Professional Responsibilities Flashcards
Which body ordinarily would have the authority to suspend or revoke a CPA’s license to practice public accounting?
A state board of accountancy
How long must a CPA retain a completed copy of each return?
The CPA must retain a completed copy of each return for three years after the close of the return period
Who is a CPA permitted to disclose confidential client information without the consent of the client to?
The CPA generally cannot give out a client’s confidential information to anyone without the client’s consent. However, exceptions are generally made for court subpoenas and state CPA society quality control panels or computer processing.
With respect to the penalty for aiding and abetting understatements of tax liability on a tax return, the burden of proof is on:
With respect to the penalty for aiding and abetting an understatement of tax liability on a tax return, the burden of proof shifts to the IRS from the taxpayer. Unless the law expressly states otherwise, the taxpayer has the burden of proof to establish by the preponderance of the evidence that the law and the evidence do not support the position of the IRS. With respect to any criminal action, the government has the burden of proof to establish by evidence beyond a reasonable doubt that the taxpayer is guilty of the charges. Note that these burden of proof are different; criminal (beyond a reasonable doubt) is considerably higher than civil (preponderance of the evidence)
WHO is subject to the penalty for aiding and abetting?
The penalty for aiding and abetting an understatement of tax liability on a tax return applies to any person, not just to tax return preparers
What is the civil penalty for aiding and abetting?
The civil penalty for aiding and abetting an understatement of tax liability on a tax return is $1,000 for all taxpayers except corporations and $10,000 for corporations,.
What is the penalty for “willfull or reckless” conduct?
A tax preparer is liable for the penalty for “willfull or reckless” conduct (which is the greater of $5,000 or 50 percent of the income derived with respect to the tax return or refund claim on which the “willful or reckless” conduct exercised) for conduct that is either 1) a willfull attempt to understate the tax liability; or 2) a reckless or intentional disregard of tax rules and regulations.
How may people can be deemed to be a preparer of a tax return?
More than one person can be deemed to be a preparer of a tax return beaus anyone who prepares a substantial portion of a return will be treated as a preparer.
What is the substantial authority standard?
Substantial authority refers to a standard that is used in determining whether or not a tax position taken in a tax return is supported by relevant tax authorities. A tax return preparer who takes an unreasonable position in a tax return that is not supported by substantial authority may be liable for the penalty associated with the understatement of the taxpayer’s liability due to an unreasonable position by the tax return preparer.
What are the 4 elements of negligence?
Negligence has 4 elements: duty of care, breach of duty, damages and causality. An accountant breaches the duty of care when she fails to act with the same skill and care an ordinarily prudent accountant would exercise under the circumstances.
What are the 5 elements of fraud?
Fraud has 5 elements: a material misrepresentation of fact, intent to deceive or reckless disregard for the truth, reliance, an intent to induce reliance and damages. Reliance is an element of fraud.
When is a delinquency penalty not owed?
There is no delinquency penalty if the taxpayer files its return, the amount owed on the return is not $500 or more, and the taxpayer pays the balance due on or before the extended due date.
