Tax Practice, Regulation, and Ethics Elements of tax

1
Tax Practice, Regulation, and Ethics

• Elements of tax practice
• Rules and ethics in tax practice
• Circular 230
• AICPA Code of Professional Conduct
• AICPA Statements on Standards for Tax Services
  (SSTS)
• Sarbanes-Oxley and taxation
• Texas State Board of Public Accountancy
• Non-regulatory ethical behavior models
• Tax research by CPAs

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SSTS

• Statements on Standards for Tax Services (SSTS)
  issued by AICPA
• Intended to supplement AICPA Code of Professional
  Conduct and Circular 230

3
SSTS

• Tax return positions (SSTS 1)
• Answers to questions on returns (SSTS 2)
• Certain procedural aspects of preparing returns
  (SSTS 3)
• Use of estimates (SSTS 4)

4
SSTS

• Departure from a position previously concluded in
  an administrative proceeding or court decision
  (SSTS 5)
• Knowledge of error Return preparation (SSTS 6)
• Knowledge of error Administrative proceedings
  (SSTS 7)
• Form and content of advice to clients (SSTS 8)

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SSTS 1

• Should have good-faith belief that position has a
  realistic possibility of being sustained
• Authority does not have to meet IRC 6662
  definition
• If standard is not met
• Disclose position in return, and
• The position must not be frivolous

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SSTS 2

• Reasonable effort to obtain information to answer
  all questions
• Exceptions
• Data not readily available
• Meaning of question uncertain
• Answer too voluminous
• Not acceptable on Form 1120

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SSTS 3

• May rely on client information without
  verification, unless information appears to be
  incorrect, incomplete, or inconsistent
• Not required to examine supporting documents

8
SSTS 4

• Use estimates if impractical to obtain exact data
  and if estimates appear reasonable
• Disclosure of estimates may be necessary
• Records destroyed by disaster
• K-1s not received

9
SSTS 5

• Prior year disposition may not prevent
  recommending a different treatment of a similar
  item in a later year
• CPA and IRS not bound to act consistently with
  previous position, IRS usually is consistent,
  however

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SSTS 6

• CPA must inform client upon discovery of an error
• Recommend appropriate measures for client to take
• Not the CPAs duty to inform the tax authority
  about error

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SSTS 7

• Request clients permission to disclose error to
  the IRS
• If client refuses, CPA should consider
  withdrawing from engagement

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SSTS 8

• Judgement reflects professional competence
• Use written communication for complex matters
• Oral communication okay for simple matters