ACC 330 8-1 Discussion Legal and Ethical Considerations PDF

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Download ACC 330 8-1 Discussion Legal and Ethical Considerations PDF

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After reviewing this week’s reading about Circular 230 which describes the rules imposed upon those practicing before the IRS, I found a couple of sections that stood out to me as important for tax professionals . Circular 230 is published by the IRS Office of Professional Responsibility which is responsible for carrying out disciplinary hearings and assessing penalties associated with material violations. The following is one of those, “§10.22 – Diligence as to Accuracy • Practitioners must exercise due diligence re preparation of returns and documents and in determining the correctness of representations to the client and to the IRS • Practitioners are presumed to have exercised reasonable care and due diligence when relying upon work product of others…” (IRS, 2020) Another section that supports the first is “§10.34 – Practitioner Standards • Must advise client of opportunities to avoid penalties through disclosure and the requirements for an adequate disclosure • May rely in good faith, without verification, upon information furnished by the client • Must make reasonable inquiries if information received or assumptions appear incorrect or incomplete” (IRS, 2020) Tax preparers should bear these two sections in mind while performing their services to avoid the pitfalls addressed by IRC section 7216 which reads in part “Return preparers who “knowingly or recklessly” make “unauthorized disclosures or use” of “information furnished in connection with the preparation of an income tax return” are subject to criminal sanctions (i.e., imprisonment!). If the tax preparer suspects errors, omissions, or unethical disclosures on the part of their client, then the following must be applied to their subsequent actions. §10.21 – Knowledge of Clients Error or Omission • If you know the client has made an error or omission from any return or other tax related document submitted to the IRS you: – Must advise the client of the nature of the error or omission – Must advise the client of the potential consequences of the error or omission under the Code or Regulations – Be clear in your advice! These oversights may be a result of ignorance of the law or reporting responsibilities so it is extremely important to educate the client and persuade them to follow the correct course of actions to avoid penalties for both themselves and their tax preparer.

Reference: IRS.gov. (2020). Office of Professional Responsibility. Circular 230 Best Practices. Retrieved from https://www.irs.gov/pub/irs-utl/circular_230_best_practices.pdf on 10/19/20....