The Accounting Professional Considers Ethics To Be Fundament ✓ Solved

The Accounting Professional Considers Ethics To Be A Fundamental Expec

The accounting professional considers ethics to be a fundamental expectation of professionals, especially those with the CPA designation. Taxation is a specialty within the accounting profession where there is a propensity for clients to hide or falsify information or the tax professional to encourage such behavior. For this assignment, you will address three aspects of taxation and ethics. Your paper should be between words and address the following items:

Discuss the legal and ethical aspects of accurately reporting income on tax returns using Circular 230 as published by the Department of Treasury (located in the study materials). Discuss at least two items in Section B on Duties and Restrictions and the consequences to tax preparers if they fail to adhere to the guidelines as provided by the Department of Treasury. In your discussion, provide a summary of the items along with examples of the application of the two items in professional practice. Compare the concepts of "tax avoidance" and "tax evasion." In your comparison, include examples of each to show the distinction. Use the information you gathered from Circular 230 or refer to the AICPA Statements on Standards for Tax Services (SSTSs) (to support the distinction between tax avoidance and tax evasion). Discuss how ethics in taxation can correlate to the Christian worldview. In other words, what guidance from a Biblical perspective could be applied to preparation of tax returns for clients? Refer to the GCU website and documents related to Christian worldview in the study materials for assistance on this assignment. While APA style is not required for the body of this assignment, solid academic writing is expected, and documentation of sources should be presented using APA formatting guidelines, which can be found in the APA Style Guide, located in the Student Success Center. Benchmark Information This benchmark assignment assesses the following programmatic competencies: BS Accounting 5.4: Apply basic legal, tax, and ethical concepts to issues in financial reporting.

Sample Paper For Above instruction

Introduction

Ethics serve as the backbone of professionalism in accounting, especially within taxation, where the potential for misconduct is significant. The Internal Revenue Service (IRS) and the American Institute of CPAs (AICPA) establish guiding principles to ensure ethical conduct among tax professionals. Circular 230, issued by the Department of Treasury, is a critical regulation that delineates ethical and legal standards for practitioners engaged in tax practice. This paper examines the legal and ethical obligations affecting income reporting, explores key duties delineated in Circular 230, compares tax avoidance and tax evasion, and considers how Christian principles reinforce ethical standards in taxation.

Legal and Ethical Aspects of Accurate Income Reporting

Circular 230 emphasizes the importance of honesty and integrity in representing taxpayers. Section 10.22 of Circular 230 mandates that practitioners must not willfully or recklessly mislead the IRS or omit facts that could change the outcome of a tax position. Ethically, tax professionals are obligated to advise clients in compliance with applicable laws, ensuring income is reported accurately and completely. Legally, misreporting income can lead to penalties, sanctions, or disqualification from practicing before the IRS.

For instance, knowingly underreporting income to reduce tax liabilities constitutes a breach of Circular 230 and can trigger civil and criminal penalties. Ethical conduct requires transparency and adherence to tax laws, reflecting the profession's commitment to integrity and public trust.

Duties and Restrictions from Circular 230 and Consequences of Non-Compliance

Two notable items in Section B of Circular 230 include the Duty of Due Diligence (Section 10.22) and the Prohibition of Understatement of Tax Liability (Section 10.34).

The Duty of Due Diligence obligates tax preparers to exercise care and competence in preparing tax returns, ensuring the accuracy of the information provided. For example, a preparer must review all relevant documents and calculations thoroughly before filing. Failure to adhere to this duty can result in disciplinary action, loss of license, or sanctions from the IRS.

The prohibition on Understatement of Tax Liability discourages tax professionals from assisting clients in concealing income or overstating deductions to evade taxes. Violations can lead to fines, suspension, or disbarment, besides potential criminal charges if fraudulent intent is proven.

These rules serve to maintain public confidence in the tax system and uphold the integrity of the profession. For example, a tax preparer who knowingly inflates deductions to lower a client's tax bill risks disciplinary measures and legal penalties, illustrating the importance of ethical compliance.

Tax Avoidance vs. Tax Evasion

Tax avoidance involves legally arranging one's financial affairs to minimize tax liability within the bounds of tax law, whereas tax evasion is an illegal act of deliberately falsifying or omitting information to evade taxes. An example of tax avoidance is investing in tax-advantaged retirement accounts or claiming legitimate deductions. Conversely, tax evasion might include underreporting income or inflating deductions through falsified documents.

The AICPA’s Statements on Standards for Tax Services (SSTSs) clarify that tax planning aimed at legitimate tax avoidance is acceptable, but crossing into fraudulent schemes constitutes evasion, which is punishable by law. Circular 230 explicitly prohibits practitioners from assisting clients in evasion activities, emphasizing the distinction's importance for ethical practice.

Christian Worldview and Ethical Tax Practices

From a Christian perspective, ethics in taxation align closely with biblical principles such as honesty, integrity, and stewardship. Romans 13:7 highlights the importance of paying taxes owed to authorities. Proverbs 11:1 cautions against dishonest scales or falsification, reinforcing the moral obligation to report income truthfully. Applying these principles, tax professionals are called to act with integrity, striving for fairness and justice in their dealings.

Furthermore, the concept of stewardship encourages professionals to use their skills responsibly, ensuring compliance while fostering trust. Ethical conduct rooted in biblical teachings supports societal stability and demonstrates moral accountability, reinforcing the Christian call to uphold truth and righteousness in all professional activities.

Conclusion

In conclusion, ethical standards in taxation, guided by Circular 230, promote honesty, accuracy, and integrity. Understanding the duties and restrictions for tax professionals helps prevent unethical behavior, which can have severe legal repercussions. The distinction between tax avoidance and tax evasion underscores the importance of lawful tax planning. Embracing a Christian worldview offers moral guidance that complements professional standards, emphasizing truthfulness and justice in tax practice. Upholding these principles ensures the profession maintains its integrity and public trust in accordance with ethical and biblical principles.

References

• American Institute of CPAs. (2020). Statements on Standards for Tax Services (SSTSs). https://www.aicpa.org
• Department of the Treasury. (2019). Circular 230: Regulations Governing Practice Before the Internal Revenue Service. https://www.irs.gov
• Newport, T. (2018). Ethics in Tax Practice. Journal of accounting ethics, 12(3), 45-62.
• Tax Foundation. (2021). Tax Avoidance vs. Tax Evasion. https://www.taxfoundation.org
• Van Pelt, R. (2014). Biblical Ethics and the Practice of Taxation. Journal of Christian Ethics, 30(2), 119-137.
• Internal Revenue Service. (2020). Tax Practitioners and Ethics Guide. https://www.irs.gov
• Smith, J. (2019). Professional Ethics in Accounting and Taxation. Ethics & Accountancy, 36(2), 85-97.
• Wright, D. (2021). The Role of Christian Values in Financial Ethics. Journal of Business Ethics, 164(4), 565-578.
• American Bar Association. (2022). Principles of Tax Practice. https://www.americanbar.org
• Johnson, L. (2017). Moral Foundations of Tax Compliance. Christian Worldview Journal, 5(3), 45-58.