The American Institute of Certified Public Accountants has issued an exposure draft of a proposed interpretation of Statement on Standards for Tax Services (SSTS) No. 1, "Tax Return Positions," specifically emphasizing the tax accountant's role in the area of tax planning.
The SSTS statements are part of an ongoing process by the AICPA to set out enforceable standards that govern the conduct of AICPA members and explain the responsibilities that tax practitioners have to taxpayers, the public, government, and the profession as a whole. The interpretation just issued is a response to recent controversies over potentially abusive tax shelters.
Placing an emphasis on ethical standards, the proposed interpretation sets out specific recommendations for the tax practitioner that provide direction in the area of tax planning. Included in the steps that a practitioner should follow are recommendations to establish background facts, consider reasonableness of assumptions and representations, apply pertinent authorities to relevant facts, consider the existence of a business purpose or economic substance for the transaction, and arrive at a conclusion supported by authorities.
Much of the interpretation document is made up of illustrations of case studies with recommendations for how to resolve dilemmas. Such resolutions typically require the practitioner to make sure taxpayers are informed of risks, inform the taxpayer of disclosure requirements, and consider circumstances when it would not be appropriate for the practitioner to sign the tax return.
The AICPA is soliciting comments on the proposed interpretation prior to publication. Comments are due by April 30, 2003, and may be submitted by e-mail to [email protected] or by mail to:
Edward S. Karl
Tax Division, AICPA
1455 Pennsylvania Avenue, NW
Washington, DC 20004-1081