1.2 - AICPA Standards for Tax Service Flashcards
AICPA Standards for Tax Service
Identify the regulations AICPA members working in tax services roles are required to follow
AICPA standards
AICPA Standards for Tax Service
What is the common base for rules of conduct for tax services?
AICPA standards (due diligence and good faith effort)
AICPA Standards for Tax Service
Statements on Standards for Tax Services (SSTSs) are enforceable under what???
- the AICPA Code of Professional Conduct
- Justification is required if member departs from standards
AICPA Standards for Tax Service
What is a tax return position?
- Inclusion / exclusion of an item as GI or deduction of certain expense
AICPA Standards for Tax Service
Define “reasonable” in the case of a reasonable tax return position
- Some level of authority which justifies position taken
AICPA Standards for Tax Service
Tax return positions must be????
Reasonable
AICPA Standards for Tax Service
What does the “level of authority” depend on?
- Depends on disclosure of position to IRS and whether relates to tax shelter
AICPA Standards for Tax Service
What level of authority is needed for ordinary transactions?
Reasonable basis or substantial authority with disclosure
AICPA Standards for Tax Service
Define “substantial authority”
- Means 40% chance of succeeding
AICPA Standards for Tax Service
What level of authority is needed for tax shelter transactions?
More likely than not
AICPA Standards for Tax Service
What level of authority is required to avoid preparer penalties for a tax shelter when the position is disclosed?
reasonable to believe that the position would more likely than not be sustained
AICPA Standards for Tax Service
What level of authority is needed for undisclosed positions?
substantial authority
AICPA Standards for Tax Service
What are reasonable grounds for omission of tax return information?
HINT; 5
- Info not available
- Uncertainty of question
- Answer is extensive
- Member does not need to provide an explanation for the omission
- Must consider if return would be incomplete
AICPA Standards for Tax Service
When are tax preparers required to sign the tax return?
- Must sign return if compensated per Treasury Regulations
AICPA Standards for Tax Service
What inquiries are tax return preparers required to make when preparing tax returns?
- not required to make any verifications of informaton
- reasonable inquiries when needed
- consult prior returns if feasible
- must make inquiries about supporting documentation regarding travel and entertainment
- must consider info known from another taxpayer’s return if not violating any rules (ie. husband and wife)
AICPA Standards for Tax Service
When are tax preparers allowed to use estimates & who is responsible for providing details or data?
- May use if impracticable to obtain exact data
- Must not imply greater accuracy
- Taxpayer responsible for providing data
AICPA Standards for Tax Service
What is a taxpreparer required to do when they discover an error in a taxpayer’s return?
- Inform taxpayer
- Advise of consequences
- Not obligated to inform tax authority unless required by law
AICPA Standards for Tax Service
What is a tax preparer required to do when they discover “uncorrected” errors?
- If taxpayer does not correct PY’s error, member should consider whether to withdraw
- Reasonable steps taken to ensure error is not repeated
- Do not consider immaterial items
AICPA Standards for Tax Service
When is written tax advice to clients necessary?
- When complex or confusion can occur
- Substantial $ values
- Non-routine transaction or occurrence
AICPA Standards for Tax Service
As a tax preparer, what are the duties of being an AICPA member?
- Strive for legal minimum tax
- Be an advocate for entity’s position
AICPA Standards for Tax Service
What does it imply when a tax preparer (member) signs the preparer’s declaration?
- Return is not misleading based on all info of which the member has knowledge
AICPA Standards for Tax Service
What actions is a member required to take if a taxpayer improperly alters the tax return?
- Member must take no further actions & should consider the implications of taxpayers actions for any future relationships
Who is responsible for disclosing the tax position on a tax return?
the taxpayer is responsible for deciding whether and how to disclose
