Legal and Ethical Responsibilities in Tax Practice

Abstract

This paper is designed to discuss the ethical and legal responsibilities in tax practice based on Treasury Department Circular 230, AICPA Statements on Standards for Tax Services, and Internal Revenue Code of 1986, as amended, and Regulations related to tax return. In recent years, enlargements in the regulatory environment are driving towards tax practitioners for considering many issues related to its compliance. Those particular issues include the extended statutory provision of penalty, regulations revision, and changes in tying ethics rules linked to tax engagements.

Legal and Ethical Responsibilities in Tax Practice

Introduction

Avoiding tax under the rules is not illegal, but it is also not justifiable. Different states make their laws that how tax shall be applied; therefore, businesses are also expected to pay their taxes according to their laws. Usually the issue falls under the region of ethics as businesses have an option to interpret the law and hence paying taxes. While being legal in everything is not something happening, but ethical lines are also there to consider in tax affairs. Corporate responsibility is a complex practice that needs judicial statutes and decisions. The key problem of legal ethics is basically the rules that regulate the conduct of judges and lawyers and eventually adopted by the entire state. The rules are based on the Code of Judicial Conduct and Professional Conduct which highlights the importance and necessity of paying taxes. The paper would cover all the given elements and further find the similarities among the three strands.

Discussion Analysis

The First Strand

The regulations under Circular 230 (31 CFR part 10) direct the practice before the IRS, and this practice is more elaborated than the preparation of return. The circular 230 of Treasury Department includes filing and preparing documents, communicating and corresponding with the IRS, offering written advice, representing meetings and conferences on client's behalf that show potential ignorance towards tax payment. This circular can be applied to attorneys, enrolled retired agents and actuaries (www.irs.gov).

Circular 230 presently exist in section 10.7(e) that particularly highlight that the tax does not apply return preparation by non-covered professionals. Nevertheless, the current announced regulation of all tax preparers by IRS program is expected that portions of Circular 230 will be enlarged to incorporate all registered preparers. Those Practitioners who are already covered by Circular 230 will not be needed to meet extra new testing and ongoing professional education demands. This circular ...