Ethics and Responsibility in Tax Practice

Question 1

Max penalty for using tax info w/o consent other than for preparing return

Answer 1

Not more than $1,000 or imprisoned for more than 1 year, or both, for each violation.

Civil penalty of $250.

Question 2

Failures under Sect 6695

Answer 2

(a) Failure to furnish copy of return to taxpayer $50
(b) Failure to sign return $50
(c) Failure to furnish identifying number $50
(d) Failure to retain copy or list $50 (keep for 3 yrs (July 1-Jun 30), list inclds name, tax ID of taxpayer, type, tax yr)
(e) Failure to file correct information returns $50
(f) Negotiation of check $545
(g) Failure to be diligent in determining eligibility of certain tax benefits (EIC, AOTC, ACTC, ODC, HOH) $545 each credit

Question 3

Section 6694 - Penalty for understatement of tax return liability

Answer 3

• For unreasonable positions = $1,000 or 50% preparer’s fee (whichever is greater)
• For willfull or reckless conduct = $5,000 or 75% of preparer’s fee (whichever is greater)

Question 4

Circular 230 - Practice before the IRS

Answer 4

• CPAs
• Enrolled actuaries
• Attorneys

Overseen by Office of Professional Responsibility (part of Secretary of the Treasury; also known as delegate or Director of Practice)

Question 5

How long must IRS representatives keep written consent for conflicts of interest?

Answer 5

36 months after conclusion reached before the IRS

Question 6

Incompetence & disreputable conduct under Circular 230 includes

Answer 6

• Conviction of any criminal offense under Federal tax laws
• Conviction of criminal offense involving dishonesty or breach of trust
• Willfully failing to sign a tax return

Question 7

Who’s in charge of interpreting and enforcing the AICPA Code of Professional Conduct (COPC)?

Answer 7

The Professional Ethics Executive Committee of the AICPA

Question 8

Why was the PCAOB created?

Answer 8

To enforce auditing, quality control and independence standards in ONLY the auditing of PUBLICLY traded companies