SRTPs to become enforceable.

• Author: Mendelson, Dan L.
• Position: AICPA Statements on Responsibilities in Tax Practice

The AICPA Tax Division issues Statements on Responsibilities in Tax Practice (SRTPs). The SRTPs are advisory opinions on ethical standards of tax practice, which were codified in 1976 and have been modified and revised several times since. The AICPA's Council recently approved the Tax Executive Committee of the Tax Division as a standard-setting body, so that the SRTPs can become enforceable standards. An updated and edited version of the SRTPs will be available on the AICPA website (www.aicpa.org) shortly after April 15, 2000.

Within the AICPA, there has been considerable debate and comment for several years about the advisability of making the SRTPs enforceable standards. However, three compelling reasons exist for elevating the SRTPs from advisory opinions to enforceable standards.

First, as evidenced by the Congressional enactment of a "realistic possibility of success" (RPOS) standard (Sec. 6694(a)) in 1989, it is clear that CPAs could, in significant part, "self-regulate" by establishing reasonable standards of ethical conduct such as SRTP No. 1--Tax Return Positions. Treasury and the IRS promulgated Regs. Sec. 1.6694-2 to define an RPOS after both the AICPA and American Bar Association recommended the new ethical standard in place of the old "reasonable basis standard."

Despite this, the Tax Executive Committee recognized that, without the ability to enforce the SRTPs, they would not become familiar authoritative guidance to all CPAs. Professional training will be spurred by the new standard-setting development in the Tax Division, in order that all CPAs can become familiar with ethical standards of conduct in tax practice.

Second, for many years, SRTPs have been cited in texts, treatises and the courts as evidence of ethical conduct in tax practice by CPAs. If CPAS are to aspire to these standards, it makes sense that the standards be subjected to the rigorous review process for setting standards.

Thirdly, although the SRTPs have been educational in nature, several state boards of accountancy have explicitly made the statements enforceable, and there have been reported cases in which state boards have disciplined licensees for failure to comply with the SRTPs.

Why Are the SRTPs Important to CPAs?

The eight SRTPs address issues that CPAs commonly face in tax practice. In fact, the SRTPs are so practical, they have required little revision since original issuance. A brief description of each SRTP follows. (Future issues of The Tax...