake, must also have occurred after the retroactive date, and you must have first become aware of the mistake during your current policy period. Your retroactive date is the date your old coverage started, provided that coverage has been in force continuously since that date and it is acceptable to The Hartford. What do you mean by each claim and aggregate? The coverage amounts listed in question 7 on the application, and Tables 1 and 2 on page 3 of this package, refer to the limits of liability under the policy. The each claim amount is the most that will be paid for all damages and expenses arising out of a single act, error or omission. The aggregate amount is the most that will be paid for all claims during any one-year policy period. Is representation before the IRS included? If you represent your client before a tax authority on a tax audit or collection matter, your representation of your client as permitted by the tax authority would be covered if liability arises out of these activities. How do you define bookkeeping? We define bookkeeping as one or more of the following activities: Recording numerical data in order to develop and maintain financial records Recording debits and credits and comparing current and past balance sheets Preparing bank deposits Compiling data from cashiers to verify and balance receipts Verifying documents for mathematical accuracy and proper codes Balancing and reconciling billing vouchers Posting transactions in journals and on computer files, and updating files as needed Reviewing computer printouts against manually maintained journals, and making necessary corrections Reconciling computer reports and operation reports Preparation of payroll How do you charge for bookkeeping activities? You may add coverage for bookkeeping activities (including payroll services associated with bookkeeping) for an additional charge. The charge factors for bookkeeping activities are based upon the percentage of your bookkeeping receipts (refer to Table 3 on page 3 for the charge factors). If you plan to start bookkeeping activities during the policy period and desire coverage, show at least 1% under bookkeeping services (question 6b on the application) and include the appropriate minimum charge. What is an Extended Reporting Period? If you or The Hartford cancels or non-renews your policy, you can purchase Extended Reporting Period Coverage for up to three years. Also called Tail Coverage, it extends the claim reporting period even though the policy has been cancelled. This coverage does not protect you from claims arising from errors made after cancellation or non-renewal, and is not available if the policy was cancelled for nonpayment of premiums.