Ethics

•  Introduc.on

•  Keyareas

•  Whatwouldyoudo??

Circular230Issues

•  UpdatedInJune2014– Coveredopinions-GONEGONEGONE– RTRP-DeadandGONE-butnotforgoLen– AnnualFilingSeasonProgram-RecordofComple.on-or-AFSP-RecordofComple.onWOWsaythat4.mes

Circular230Issues

•  Lovingcase– Taxreturnsnotprac.ce– AnyonecangetaPTIN–  IRSresponse-unlessyousubmittovoluntaryregula.on(anoxymoron)--asof1/1/16taxpreparercannothelpclientwithaudit-auditisprac.ce

Ethics:KeyAreas

CompetenceDueDiligence

ReasonableInquires

RelianceonOthersClientRecords

ConflictofInterest

Duediligence

KarenHawkinsdefinesduediligenceas:•  Knowingtherelevantfacts•  Knowingthelaw•  Matchingthefactsandthelaw

Ethics

Whatwouldyoudo?

Ethics:Whatdoyoudo?•  Yourneighbor,Harry,wantsyoutodohistaxreturn.He

hasaconstruc.onbusiness.Heshowsyouhisdetailedmileagelogforhisbusinesstruckandsaysthathisbusinessuseis100%.YouhaveseenthetrucktowinghisboatonmanySaturdaymornings.Whatdoyoudo?1.  Tellhimthatyoucannotpreparehisreturnandtopleasego

elsewhere.2.  Takehisinforma.onwiththedetailedmileagelogand

preparehisreturnusingtheinforma.onasis.3.  Tellhimwhatyouhaveobservedandaskhimtocorrecthis

log.4.  Askhimaboutthebusinessuseoftheboatandaddittothe

deprecia.onschedule.•  WhatdoestheOregonorFederalcodesay?

Ethics:Whatdoyoudo?•  DorisandHankhavebeencomingtoyouforyears.Youhavealwaysfiledtheirreturnasajointreturn.Asyouaresayinggoodbyeacertheirinterview,Dorismakesajokeaboutwishingshewasanhonestwoman.Whatdoyoudo?1.  Tellthemthatyoucannotpreparetheirreturnandto

pleasegoelsewhere.2.  Saynothingandpreparetheirnormaljointreturn.3.  Ques.onthemaboutwhethertheyarereallymarried

andwhetheryouhavealloftheirincomeinforma.on.4.  Trytojokinglyfindoutwhatshemeant,butletitgo.

•  WhatdoestheOregonorFederalcodesay?

Ethics:Whatdoyoudo?

•  Dorissaysthattheynevermadeittothealter,buttheyarecommonlawspouses.Whatdoyoudo?1.  Tellthemthatyoucannotpreparetheirreturnand

topleasegoelsewhere.2.  Preparetheirnormaljointreturnbecausethey

answeredtheques.on.3.  Ques.onthemformoreinforma.onabouttheir

statusandpreparesinglereturns.4.  Preparesinglereturnsandamendbackasfaras

required.•  WhatdoestheOregonorFederalcodesay?

Ethics:Whatdoyoudo?•  WendySmithcomestoyoutohavehertaxesprepared.Shebrings

inlastyearsreturnandsaysshedidhertaxesusingconsumersocware.Youno.cethatshehaslowincomegivingheranEarnedIncomeCredit.Youalsono.cethatsheneglectedtotakedeprecia.onontherentalhousesheowns.Youaskherifshehastakendeprecia.onbeforeandsheanswersthatshehasbutlastyearthedeprecia.onloweredherEICsoshedeletedit.Whatdoyoudo?1.  Tellherthatyoucannotprepareherreturnandtopleasego

elsewhere.2.  Saynothingaboutitbecauseitisnotareturnyouprepared.3.  TellherthatshemustamendherreturnoryouwillcalltheIRS.4.  Tellherthatsheneedstoamendherreturn,comewhatmayand

whattheconsequencesofnotamendingcouldbeforher.•  WhatdoestheOregonorFederalcodesay?

Ethics:Whatdoyoudo?•  Wendysaysshes.llwantsyoutopreparethisyear’sreturnbecausehernewbusinessneedsprofessionalhelp.Whatdoyoudo?1.  Tellherthatyoucannotprepareherreturnandto

pleasegoelsewhere.2.  Takeherinforma.onandprepareherreturnusinglast

year’sinforma.onasis.3.  Tellherthatyouwillamendherlastyear’sreturnsothat

thisyear’scanflowcorrectly.4.  Tellherthatsheneedstoamendherreturnandthatyou

willcreatecorrec.onssothatthisyear’scanflowcorrectly.

•  WhatdoestheOregonorFederalcodesay?

Ethics:Whatdoyoudo?

•  YouhavedonetheWilson’sjointreturnfor5years.SallyWilsoncomestodropoffthetaxinforma.onasherhusbandinstructed.Shesitsdownandstartstocry.Shesayssheisgoingtoleaveherabusivehusbandandisworriedaboutfilingwithhimthisyear.

•  Whatdoyoudo?

Ethics:Whatdoyoudo?•  Youpreparedthe1040forPhillipSmithfor2012.Hehasa

ScheduleCbusinesswithofficeinhomeandmileageonthereturn.Hecallsyoutosaythathehasbeenaudited.Tosavemoney,hewenttotheauditonhisown.Hetellsyouthatthemileageisbeingdisallowedbecausehehadnorecords.Heimpliestoyouthathetoldtheauditorthatyoutoldhimrecordswerenotreallyneeded.

•  Whatdoyoudo?•  TheauditorforPhillipcallsyouandasksabouthisclaims

thatyoutoldhimhedidnotneedrecords.•  Whatdoyoudo?

Ethics:Whatdoyoudo?

•  FredJohnsoncomestoyouveryworried.Helivedthroughahousefirein2012andlosteverything-allhisrecords.Hehasnotfiledsincethenbecausehedidnotknowwhattodoabouthisrecords.

•  Youwanttohelphimcatchup,whatdoyoudo?

Ethics:Whatdoyoudo?

•  Yourclient,Teresa,isalwayslastminute.Shedropsoffherbusinessinforma.onandrushesoff.Asyouaredoingherreturnyousee$900ofconsul.ngand$850ofaccoun.ng.Youcallhertoaskwhogothowmuchandtellheraboutthe1099repor.ngques.onsonherscheduleC.Shesaystoreducetheexpensesto$599becauseshedoesnotwanttodo1099’s.

•  Whatdoyoudo?

Ethics:Whatdoyoudo?

•  BeckyMillercomestoyouasanewclient.Youseethatinlastyear’sreturnshehadabout$10000ofnon-cashcharitablededuc.ons.Forthisyearshehandsyou4goodwillslipswithscribblednotesandvaluesof$2057,$3504,$1239and$5200notedontheforms.

•  Whatisduediligenceinthiscase?•  WhatdoestheOregonorFederalcodesay?

Ethics:Whatdoyoudo?•  PatriciaJameshasbeenaclientforseveralyears.Whenpreparingforthisyear’sreturnyouno.cethatlastyear,youforgottoputinsomebusinessincomethatPatcalledinlate.Theincomewilladdatleast$1000oftax-fed,stateandSE.Alsobecauseofotherissues(rental,etc.),PathasanNOLcarry-forwardthatwouldbewipedoutwiththisaddedincome.Yoususpectthatthischangewillloseherasaclient.

•  Whatdoyoudo?•  WhatdoestheOregonorFederalcodesay?

Ethics:Whatdoyoudo?

•  JoeFieldsisaclientwhohasadinerdowntheroad.Theplaceisalwaysbusy.Hecomestoyoutodohistaxes.HeshowsalossonhishandwriLenprofitandloss.Whenyouasktoseehis1099fromthemerchantaccount,itismorethanhisstatedincome.

•  Whatdoyoudo?•  Joecomesbackacerreviewinghisprofitandlossandshowsincomeof$100amonthoverthemerchantamounts.Hisexpensesarehigherthanbeforeandhes.llshowsanetloss.

•  Whatdoyoudo?

Ethics:Whatdoyoudo?

•  SamandGlendacometoyoutohavetheirtaxesreturnprepared.YouseethatlastyeartheyhadveryliLleincome.ThisyeartheyhaveveryliLleincomeaswell.TheywillgetabigEICduetotheirthreechildren.

•  Whatdoyoudo?

Ethics:Whatdoyoudo?

•  HenryJonescomestoyouasanewclientwithhisinforma.on.HehasasmallW-2andimmaculaterecordsforhisnewbusinessthatstartedthisyear.Hehadnosalesandexplainsthatheisjustgenngstartedinhisan.quityrecoverybusiness.HisexpensesarelargeandwillputhiminanNOLsitua.on.

•  Whatisduediligenceinthiscase?•  WhatdoestheOregonorFederalcodesay?

Ethics

Thankyou

Whatcanbetrouble?

•  Circular230sec.on10.51•  18itemsthatdefineincompetenceanddisreputableconduct