5.Our self-assessment tax system can function effectively only if taxpayers file tax returns that are true, correct, and complete. A tax return is primarily a taxpayer's representation of facts, and the tax-payer has the final responsibility for positions taken on the return.
6.In addition to a duty to the taxpayer, a member has a duty to the tax system. However, it is well established that the taxpayer has no obligation to pay more taxes than arc legally owed, and a member has a duty to the taxpayer to assist in achieving that result. The standards contained in paragraphs 2, 3, and 4 recognize the members' responsibilities to both taxpayers and to the tax system.
7. In order to meet the standards contained in paragraph 2, a member should in good faith believe that the tax return position is warranted in existing law or can be supported by a good-faith argument for an extension, modification, or reversal of existing law. For example, in reaching such a conclusion, a member may consider a well-reasoned construction of the applicable statute, well-reasoned articles or treatises, or pronouncements issued by the applicable taxing authority, regardless of whether such sources would be treated as authority under Internal Revenue Code section 6662 and the regulations thereunder. A position would not fail to meet these standards merely because it is later abandoned for practical or procedural considerations during an administrative hearing or in the litigation process.
8. If a member has a good-faith belief that more than one tax return position meets the standards set forth in paragraph 2, a member's advice concerning alternative acceptable positions may include a discussion of the likelihood that each such position might or might not cause the taxpayer's tax return to be examined and whether the position would be challenged in an examination. In such circumstances, such advice is not a violation of paragraph 3a.
9. In some cases, a member may conclude that a tax return position is not warranted under the standard set forth in paragraph 2a. A taxpayer may, however, still wish to take such a position. Under such circumstances, the taxpayer should have the opportunity to take such a position, and the member may prepare and sign the return provided the position is appropriately disclosed on the return or claim for refund and the position is not frivolous. A frivolous position is one that is knowingly advanced in bad faith and is patently improper.
10. A member's determination of whether information is appropriately disclosed by the taxpayer should be based on the facts and circumstances of the particular ease and the authorities regarding disclosure in the applicable taxing jurisdiction. If a member recommending a position, but not engaged to prepare or sign the related tax return, advises the taxpayer concerning appropriate disclosure of the position, then the member shall be deemed to meet these standards.
11. If particular facts and circumstances lead a member to believe that a taxpayer penalty might be asserted, the member should so advise the taxpayer and should discuss with the taxpayer the opportunity to avoid such penalty by disclosing the position on the tax return. Although a member should advise the taxpayer with respect to disclosure, it is the taxpayer's responsibility to decide whether and how to disclose.
12. For purposes of this Statement, preparation of a tax return includes giving advice on events that have occurred at the time the advice is given if the advice is directly relevant to determining the existence, character, or amount of a schedule, entry, or other portion of a tax return
1.The SSTS (Statements on Standards in Tax Services) were formerly known as the Statements on Responsibility in Tax Practice (SRTP), but were upgraded in 2000 from guidelines to standards - which means that they have been upgraded to a standard of care. 2.31 Code of Federal Regulations, Subtitle A, part 10.
