TEC initiatives.

• Author: Purcell, Thomas J., III
• Position: Tax Executive Committee

Since the last cut-off date for this column (Dec. 15, 2005; see TFA, February 2006, p. 114), the Tax Executive Committee (TEC) met once (Feb. 1-2, 2006) and exercised its review function on several projects. TEC actions taken after Mar. 15, 2006 will be reported in a future column. The February 2006 column focused on the Tax Division's and the TEC's advocacy efforts. This column will address the standard-setting process. The August 2006 column will describe the tax products and services available to Tax Division members.

Tax Standard Setting

In October 1999, the AICPA Council granted the TEC the ability to promulgate binding ethical standards of tax practice. The TEC collaborates with the Tax Practice Responsibilities Committee (chaired by Eve Elgin), which reports to the TEC, in discharging this significant function, always sensitive to the effect that binding tax standards will have on the AICPA's 350,000+ members. Once the TEC approves a standard or an interpretation, it becomes enforceable as part of the AICPA's Code of Professional Conduct. As with all AICPA ethical standards, the Professional Ethics Executive Committee oversees enforcement.

Currently there are eight Statements on Standards for Tax Services (SSTSs); available at http://tax.aicpa.org/Resources/Professional+Standards+and+Ethics/. SSTS No. 1, "Tax Return Positions" has two interpretations.The SSTSs and Interpretation No. 1-1, "Realistic Possibility Standard," were based substantially on the educational Statements on Responsibilities in Tax Practice (SRTPs), which had provided CPAs with nonbinding advice on how best to practice tax. However, in the years following the publication of the SRTPs, the statutory, regulatory and legal environments changed significantly, resulting in the SRTPs becoming de facto standards rather than merely guidelines. The TEC was convinced that the best interest of the profession, as well as the public, lay in elevating the SRTPs to binding ethical standards. Thus, it reissued the SRTPs as SSTSs Nos. 1-8, with Interpretation No. 1-1 (which became effective on Dec. 31, 2000). Subsequently, it promulgated Interpretation No. 1-2, "Tax Planning" which became effective on Oct. 31, 2003.

The SSTSs cover a variety of topics, but generally fall into standards relating to tax return preparation and certain aspects of tax representation, and the rendering of tax advice. In setting the SSTSs, the TEC was cognizant of the prevailing statutory, regulatory and...