• practitioners must exercize due diligences in all aspects of practice 
• can rely on work of other if practitioner used reasonable care in engaging, supervising, training, and evaluating them (10.22)

• conflicts of interest prevented by section 10.25
• need to wait at least 2 years after leaving service

practitioner may not charge a contingent fee for poviding services before the IRS UNLESS

1. IRS examination or challange to an original tax return or an amended return or claim for refund when filed within 120 days of receiveing a written notice of examination or challange of exam
2. a claim for refund is filed solely in connection with determination of statutory interest or penalties
3. accountant is representing the client in judicial proceedings

• practitioners should not represent a client before IRS if it would be conflict of interest
• this exists if the representation of one client would be adverse to that of another

types of transactions that have recently been abused and therefore should be subjected to higher standards in the future

1. transaction that is the same or subtantially similar to a transaction that the IRS has already determined to be a "tax avoidance transaction"
2. any partnership or other entity, investment plan or arrangement, or any other plan or arrangement, the principal purpose of which is to avoid or evade income tax obligations
3. transactions where tax avoidance is not the principal purpose but is a significant purpose for: reliance opinions (50% or more chance to be resolved in TP favor), marketed opinions, opinions issued out of confidentiality, opinions issued subject to contractural protection

1. using reasonable efforts to identify and ascertain relevant facts and not basing opinions on unreasonable factual assumptions or representations
2. relating the applicable law to relevant facts 
3. evaluating all siginificant Federal tax issues and providing a reasonable conclusion
4. being knowledgeable about Federal tax law so as to provide a competent opinion
5. disclosing relationships between you and a tax shelter among other information

1. TRP should not prepare or sign a return taking a position unless they have a good-faith belief that the position has at least a realistic possibility (33% likelihood) or being sustained administratively or judicially
2. even if there is no realistice possibility, a reasonable basis (20-33% likelihood) will do if position is disclosed to IRS

members should never reccomend a poisition or prepare or sign a return reflecting a position that:

1. exploits the audit selection process ("this is wrong but the IRS never checks it")
2. serves as a mere negotiating position 

• information not readily available and answer is not significant in terms of taxes
• uncertainty as to meaning of question in relation to particular return
• answer is voluminous and return states that data will be supplied on examination
• Note: IT IS NOT OKAY TO OMIT INFORMATION FOR THE REASON THAT DISCLOSURE MIGHT DISADVANTAGE THE TP

SSTS No. 3 - Procedural aspects of preparing a return

1. Good faith reliance
2. red flags
3. check earlier returns
4. conditions
5. others' returns

unless prohibited by statute or rule, a member may use the TPs estimated in preparing a tax return if:

1. it isn't practical to obtain exact data AND
2. member determines that the estimates are reasonable based on known facts and circumstances known to member

NOT generally required unless

1. TP has died or is ill at the time the retun is filed
2. TP hasn't received a Schedule K-1 for a pass-through entity at the time the tax return is to be filed
3. there is pending litigation
4. fire, computer failure, or natural disaster has destroyed relevant records

1. position lacked documentation last year but this year is available
2. TP simply wanted to settle the dispute last year even though advice met the standards of SSTS No. 1
3. new court decisions, rulings, or other authorities have developed since the prior ruling and they support the previous position

• no formal standard exists for format of communication but AICPA urges the use of written advice 
• updates not required to be shared with TP unless (1) changes occur while member is assisting a TP in implementing procedures or plans associated with the advice provided or (2) when a member specifically agrees to provide updates

1. furnishes typing, reproducing, or other mechanical assistance
2. prepares a return or claim for refunds of the employer by whom he is regularly and continuously employed
3. prepares as a fiduciary a return or clam for refund of any person

1. understatement of liability
2. disclosure provisions
3. abusive tax shelters
4. aiding and abetting understatement or liability
5. confidentiality
6. injunctions

1. position is unreasonable if there is no substantial authority (>40% chance of being sustained) for that position
2. position is unreasonable if it is disclosed yet there is no reasonable basis (>20% chance of being sustained) for it
3. position is unreasonable if it relates to a tax shelter unless it is more likely than not (>50% chance) that the position will be sustained

• NOTE: there is a good faith defense

Section 6695 punishes TRPS for ...

1. failure to furnish a copy of return to TP
2. failure tosign and show own identity
3. failure to furnish preparer's identifying number to IRS
4. failure to keep copy of return

1. tax evasion
2. tax fraud

IRC section 7201 punishes tax evasion. gov must prove 3 things:

1. affirmative act constituting an attempt to evade or defeat payment of a tax
2. willfulness
3. existence of a tax deficiency

IRC section 7206 punishes fraud and false statements, criminalizing:

1. willfully making and subscribing to any document made under penalty of perjury, which the accountant does not believe to be true as to every material matter
2. willfully aiding the preparation of any tax related matter which is fraudulent as to any material matter
3. concealing client's property with intent to defeat taxes

1. preparation of tax returns
2. management advisory services
3. preparing financial statements without issuing a report thereon

1. hears more serious cases
2. has power to acquit, admonish, suspend, or expel
3. initial decisions are made by a panel whose actions are reviewable by the full trial board whose decisions are conclusive

1. commiting a felony
2. willfully failing to file a tax return
3. filing a fraudulent tax return on own or client's behalf
4. aiding in preparing a fraudulent tax return for a client
5. revocation by state board of CPA license

• AICPA and most state CPA socieites have agreements to split handling of ethics and complaints
• AICPA handles matters of national concern, matters involving more than one state, and matters in litigation