Question

"Interpreting Tax Research and Tax Representation Guidelines"

• Compare the American Institute of CPAs’ (AICPA) Statements on Tax Standards (SSTS) and the Treasury Department Circular 230 rules to practice before the Internal Revenue Service (IRS). Suggest which document creates better guidance in the preparation of tax returns and written advice provided to taxpayers. Suggest measures the AICPA could take to ensure that CPAs are compliant with either set of standards. Defend your position.

Answer 1

The AICPA’s Statements on Standards for Tax Services (SSTSs) are enforceable tax practice standards for members of the AICPA. It applies to all the members regardless of their jurisdictions of practices or services they offer. SSTS guidelines help the CPAs to promote governance and compliance responsibilities presented by treasury as well as IRS.

Circular 230 is federal tax practice standard. Circular 230 covers the authority of both attorney or CPA to represent and prepare tax documents to IRS.

SSTS is very clearly written. As it is prepared in concise manner, it helps in better preparation of tax returns. It vividly explains and breaks down the sections or any tax contents providing situational solutions. On the other hand, Circular 230 is written without much depth to just jot down the summary rather than to understand the main content.

The measures to ensure that CPAs are compliant with both set of standards are as follows:

1. CPAs should develop basic framework to know what set of sections apply to them and comply with those laws as applicable.
2. The awareness of good standards of practice can increase the compliance aspect.
3. Since the compliances to these standards enhance CPA designations, members need to be cautious as well devoted to apply these set of standards.