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.
