Tax Ethics Essay

Submitted By vincentwyh
Words: 2147
Pages: 9
Open Document
Ethics in Tax Practice

It is significantly important for all tax practitioners to comply with high standard of professional ethics in tax practice. Many regulations have stated standards that practitioners must meet and any violation of these standards will result in penalties.

Section 6694
When providing tax return preparation service, the tax professional must accurately state the tax liability of taxpayer. There should be no understatement of the amount payable or overstatement of credit or refund to reduce the tax liability. According to the U.S. Code Section 6694, a tax return preparer who conducts understatement of taxpayer’s liability shall be subject to penalties.

First of all, there would be a penalty if the tax preparer understated tax liabilities due to an unreasonable position with knowledge of that position. The “unreasonable position” means a position that the tax preparer doesn’t have necessary technical authorities or skills to perform the tax return practice without disclosure. If the position is disclosed, the tax preparer need only a reasonable basis, a tax reporting standard higher than a patently improper or frivolous, to support the position. The “unreasonable position” also refers a position with respect to a tax shelter and it is not reasonable to believe the position depends more on its merits. However, if there was evidence to prove that the tax preparer acted in good faith with a reasonable reason for the understatement, there would be no penalty.

Secondly, there would be also a penalty if the tax preparer understated the tax liability due to a willful attempt or reckless. A willful misconduct implies intentionally doing acts resulting deviation from a duty or rule of conduct with knowledge of the consequence. A reckless conduct implies the negligence of knowing obvious risk of negative results what are not reasonable. The penalty can be reduced by the amount paid due to the unreasonable position.

Section 6695
The U.S Section 6695 also identifies other penalties regarding the tax return preparation practice. If the tax preparer failed with any of requirements below, there would be a penalty unless the failure was due to reasonable cause and not due to willful neglect.

Firstly, the Section 6107(a) requires the tax preparer to provide a completed copy of the tax return before it is presented for taxpayer’s signature. Secondly, the tax preparer must sign the return or claim for refund. Thirdly, the Section 6109(a)(4) requires the tax preparer to provide a identifying number for securing proper identification the tax return practice regarding both the preparer and his employer. Fourthly, the Section 6107(b) requires the tax preparer to keep the copy or list of the return for the period ending 3 years after the close of the return period and to make it available for inspection requested by the Secretary. Fifthly, the Section 6060 requires the tax preparer to file correct information returns on or before the first July 31 following the end of the return period. Information includes the name, taxpayer identification number, and place of work of each tax preparer employed by him. Sixthly, the tax preparer is not allowed to endorse or negotiate, directly or through an agent, any check made by the taxpayer for the tax return. Lastly, the tax preparer must meet the due diligence requirements to determine eligibility for allowance of credit against the tax.

Circular 230
Other than the U.S. Section 6694 and 6695, the Circular 230 also provides ethics guide for the tax practice. The Circular 230 contains rules governing tax practice before the IRS. It requires attorneys, certificated public accountants, enrolled agents, and other practitioners to comply with the rules when prepare tax returns and provide tax advice. Any violation of regulations will result in penalties on those identified practitioners.

There are five parts in the Circular 230. In the subpart A, rules relating to the authority to
Show More

Related Documents: Tax Ethics Essay

Congressional Ethics Research Paper

Congressional Ethics The Office of Congressional Ethics was established by the House of Representatives. The Office of Congressional Ethics was established in March 2008. The main purpose of the Office of Congressional ethics as an independent, is to examine non-partisan entity charged with receiving and reviewing allegations of misconduct concerning House Members and staff and, when appropriate, referring matters to the Committee on Ethics. The office of Congressional Ethics provides a set…

Words 791 - Pages 4

Summary: Honkamp Krueger Internship

During my internship with Honkamp Krueger Co., a public tax and accounting firm, as a tax intern I learned a tremendous amount about the company, industry, and myself. Going into the internship, I was extremely nervous about how I would do and that I would make a fool of myself with my knowledge of tax. It was one of the best experiences of my life and I learned quickly how to take initiative and make connections with co-workers. Throughout my internship, I feel that I showed great improvement in…

Words 1061 - Pages 5

Ethical: Academic Journal and Term Paper

of the paper) APA term paper from the list of ethics topics below. Ethics Topics (Please select one) 1. Politicians often say that President Bush’s tax cuts were for the rich. In 2005, the top 10% of the tax payers paid 70% of the total income tax paid. The top 1% of the taxpayers paid almost 40% of all income tax, a proportion that has jumped dramatically since 1986. The bottom 50% of the tax payers paid approximately 3% of the total income tax. The bottom half’s share of total payments has…

Words 627 - Pages 3

Legal and Ethical Issues in Management Essays

------------------------------------------------- ------------------------------------------------- ------------------------------------------------- Milton Friedman would have felt that the decision made was to be decided upon by the government and paid with tax dollars (Halbert and Ingulli, 2012, Chapter 1, p. 11). However, the goal of a business is to be profitable for the shareholders, and not to simply pay the CEO. He would not have felt that providing the CEO’s with large compensation was acceptable because…

Words 393 - Pages 2

Apple Business Ethics

Business Ethics: Apple Apple today is continuing to be a leader in the technological field, with its new innovations of various electronics, along with its ability to make other competitors want to follow in their shoes. With over 408 retail stores in 14 different countries, a company this large is forced to have certain morals and social responsibilities in order to make sure they are functioning as a whole and achieving that one common goal specified by the corporation (Forbes.com). Apple’s ethics…

Words 2218 - Pages 9

Guilds to 2013 Aicpa Essay example

ISAs. This section also tests knowledge of professional responsibilities of certified public accountants, including ethics and independence. Candidates are also expected to demonstrate an awareness of: (1) the International Ethics Standards Board for Accountants (IESBA) and its role in establishing requirements of the International 2 Federation of Accountants (IFAC) Code of Ethics for Professional Accountants, and (2) the independence requirements that apply when they perform audit procedures…

Words 7307 - Pages 30

ACT Certification: The Accreditation Council For Accountancy And Taxation

adherence to the Councils Code of Ethics and Rules of Professional Conduct. (Kolar, 99) Accreditation is a voluntary credentialing progam for accountants and tax practitioners that recognizes individuals who have demonstrated a specific level of professional knowledge and competency. (Kolar, 99) When obtaining an accreditation, you are letting businesses, government and the public know that you will be providing the highest degree of specialization in accounting and tax services. The ACAT Board…

Words 717 - Pages 3

Coco Cola Code Of Conduct

authority and ethics codes that are established. The company has laid out Corporate Governance and charter of directors committees to ensure compliance. They are affiliated with Political Action organizations which comply with United States Laws and requirements. The laws ensure federal, state, trade, and public policies are followed. However, governments around the world have requested that everyone maintains a healthy lifestyle. For example, Philadelphia Pennsylvania voted to pass a tax increase percents…

Words 182 - Pages 1

Consequences Of Economic Downturn: Beyond The Usual Economics

American Economic Association (AEA) said "You should know that our middle name is Ethics, but without particular code, therefore I cannot adhere to with your request". It captures completely the attitude of economists concerning the professional economic ethics over the past century. Economists as rule are compelled by the compulsory not to just understand the world, also to improve it. The case for the economic ethics is simple and clear. Economists affect the life chances of endless people…

Words 529 - Pages 3

Emerald Coast Behavioral Hospital Case Study

Additionally, ICC is dedicated to providing these services in an extremely ethical manner following the guidelines set forth by the ACA Code of Ethics (ACA, 2014). As stated throughout this proposal, the client is the most important component of the practice. Only best practices guidelines will be used with clients. Ms. Pifer will remain flexible and open to making changes to her original ideal…

Words 773 - Pages 4