Tax Return Reporting

Tax Return Reporting In the intensely personal working relationship which is necessarily fostered between tax preparers and their clients, a great deal of trust is required to assure that each party acts in accordance with the rule of law and the boundaries of ethical conduct. Certified Public Accountants (CPAs) and other recognized tax preparers are morally, ethically and legally bound, both by federal tax code and professional pride, but the demands of clients who are interested in preserving their own financial assets often conflict with these priorities.

From the disclosure of certain questionably gained assets to the reporting supplementary income to the Internal Revenue Service, individual taxpayers often subject their tax preparers to undue pressure and untenable requests. If a client employing my tax preparation services asked that I not report certain information which may implicate them with the law, I would be considerate of their personal circumstances but ultimately my own ethical obligations and cognizance of pragmatic concerns would take precedence in my decision making process.

Due to the confluence of a prolonged economic recession, continually mounting national debt and the devaluation of the dollar as a global currency, the federal government has become increasingly reliant on income generated from taxation of its citizens and small businesses. This reliance has increased the government's willingness to legally pursue tax preparers who flout the law in favor of assisting their client's financial interests, as evidenced by a recent federal case involving the "disbarment of CPA Tim W.

Kaskey" because he "failed to exercise due diligence in preparing tax returns for a corporation and its husband and wife shareholders" ("Cpa disbarred for," 2010). To effectively defuse a client requesting illegal or unethical services, a combination of flexibility and resoluteness is essential to provide the best financial advice while not deviating from your professional duties. Revisions to the existing tax code contained within the Small Business and Work Opportunity Act of 2007 amended IRC Sec.

6694 enacted in 2007 have heightened the standard for tax preparers with more stringent applications of the law (Davis 2007) and it is important for CPAs and other financial professionals to keep abreast of these changes. I would remind my client of the increasingly harsh penalties now inflicted on tax preparers who violate the law and politely decline their requests to prepare illegal tax returns, shield illegal assets or engage in unethical conduct of any kind.

If they pressed the matter I would be forced to terminate our working relationship and remove myself from the situation as quickly as possible. Depending on the severity of the improprieties committed by my former client, I would also consider contacting a qualified financial attorney for legal counsel. They would likely invoke Sec.