Revised Statements on Standards for Tax Services Take Effect Jan. 1


The AICPA has released revised Statements on Standards for Tax Services (SSTS), which  become effective Jan. 1, 2010. The SSTS are enforceable standards of tax practice for AICPA members that address each member’s obligations regarding the following issues:

 

  • The level of authority needed to recommend a tax return position or prepare or sign a tax return;
  • The effort required to answer all questions on a return;
  • The extent to which information furnished by the taxpayer or a third party can be relied upon without verification;
  • The use of the taxpayer’s estimates in preparing a tax return;
  • The ability to recommend a tax return position that departs from a position determined in an administrative proceeding or court decision with respect to a prior year’s return of the taxpayer;
  • The action to be taken upon becoming aware of an error in a return previously filed by the taxpayer or of the taxpayer’s failure to file a required return; and
  • The form and content of advice to taxpayers.

Two of the standards contain the most significant substantive revisions. SSTS no. 1, Tax Return Positions, was changed to indicate that, in recommending a tax return position or preparing or signing a tax return, a member should:

 

(1)   Satisfy the reporting standard and disclosure requirements of the applicable taxing authority, or

(2)   If the taxing authority has no written standard (or if it is lower than the following standard), the following will apply:

a.     For undisclosed positions, “realistic possibility of success;”

b.    For disclosed positions, “reasonable basis.”

 

Note: The current SSTS no. 1 contains no reference to an applicable taxing authority. Also, this represents an increase in the reporting standard for disclosed positions; in the current SSTS, the standard for disclosed positions is “not frivolous.”

 

SSTS no. 7, Form and Content of Advice to Taxpayers (renumbered from SSTS no. 8), is revised to:

 

(1)   Note that, when communicating written advice to a taxpayer, the member should comply with any relevant standard of the applicable taxing authority;

(2)   Emphasize that the member should consider the tax return reporting and disclosure requirements and the potential penalty consequences regarding the tax return position on which advice is being provided; and

(3)   Expand the list of factors to be considered in determining the form of advice to be provided.

SPONSORED REPORT

Questions to ask before committing to the cloud

Cloud computing has its pros and cons. In this report, we answer common questions CPAs may have as they consider transitioning partially or fully to the cloud.

QUIZ

News quiz: IRS reopens an online service, but criticism endures

The IRS brings back the Get Transcript Online service, but the agency faces criticism for its handling of the aftermath of the event that led to the shutdown of the service. See how much you know about other recent news with this quiz.

CHECKLIST

Auditing risks in culture

Cultural flaws can seriously damage an organization. Here’s how internal auditors can reduce risks by embedding culture audits into existing audit programs.