Statement on Standards for Tax Services No. 4
Standards for Members Providing Tax Representation Services
Introduction
4.1.1. This Statement on Standards for Tax Services (SSTS) sets forth the applicable standards for a member representing a taxpayer before an applicable taxing authority. Representing a taxpayer in various tax matters could involve the application of other standards. The focus of this statement is on the representation relationship itself. If the member is aware of an error related to a representation engagement, consult section 1.2, “Knowledge of Errors,” of SSTS No. 1, General Standards for Members Providing Tax Services.
4.1.2. In addition to the AICPA, applicable taxing authorities may impose specific standards regarding the representation of taxpayers by a member. These standards can vary between taxing authorities and by type of tax.
Standard
4.1.3. The member, and any individuals working with or for the member, should take steps to obtain technical competence in the subject matter involved. This includes competence in the technical tax area as well as the tax practice and procedures of the taxing authority. For this purpose, competence follows the “Competence” interpretation (ET sec. 1.300.010) of the AICPA Code of Professional Conduct, as well as any other applicable standards.
4.1.4. The member should take appropriate steps to comply with applicable professional and regulatory obligations in connection with representing a taxpayer.
4.1.5. The member should act with integrity and professionalism in dealings with the taxing authority. This includes complying with applicable authority governing the timeliness of a response.
4.1.6. As part of a tax representation engagement, in the event a taxing authority requests taxpayer information from the member, the member should comply with the “Confidential Client Information Rule” (ET sec. 1.700.001) in the AICPA Code of Professional Conduct and applicable laws and regulations in responding to any such request.
4.1.7. If, in connection with professional representation, a member becomes aware of taxpayer conduct that may be fraudulent or criminal in nature, the member should consider whether to continue a professional or employment relationship with the taxpayer. A member may also recommend a legal consultation.
4.1.8. In connection with a taxing authority’s completion of the examination, the member should review any documents or computations detailing the results of the examination for consistency. The member should also discuss with the taxpayer the consequences of agreeing to these conclusions pursuant to the terms of the engagement.
Explanations
4.1.9. Members should consider multiple factors that could affect a taxpayer representation engagement. Among other items, this may include the following:
a. Consulting with legal counsel to determine whether the representation would constitute the unauthorized practice of law
b. Determining whether CPA licensure in another jurisdiction may be required
c. Executing any taxpayer authorizations required by the taxing authority, such as powers of attorney
d. Determining whether the member may be facing a conflict of interest
e. Establishing and documenting in writing an understanding with the taxpayer regarding objectives of the engagement, services to be performed, taxpayer’s acceptance of its responsibilities, member’s responsibilities, and any limitations of the engagement.
4.1.10. When representing taxpayers, members are required to comply with applicable conflict-of-interest standards, such as those mentioned in “Ethical Conflicts” (ET sec. 1.000.020) and the “Integrity and Objectivity Rule” (ET sec. 1.100.001 and 2.100.001) and related interpretations of the AICPA Code of Professional Conduct.