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    CPA Ethics while Preparing Income Tax Returns

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    CPAs that act as tax advisors are responsible for ensuring that their clients pay the proper amount of income tax. In other words, the clients should pay no more tax than he or she legally owes. While CPAs acting as tax advisors are not held to the same level of independence standards as those CPAs performing attestation work, the CPA is held to the same level of objectivity and integrity as those performing attestation work. CPAs do have an ethical responsibility to the public when preparing tax returns as do CPAs when auditing financial statements of publicly traded companies. CPAs do not have to "audit" the information provided by their tax clients, but they do have a responsibility to state that the tax return is true and correct to the best of his or her knowledge.

    What do you feel are the ethical responsibilities of the tax preparer?

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    Solution Preview

    Basically, any CPA preparing tax returns must prepare the tax return with due diligence - which includes asking questions that are required for determining certain credits (such as due diligence required for the Earned Income Tax Credit), and CPA's must also make inquiries when the information does not necessarily "fit" the tax return. It is the taxpayer's responsibility to ...

    Solution Summary

    This solution discusses the ethics that CPA's should adhere to, when preparing income tax returns.