R5 Professional Resp 4 (W) Flashcards
Disciplinary Action by AICPA and State CPA Societies
The AICPA may suspend or terminate membership for failure to pay dues or failure to comply with membership retention requirements without a hearing for
proof of conviction for a crime punishable by imprisonment for more than 1 year
proof of conviction for failure to file any income tax return
Possible Sanctions from AICPA or State CPA Society
Expulsion from the AICPA or state CPA society
Suspension
CPE courses
IRS Disciplinary Actions
Criminal Penalties for person who counsels or prepares a tax return in a fraudulent or false manner (jail for 3 years and/or $100,000 in fines)
Civil Penalties could be prohibiting accountant from practicing before IRS and fines
SEC Disciplinary Actions
May suspend or permanently revoke the right of accountant to practice before SEC, including the right to sign documents required by the Securities Act of 1933 and the Securities Exchange Act of 1934 (Fine of $100,000)
Lacks qualifications, character, unethical, willfully violates security laws, convicted of felony or misdemeanor of moral turpitude
U.S. Tax Court
A specialized trial court with no jury that hears only federal tax cases, generally prior to the time that formal tax assessment are made by the IRS
Taxpayers may litigate without having first paid the disputed tax in full
19 regular judges who travel nation hear cases
Cases cannot be taken to court before IRS sends out notice of deficiency
Appeals of U.S. Tax Court
The U.S. tax court is a national court, and its decisions (other than small tax cases) may be appealed to various U.S. Court of Appeals. The tax court will follow the Court of Appeals that has direct jurisdiction over the taxpayer in question
U.S. District Courts
The general trial courts of the U.S. federal court system. Both civil and criminal cases are filed. A taxpayer will request a hearing before the district court that has jurisdiction over the location in which the taxpayer lives or conducts business
Must first pay disputed tax liability and then sue IRS for refund
U.S. district court cases are heard before one judge, not a panel of judges
U.S. Court of Federal Claims
A nationwide court that has jurisdiction over most claims for money damages against the United States (tax refunds). The taxpayer must pay the disputed tax and then sue the IRS for a refund. There are 16 judges and no jury. They follow the decisions of the Federal Court of Appeals
U.S. Court of Appeals (Circuit Courts)
The first level of appellate courts
Three-Judge Panel (no jury)
Geographic court of appeals handle tax and non-tax issues brought from the tax court or a district court for a specific geographic area
Represents the final word as the U.S. Supreme Court hears very few cases
Federal Court of Appeals
Handles tax and nontax cases that originate in the Court of Federal Claims and other types of specialized appeals
U.S. Supreme Court
The highest court in the nation
Panel of nine judges (no jury)
All nine justices hear cases that the Supreme Court agrees to consider (for which it grants a “writ of certiorari”)
Tax cases are rare
Joint Conference Committee
If there are differences between the House and the Senate versions of the bill, the bill is referred to the members of the House Ways and Means Committee and the Senate Finance Committee where the differences are resolved and then must be approved by both the House and Senate
Discriminant Inventory Function (DIF) System
The IRS utilizes statistical models to select tax returns that are most likely to contain errors and yield significant amounts of additional tax revenue upon audit. Although specific criteria are not disclosed, it is clear that certain groups of taxpayers (individuals with gross incomes greater than $100,000, self-employed individuals with substantial business income and deductions, and cash businesses) are subject to audits more frequently than others
