Tax standards update: circular 230, due diligence and AICPA Tax FAQs.

• Author: Davis, Conrad M.
• Position: Regulatory update

french novelist Alphonse

Kerr said, "The more things change, the more they are the same." One of the first sentences in the preamble to Circular 230 reads, "Treasury and the IRS have consistently maintained thai individuals subject to Circular 230 must meet minimum standards of conduct with respect to written tax advice, and those who do not should he subject to disciplinary action, including suspension or disbarment."

They are pointing out that, while there have been several changes to the written advice standards, the core ethic has not changed.

The updated Statements on Standards for Tax Services (SSTSs) became effective in January 2010. The AICPA has published- and continues to publish- FAQs related to these standards and similar items. The U.S. Treasury released the most recent revisions to Circular 230 regulations in June. Less formally, Office of Professional Responsibility Director Karen Hawkins has recently been speaking on the issue of due diligence.

Again, the core ethic embodied in the AICPA Code of Professional Conduct is unchanged; however, how we document, communicate or practice continues to evolve. This article addresses in summary several of these areas.

AICPA SSTS FAQs

During the exposure period for the updated SSTSs (2009), the AICPA received a number of questions and comments from CPAs and others. In response, the AJCPA has continued publish responses in an FAQ section of its website. Topics include such items as use of estimates and answering questions on tax returns, as well as specific issues like home office deductions ancl casualty losses. Also, the AICPA is working on what to do when you discover an error.

These FAQs are not official statements or authoritative guidance, but represent the opinions of experienced CPAs. CPAs are advised to consult the official guidance in conjunction with the FAQs. The official AICPA guidance is found at this same location.

Circular 230: Competency Sec. 10.35

For CPAs, there is not really anything new in this replacement section of Sec. 10.35. This new rule is similar to the AICPA Code of Professional Conduct, Sec. 56: Article V-Due Care. This section, in part, reads: 'A member should observe the profession's technical and ethical standards, strive continually to improve competence ... ." As CPAs, we already had a "competency" standard. Circular 230 applies this requirement to all covered individuals. If you are competent under the AICPA standard, then Circular 230 has not changed...