In order to understand the ethics in tax preparation and AICPA Code(s) of Professional Conduct rules, the essay will answer 4 questions based on estate tax case study. The discussion below highlights some of the application of ethics and principles in practice.
1. Under Circular 230, does Charles have any responsibility to inform the widow that she is being significantly overcharged by the attorney? Be sure to cite research that supports your position.
Based on the difference between the fair charge, 3 to 5 percent, and the actual rate charged, 17%, by attorney to handle Clara’s estate work, it is clear that the fee was unreasonable. As such, the CPA has moral and statutory obligations to tell client that is she is overcharged. In fact, Circular 230 requires the practitioner to exercise due diligence when preparing taxes (Blaise & DBA, 2012). Therefore, Charles should alert client on the overcharging issues. Moreover, the Circular imposes a duty to the CPA on advising the clients on any concern that may affect the status of their property. Additionally, it prohibits CPA from signing documents if he/she is aware of unreasonable position or disregard of the set rules in preparation of tax reports (Circular 230 Tax Professionals, n.d.). In this case there are unreasonable charges; therefore, it is in line with the provision in the circular to inform the client.
2. What potential ethics issues do you see in this situation?
Firstly, there is conflict of interest between the attorney and the CPA. In particular, the attorney perceives estate work as a profit making business, hence the unreasonable charges. On the other hand, the CPA is bound by the provision in Ci...
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Blaise M. Sonnier, J.D., DBA. (2012). Circular 230: Its Day-to-Day Impact on Tax Practices. Retrieved October 12, 2016, from http://www.thetaxadviser.com/issues/2012/feb/tpr-feb12.html
Circular 230 Tax Professionals. (n.d.). Retrieved October 12, 2016, from https://www.irs.gov/tax-professionals/circular-230-tax-professionals
Comparing the Ethics Codes: AICPA and IFAC. (2010). Retrieved October 12, 2016, from http://www.journalofaccountancy.com/issues/2010/oct/20103002.html
Ethics for Tax Return Preparers - media.straffordpub.com. (n.d.). Retrieved October 12, 2016, from http://media.straffordpub.com/products/ethics-for-tax-return-preparers-2012-08-28/presentation.pdf
Rice, B. (n.d.). AMERICAN INSTITUTE OF CERTIFIED. Retrieved October 12, 2016, from http://pacioli.loyola.edu/rice/ac101/ethics.HTML
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