RuybalS.ACC460.EP1

Circular 230 Circular 230, published by the Department of Treasury, establishes rules and governs those who practice before the Internal Revenue Service (IRS). The required actions stated in this publication are disclosure with sufficient documentation, giving a copy to the client, returning records to clients, signing all documents on the return, and due diligence and best practice. On the legal side, giving tax advice must adhere to several established rules. For instance, tax advice must not be based on unreasonable information or on a representation of the client or others; it must consider the relevant facts and laws. On the ethical side, this improves the knowledge and efficiency that tax preparers need to understand. Giving clients a clear picture of the penalties is one of the legal and ethical aspects of accurately reporting income on tax returns. To put it another way, tax preparers are obligated to advise clients on correctly filing their returns. Section §§1.6694-1, et. seq. of Circular 230 states that if the tax return is filed incorrectly, then there will be penalties stemming from this action which include a suspension or disbarment from practice and fines that do not exceed the gross income derived from the conduct (Internal Revenue Service, 2009). Statements on Standards for Tax Services On the legal side of the Statements on Standards for Tax Services (SSTS), tax prepares are obligated to advice the taxpayer of relevant tax return disclosures and potential penalties, disclose standards of tax authorities and type of tax, as well as following the standards when recommending tax return positions. On the ethical side, tax preparers may not make misleading statements or representations. A tax position cannot be taken by a preparer unless they believe that it has a reasonable chance of being upheld by administrative or judicial means if challenged,