Integrating circular 230 unto the tax curriculum.

• Author: Kastantin, Joseph T.

Income tax rules, regulations and court cases are overwhelming in volume and complexity. As a result, tax educators face a daunting task in trying to teach in a meaningful, coherent way and to cover tax literature adequately so that their students can practice effectively. While students may receive an in-depth education and become technically competent tax practitioners, their education would be remiss (and incomplete) if it did not instill a sense of ethics and clarify the consequences of an inadequate performance, such as sanctions and penalties.

Within the broad penalty structure, taxpayers, tax advisers, firms and their staffs, and students should familiarize themselves with two critical documents--Treasury Circular 230, Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries, and Appraisers Before the Internal Revenue Service (Circular 230), and the AICPA's Statements on Standards for Tax Services (SSTSs)--along with any proposed changes to these documents that may be on the horizon. Circular 230 and the SSTSs are the foundation of the profession. In instituting and maintaining them, tax practitioners fulfill their professional responsibilities.

This responsibility extends to tax academicians, who should consider how to revise the tax curriculum to enable students to cope with the increased rigors of tax practice. Updating of curriculum will also better prepare students to sit for the CPA examination. Besides the examination's technical aspects, it also covers ethical issues and responsibilities in tax practice, including Circular 230 and the SSTSs, according to the Uniform CPA Examination's "Examination Content Specifications."

Penalties and Sanctions under Circular 230

Tax practice, as defined in Section 10.2(d) of Circular 230, encompasses "all matters connected with a presentation to the Internal Revenue Service or any of its officers or employees relating to a taxpayer's rights, privileges, or liabilities under laws or regulations administered by the Internal Revenue Service." A presentation may include preparing and filing documents and corresponding and communicating with the IRS, as well as representing clients at hearings, conferences and meetings.

An understanding of Circular 230 is critical, because of the duties it requires of practitioners and the penalties and/or sanctions it imposes for neglecting responsibilities. Duties cover due diligence, as discussed in...