Introduc.on Key areasfiles.ctctcdn.com/b24c98a5301/29844d6e-a5ee-4c21... · Circular 230 Issues •...
Transcript of Introduc.on Key areasfiles.ctctcdn.com/b24c98a5301/29844d6e-a5ee-4c21... · Circular 230 Issues •...
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Ethics
• Introduc.on
• Keyareas
• Whatwouldyoudo??
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Circular230Issues
• UpdatedInJune2014– Coveredopinions-GONEGONEGONE– RTRP-DeadandGONE-butnotforgoLen– AnnualFilingSeasonProgram-RecordofComple.on-or-AFSP-RecordofComple.onWOWsaythat4.mes
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Circular230Issues
• Lovingcase– Taxreturnsnotprac.ce– AnyonecangetaPTIN– IRSresponse-unlessyousubmittovoluntaryregula.on(anoxymoron)--asof1/1/16taxpreparercannothelpclientwithaudit-auditisprac.ce
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Ethics:KeyAreas
CompetenceDueDiligence
ReasonableInquires
RelianceonOthersClientRecords
ConflictofInterest
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Duediligence
KarenHawkinsdefinesduediligenceas:• Knowingtherelevantfacts• Knowingthelaw• Matchingthefactsandthelaw
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Ethics
Whatwouldyoudo?
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Ethics:Whatdoyoudo?• Yourneighbor,Harry,wantsyoutodohistaxreturn.He
hasaconstruc.onbusiness.Heshowsyouhisdetailedmileagelogforhisbusinesstruckandsaysthathisbusinessuseis100%.YouhaveseenthetrucktowinghisboatonmanySaturdaymornings.Whatdoyoudo?1. Tellhimthatyoucannotpreparehisreturnandtopleasego
elsewhere.2. Takehisinforma.onwiththedetailedmileagelogand
preparehisreturnusingtheinforma.onasis.3. Tellhimwhatyouhaveobservedandaskhimtocorrecthis
log.4. Askhimaboutthebusinessuseoftheboatandaddittothe
deprecia.onschedule.• WhatdoestheOregonorFederalcodesay?
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Ethics:Whatdoyoudo?• DorisandHankhavebeencomingtoyouforyears.Youhavealwaysfiledtheirreturnasajointreturn.Asyouaresayinggoodbyeacertheirinterview,Dorismakesajokeaboutwishingshewasanhonestwoman.Whatdoyoudo?1. Tellthemthatyoucannotpreparetheirreturnandto
pleasegoelsewhere.2. Saynothingandpreparetheirnormaljointreturn.3. Ques.onthemaboutwhethertheyarereallymarried
andwhetheryouhavealloftheirincomeinforma.on.4. Trytojokinglyfindoutwhatshemeant,butletitgo.
• WhatdoestheOregonorFederalcodesay?
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Ethics:Whatdoyoudo?
• Dorissaysthattheynevermadeittothealter,buttheyarecommonlawspouses.Whatdoyoudo?1. Tellthemthatyoucannotpreparetheirreturnand
topleasegoelsewhere.2. Preparetheirnormaljointreturnbecausethey
answeredtheques.on.3. Ques.onthemformoreinforma.onabouttheir
statusandpreparesinglereturns.4. Preparesinglereturnsandamendbackasfaras
required.• WhatdoestheOregonorFederalcodesay?
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Ethics:Whatdoyoudo?• WendySmithcomestoyoutohavehertaxesprepared.Shebrings
inlastyearsreturnandsaysshedidhertaxesusingconsumersocware.Youno.cethatshehaslowincomegivingheranEarnedIncomeCredit.Youalsono.cethatsheneglectedtotakedeprecia.onontherentalhousesheowns.Youaskherifshehastakendeprecia.onbeforeandsheanswersthatshehasbutlastyearthedeprecia.onloweredherEICsoshedeletedit.Whatdoyoudo?1. Tellherthatyoucannotprepareherreturnandtopleasego
elsewhere.2. Saynothingaboutitbecauseitisnotareturnyouprepared.3. TellherthatshemustamendherreturnoryouwillcalltheIRS.4. Tellherthatsheneedstoamendherreturn,comewhatmayand
whattheconsequencesofnotamendingcouldbeforher.• WhatdoestheOregonorFederalcodesay?
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Ethics:Whatdoyoudo?• Wendysaysshes.llwantsyoutopreparethisyear’sreturnbecausehernewbusinessneedsprofessionalhelp.Whatdoyoudo?1. Tellherthatyoucannotprepareherreturnandto
pleasegoelsewhere.2. Takeherinforma.onandprepareherreturnusinglast
year’sinforma.onasis.3. Tellherthatyouwillamendherlastyear’sreturnsothat
thisyear’scanflowcorrectly.4. Tellherthatsheneedstoamendherreturnandthatyou
willcreatecorrec.onssothatthisyear’scanflowcorrectly.
• WhatdoestheOregonorFederalcodesay?
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Ethics:Whatdoyoudo?
• YouhavedonetheWilson’sjointreturnfor5years.SallyWilsoncomestodropoffthetaxinforma.onasherhusbandinstructed.Shesitsdownandstartstocry.Shesayssheisgoingtoleaveherabusivehusbandandisworriedaboutfilingwithhimthisyear.
• Whatdoyoudo?
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Ethics:Whatdoyoudo?• Youpreparedthe1040forPhillipSmithfor2012.Hehasa
ScheduleCbusinesswithofficeinhomeandmileageonthereturn.Hecallsyoutosaythathehasbeenaudited.Tosavemoney,hewenttotheauditonhisown.Hetellsyouthatthemileageisbeingdisallowedbecausehehadnorecords.Heimpliestoyouthathetoldtheauditorthatyoutoldhimrecordswerenotreallyneeded.
• Whatdoyoudo?• TheauditorforPhillipcallsyouandasksabouthisclaims
thatyoutoldhimhedidnotneedrecords.• Whatdoyoudo?
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Ethics:Whatdoyoudo?
• FredJohnsoncomestoyouveryworried.Helivedthroughahousefirein2012andlosteverything-allhisrecords.Hehasnotfiledsincethenbecausehedidnotknowwhattodoabouthisrecords.
• Youwanttohelphimcatchup,whatdoyoudo?
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Ethics:Whatdoyoudo?
• Yourclient,Teresa,isalwayslastminute.Shedropsoffherbusinessinforma.onandrushesoff.Asyouaredoingherreturnyousee$900ofconsul.ngand$850ofaccoun.ng.Youcallhertoaskwhogothowmuchandtellheraboutthe1099repor.ngques.onsonherscheduleC.Shesaystoreducetheexpensesto$599becauseshedoesnotwanttodo1099’s.
• Whatdoyoudo?
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Ethics:Whatdoyoudo?
• BeckyMillercomestoyouasanewclient.Youseethatinlastyear’sreturnshehadabout$10000ofnon-cashcharitablededuc.ons.Forthisyearshehandsyou4goodwillslipswithscribblednotesandvaluesof$2057,$3504,$1239and$5200notedontheforms.
• Whatisduediligenceinthiscase?• WhatdoestheOregonorFederalcodesay?
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Ethics:Whatdoyoudo?• PatriciaJameshasbeenaclientforseveralyears.Whenpreparingforthisyear’sreturnyouno.cethatlastyear,youforgottoputinsomebusinessincomethatPatcalledinlate.Theincomewilladdatleast$1000oftax-fed,stateandSE.Alsobecauseofotherissues(rental,etc.),PathasanNOLcarry-forwardthatwouldbewipedoutwiththisaddedincome.Yoususpectthatthischangewillloseherasaclient.
• Whatdoyoudo?• WhatdoestheOregonorFederalcodesay?
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Ethics:Whatdoyoudo?
• JoeFieldsisaclientwhohasadinerdowntheroad.Theplaceisalwaysbusy.Hecomestoyoutodohistaxes.HeshowsalossonhishandwriLenprofitandloss.Whenyouasktoseehis1099fromthemerchantaccount,itismorethanhisstatedincome.
• Whatdoyoudo?• Joecomesbackacerreviewinghisprofitandlossandshowsincomeof$100amonthoverthemerchantamounts.Hisexpensesarehigherthanbeforeandhes.llshowsanetloss.
• Whatdoyoudo?
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Ethics:Whatdoyoudo?
• SamandGlendacometoyoutohavetheirtaxesreturnprepared.YouseethatlastyeartheyhadveryliLleincome.ThisyeartheyhaveveryliLleincomeaswell.TheywillgetabigEICduetotheirthreechildren.
• Whatdoyoudo?
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Ethics:Whatdoyoudo?
• HenryJonescomestoyouasanewclientwithhisinforma.on.HehasasmallW-2andimmaculaterecordsforhisnewbusinessthatstartedthisyear.Hehadnosalesandexplainsthatheisjustgenngstartedinhisan.quityrecoverybusiness.HisexpensesarelargeandwillputhiminanNOLsitua.on.
• Whatisduediligenceinthiscase?• WhatdoestheOregonorFederalcodesay?
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Ethics
Thankyou
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Whatcanbetrouble?
• Circular230sec.on10.51• 18itemsthatdefineincompetenceanddisreputableconduct