Strengthening Tax Services' Foundation
[ILLUSTRATION OMITTED] The AICPA's Statements on Standards for Tax Services (SSTSs) have been updated, clarified and streamlined in proposed revisions now available for study and comment by AICPA members. They can be found on the Tax Division pages of the AICPA Web site at tinyurl.com/5be2rk. The SSTSs are enforceable rules of conduct for AICPA members, in conjunction with the AICPA's Code of Professional Conduct Rule 201, General Standards, and Rule 202, Compliance With Standards. WHY WERE THEY REVISED? The current SSTSs, issued in 2000, closely mirror the earlier Statements on Responsibilities in Tax Practice (SRTPs), advisory opinions originally issued in the 1960s and 1970s. The SRTPs gradually became considered standards of professional practice, and in the late 1990s, the AICPA recognized a need to make them an official part of what were then known as the Professional Standards. At the time, the SSTSs introduced only minimal revisions to the SRTPs, because of the latter's long use and, therefore, concerns over enforceability of new standards. Since then, however, further changes in federal and state tax laws and regulations and a need for clarification of a number of points prompted the Tax Executive Committee in 2004 to convene a task force that over the next four years produced the proposed revised SSTSs. WHAT WAS CHANGED? Some of the most notable revisions were to SSTS no. 1, Tax Return Positions, since it had been much affected by legal and regulatory amendments. Also, the proposed consolidation of SSTS no. 6 and SSTS no. 7 deserves careful review. A red-lined draft showing the current version with the proposed revisions is available on the Tax Division Web site. Here is a brief summary of new features: SSTS no. 1, Tax Return Positions. This statement provides the AICPA standards members must satisfy to recommend a tax return position and to sign a tax return. For nondisclosed positions recommended by a member, this statement has been revised to clarify that the tax return reporting standard of the applicable taxing authority must be satisfied; if the taxing authority has no written standard or its written standard is lower than the realistic-possibility-of-success standard for nondisclosed positions, the realistic-possibility-of-success standard will apply. The revisions also note that for federal returns, members should consult the tax return preparer standard in IRC [section] 6694 or its successor. Generally, if a taxing authority has a standard for nondisclosed positions, it will also provide that if disclosure is made, the position may be recommended based on a lower standard. Current SSTS no. 1 provides that a member may recommend a disclosed position if the position is not frivolous. The revisions direct members to comply with the taxing authority's standard for disclosed positions or, if there is no such standard or the standard is lower than a reasonable basis for recommending a position, the reasonable-basis standard will apply The revisions also emphasize the requirement that members advise clients of the taxpayer return disclosure requirements and how taxpayers may avoid penalties through disclosure. SSTS no. 2, Answers to Questions on Returns. The revisions give another reason why preparers signing a tax return should make a reasonable effort to obtain answers to all questions on a tax return: "A request for information may require a disclosure necessary for a complete return or to avoid penalties. …