The New SSTSs: CalCPA's Comments on Proposed Tax Ethics Standards.

• Author: Dellinger, Kip

CalCPA's Committee on Taxation recently submitted comments on the AICPA's revised and new Statements on Standards for Tax Services (SSTSs).

The AICPA asked for comments on how it might address the issue of quality control in tax practice, which is a necessary element to ensure compliance with both the revised and the new SSTSs.

After consideration of comments from interested parties, the SSTSs are scheduled to become effective Jan. 1, 2024. While the SSTSs govern AICPA members, they are recognized by CalCPA as guidelines for its members and are cited by the California Board of Accountancy in enforcement proceedings involving CPA discipline pertaining to the required standard of care when providing tax services to a client.

The proposals retain, virtually intact, the seven existing SSTSs and then add three new standards that address:

1 Data Security

2. Use of Tools

3. Representing Taxpayers Before a Tax Authority

The existing standards address tax positions, responding to questions on returns, procedural aspects of preparing returns, use of estimates in tax preparation, consideration of findings in an administrative proceeding; discovery of an error in preparation or an administrative proceeding; and the form and content of advice to taxpayers.

Reorganization of the Standards

The standards are reorganized into a new formal intended to make them more user-friendly. They address general standards and applications, as well as the three fundamental activities of tax practice: return preparation, advisory and tax controversy service.

CalCPA Comments on Proposals

Find CalCPA's transmittal letter, general comments and comments on specific provisions at calcpa.org/government-relations/advocacy.

In general, it's noted that the SSTSs require a CPA to possess competency to perform tax service undertaken for a client or employer. In describing the competency requirement, the proposals refer to Treasury Department Circular 230 defining of governing practice of CPAs before the IRS. CalCPA's recommendation is that, instead, the reference be to the competency definition contained in the AICPA Code of Professional Conduct (with which Circular 230 is consistent) to provide that the CPA profession's conduct standards govern the performance of services rather than those of a third party.

Tax Positions: Statement No. 1.1

In previous versions of the standards, the CPA was generally responsible to be an advocate for the tax client with regard to advising on tax...