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tax research test 1_0005

tax research test 1_0005 - Federal Tax Research Eighth...

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Unformatted text preview: Federal Tax Research, Eighth Edition Page 1-29 a: l. 2. 15. 16. 17. 18. The avoidance of taxation is illegal and immoral. With respect to tax planning, the tax practitioner maintains some degree of control over the attendant tax liability in an open transaction situation. in; V" . . . Typically, a CPA handles tax htigation with the government that progresses beyond the initial appeal of an IRS audit result. In a closed transaction situation, tax planning may be limited to the presentation of the factual situation to the government in the most favorable, legally acceptable manner possible. The ethical conduct of an attorney is governed by the laws of the state(s) in which he or she is licensed to practice. The AICPA has produced a series of eight Statements on Standards for T ax Services, which contain advisory guidelines for members who prepare financial statements. An enrolled agent is a person who has passed a special IRS examination, or who has worked for the IRS for five years, and is issued a permit to represent clients before the IRS. According to Circular 230, a corporation may be represented before the IRS by an officer or by a part— or full-time employee. .The AICPA Code of Professional Conduct is relevant to all of the professional services ' performed by a CPA, including those services provided in the practice of public accounting, private industry, government, or education. Unlike the Regulations under Circular 230, the provisions under the Internal Revenue Code, and the AICPA Code of Professional Conduct, the AICPA Statements on Standards for Tax Services do not have such authority, but instead depend on general acceptance by practitioners and the public for their authority. I The tax system is partially derived from economics and sociology. The Internal Revenue Code (IRC) is issued by the Internal Revenue Service and is binding on tax preparers. Enrolled agents may practice before the IRS under Circular 230. Under Rule 101 of the AICPA Code of Professional Conduct, a tax partner should not own stock in an audit client of his or her firm. If a CPA is served with an enforceable subpoena or Stunmons, he or she must comply with applicable laws and regulations in regard to that subpoena or summons. Under Rule 505 of the AICPA Code of Professional Conduct, a CPA in public practice is not allowed to receive a payment for a referral of a product or service of a third party to a client. In the preparation of a tax return, a CPA may ordinarily rely, without verification, upon information provided by a client. If a CPA becomes aware of an error in a tax return, he or she must immediately notify the ...
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