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TAX PRACTICE RESPONSIBILITIES

there is a good-faith belief that the
information is privileged.
The standard also calls out the vital role
training should have in a data protection plan, Section 4.1.7. The member should
especially for nonmember personnel. consider if the taxpayer’s conduct
may be fraudulent or criminal in
nature. If so, the member should
to confirm the accuracy of a specific of a tool does not absolve the member of advise the taxpayer to retain legal
source as directly. Instead, the member professional obligations under AICPA counsel and refrain from fur-
should consider the source of the or other applicable ethical standards. ther representation.
research. For example, documentation Therefore, members should consider
obtained from a prominent implementing a general technical Section 4.1.8. Upon completion
subscription-based tax research review process to ensure work product of the examination by the taxing
software vendor may have more weight is accurate. authority, the member should review
than opinion articles from independent any documents or computations de-
internet sources. The standard does SSTS 4, Standards for Members tailing the results of the examination
not, however, prevent a member from Providing Tax Representation for correctness and discuss with the
using an opinion article in developing Services taxpayer the consequences of agree-
a position; a member should use New standards ing to these conclusions.
professional judgment to apply sound Section 4.1.3. The member, and any
tax principles in applying the opinion individuals working with or for the The SRTPs, predecessors to the
put forward in that article. member, should have or take steps SSTSs, were drafted at a time when tax
The task force believes the majority to obtain technical competence in practices primarily only prepared tax
of members already follow the proposed the subject matter involved. This returns. Since then, tax practices have
standard, exercising diligence both in includes competence in the technical expanded to provide a wide variety of
the selection of tax tools and their use. tax area involved as well as the tax services including tax representation
This standard will assist those members practice and procedures of the taxing services. The task force believed the
when working through an issue arising authority. For this purpose, compe- continuing growth in the number of
from software errors. Although reliance tence follows the definition estab- CPA firms providing tax representation
on software alone will not constitute an lished in Section 10.35 of [Treasury] services obligated the development of
adequate defense, the task force believes Circular 230 [Regulations Governing a standard.
this standard establishing principles Practice Before the Internal Revenue In the course of developing the
for the reliance on tools will be Service (31 C.F.R. Part 10)]. standard, both the task force and oth-
overwhelmingly beneficial to members ers raised the question of whether a
(see, e.g., Smalley, “Reliance on Tax Section 4.1.4. The member should separate standard was necessary, given
Software Does Not Let Taxpayer Off take appropriate steps to ensure the breadth of guidance provided by
the Hook,” Tax Insider (Aug. 3, 2017), compliance with all relevant profes- Circular 230. Upon discussion of the
discussing a Tax Court case where sional and regulatory obligations issue, the task force agreed that Circular
the taxpayer was denied relief when when representing a taxpayer. 230 does provide significant guidance
asserting reliance on personal tax to anyone involved in the representa-
preparation software). Section 4.1.5. The member should tion of a taxpayer before a taxing au-
To implement this standard, firms act with integrity and profes- thority. However, that guidance applies
should review their current tool selection sionalism in all dealings with the only to the representation of federal tax
process to ensure it meets the essence of taxing authority. This includes not clients. Task force members therefore
the standard. For many widely available unduly delaying or impeding the felt it important to develop one overall
and relied-upon tax software packages, taxing authority. set of standards that would apply to all
members may find that a basic review members providing tax services, regard-
of a new software vendor’s offerings is Section 4.1.6. Information requested less of tax jurisdiction. SSTS 4 is not
sufficient to demonstrate that reliance by the taxing authority should, with intended to override other regulatory
on the tool is appropriate. However, taxpayer approval, be provided by standards but rather to supplement
members should also remember that use the member on a timely basis unless existing standards and serve as basic

50 November 2022 The Tax Adviser