Chapter 2 - AICPA Standards For Tax Services Flashcards
Explain “Tax Return Positions”
Has to meet a realistic possibility standard.
If fails to meet standard (but is frivolous), then you disclose and can still sign return
Member should advise taxpayer of potential penalties and should not exploit process
Explain “Answers to Questions”
Member should make effort to obtain sufficient taxpayer information for all questions
Reasonable grounds may exist for omitting info (info or available, uncertainty exists)
Explain “Procedural Aspects”
Practitioner advising client may rely on info with good faith
May not ignore known misinformation
Examine or verify certain supporting data, consider info related to another taxpayer
Explain “Use of Estimates”
Client may use estimates unless prohibited by law (disclosure of estimate generally not required)
Explain “Departure From Previously Concluded Position”
Tax return position determined in court/proceedings doesn’t or restrict CPA from recommending different position in a later year, unless such an agreement exists.
Explain “Knowledge of Error”
Have to inform client of any errors and consequences.
Cannot inform IRS without client permission. If client does not agree to fix, member should withdraw from return preparation.
Explain “Form & Content of Advice”
Members use proper judgement, comply with relevant standards
In deciding upon form of advice, member considers importance of transaction, amounts invoked, nature, time availability, complexity, tax sophistication, penalty consequences, potential to avoid penalties through disclosure
Member has no obligation to communicate when subsequence developments affect advise preciously reported
