Why the AICPA SSTSs and IRS Circular 230 should be added to CPAs' lists of favorite resources.

• Author: Sauter, Donna
• Position: Statements on Standards for Tax Services, certified public acountants

Treasury Circular 230, Regulations Governing Practice Before the Internal Revenue Service, and the AICPA Statements on Standards for Tax Services (SSTSs) are crucial guidelines for tax professionals. They set standards for daily tax position decisions, workpaper documentation, document scrutiny, client communication, and practicing before the IRS. These documents are as useful as a master tax guide or tax handbook, and practitioners should refer to them as frequently as technical guides when confirming a tax position or treatment of a deduction. Becoming intimately familiar with a CPA's professional responsibilities may ultimately save the CPA from time-consuming and costly litigation or disciplinary proceedings.

Many times, busy careers and never-ending deadlines tempt tax practitioners to take shortcuts, discuss technical issues orally without following up with written documentation, or accept less-than-perfect supporting documentation from a client or other professional. Almost daily, practitioners decide which client documents or tax positions pass the proverbial "smell test" and when to pay attention to that gnawing gut feeling that says "dig a little deeper."

Circular 230

Circular 230 (available at tinyurl. com/hl4a9wx) may be viewed as an uninviting 44-page, dry-read document, but it can be an invaluable tool when making decisions, particularly on tax positions, documentation, and communications with clients.

The IRS most recently updated Circular 230 in June 2014. These guidelines not only inform a tax practitioner on what "must" or "should" be done in professional tax activities but also provide recommendations for how to maintain the highest-quality service that can be offered. Following Circular 230 may help tax professionals avoid tax preparer penalties, losses from litigation, and/ or sanctions.

Circular 230 may appear more manageable by first considering each of its five subparts. Subpart A addresses to whom the rules apply; this includes licensed professionals. Hopefully, Subparts C and D will never apply to a given practitioner. Subpart C addresses sanctions for tax preparers who are found by the Office of Professional Responsibility (OPR) to have violated the rules, and Subpart D governs disciplinary proceedings. Subpart E is a very small section containing general provisions and an effective date.

This leaves the busy practitioner with only one section to focus on and become intimately familiar with: Subpart B, Duties and...