ACC610DiscussionsWeek 6 - Discussion 2- Circular 230

Week 6 - Discussion 2

Circular 230

Give the Circular 230 position for three of the following situations that are sometimes encountered in the tax profession:

• Taking an aggressive pro-taxpayer place on a tax return.
• Not having a quality review process for a return completed by a partner of the tax firm.
• Purposely delaying compliance with a document request received from the IRS.
• Not keeping up with changes in the tax law.
• Charging $1,500 to complete a Form 1040-EZ.
• When representing a taxpayer in a federal income tax audit, charge a fee equal to one-third of the reduction of the tax proposed by the IRS agent.
• They are representing the husband and wife in tax matters when negotiating their divorce.
• Advertising on the Web for new tax clients and including Se Habla español in the ads' text.

A section of the Federal Tax Regulations that set the standards of conduct to which a tax preparer must adhere is called Circular 230 in our textbook. For instance, according to Circular 230, a tax preparer is not allowed to impose an unreasonable price or cause an unnecessary delay in the conduct of an audit.

According to Circular 230, taxpayers must have a solid foundation for any claims made on their tax returns and refrain from filing returns that lack merit (Hoffman, Raabe, Smith, Maloney, & Young, 2016, Appendix C).

The first option I’ve selected has me unprepared for an audit because I failed to keep up with the ever-changing tax laws. Each year, tax preparers must take an updated exam covering the most recent changes to the tax code and reporting requirements. For my second hypothetical, I’ve decided to charge a fee equal to one-third of the reduction in tax requested by the IRS agent when representing a taxpayer in a federal income tax audit. In the event of a national income tax audit, an accountant cannot charge an unreasonable amount to represent their client.

My third and final scenario involves promoting new tax incentives via the Internet and labeling the commercials as “Se habla español.” Financial accountants can legally promote their services. However, they should only promote relevant, up-to-date information and not offer clients tax benefits that are not accessible.

References:

Hoffman, W. H., Raabe, W. A., Smith, J. E., Maloney, D. M., & Young, J. C. (2016). South-western federal taxation 2016: Corporations, partnerships, estates and trusts (39th ed.). Retrieved from https://www.vitalsource.com/Links to an external site.