Ethical and Legal Responsibilities in Tax Practice

Abstract

The core issues of legal ethics are the rules which govern the conduct of lawyers and judges which are adopted by the state. There is a proper mechanism of which is enforced by the rules through the issuance of opinion letters submitted on the basis of ethical issues. The authority provision of Circular 230 has changed from the beginning and enforces the standards of ethical practices in Circular 230 to be maintained. AICPA defines the ethical standards of professional activities, as well as auditing standards for private companies, nonprofit organizations, federal and local authorities. A tax return preparer is a person who is responsible for the compensation and prepares considerable amount of tax return to claim for the tax which is refunded by the Internal Revenue of Code.

Tax Practice

Introduction

In professional responsibility, researching issue is a complex practice which requires judicial decisions and statutes. The core issues of legal ethics are the rules which govern the conduct of lawyers and judges which are adopted by the state. The state rules are based on the model rules which are adopted by the American Bar Association which include the Code of Judicial Conduct and Professional Conduct. There is a proper mechanism of which is enforced by the rules through the issuance of opinion letters submitted on the basis of ethical issues.

Treasury Department Circular 230

The Treasury Department and the Internal Revenue issued the regulations which were enforced to improve the ethical standards for tax professionals, which meant to, curb the abusive tax transactions. The regulations of Circular 230 would be applicable to the accountants, attorneys and tax professionals. The improvement in tax practice will provide proper standards, which will reflect, the best practices which are able to restore and maintain public confidence in tax professionals. These regulations make sure that they provide transparent advices, which are in, benefit of the tax professionals if the advice is incomplete (Christensen, Ralph, 2002). These tools will help in better dealing with the abusive tax avoidance transactions and to disregard the ethical obligations. It is one of the important goals of Circular 230 to achieve the goal of maintaining ethical standards.

The authority provision of Circular 230 has changed from the beginning and enforces the standards of ethical practices in Circular 230 to be maintained. They should be used effectively. The regulations provide best practices for tax advisors that present a great potential concern for the minimal standards of advice.

AICPA Statements on Standards for Tax Services

American Institute of Certified Independent Accountants (the American Institute of Certified Public Accountants, AICPA) is the most authoritative non-governmental professional organization representing accounting (including audit) community in the United States. The Association has over 350 000 members of various industries, including members of other international associations. AICPA defines the ethical standards of professional activities, as well as auditing standards for private companies, nonprofit organizations, federal and local authorities. AICPA tries to merge and general terms of ideal forms of behavior, and specific rules. The Code consists of four parts: concepts, rules of conduct, clarification and ethical standards. The rules are in ascending order of their level of specificity, the concept of describing the ideal standards of conduct, ethical standards are highly specific (Duska, 2003).

Any ethical code may consist of a common language to describe the ideal behavior, as well as specific rules that specify unacceptable behaviors. The advantages of common language are the focus on the proper activity and require a high level of professionalism. The drawback, on the other hand, is very difficult to get people to conform to the ideals. The advantage of carefully formulated specific rules is that they can get a specialist to observe at least the minimum standards and professional standards. The downside of that, some experts tend to consider these rules as