Assignment Conduct research on the topic “ETHICAL ISSUES IN TAX PRACTICES” and write a research paper using the attached outline. Research Paper Details: Topic: ETHICAL ISSUES IN TAX PRACTICES - MUST

Running head: TAX ETHICS 0

Ethical Issues in Tax Practices

Introduction

There are several ethical issues that are unique to the tax practices. The tax practice is one which requires one to comply with several ethical frameworks that are there. The variety of frameworks is what leads to several complex questions as well as ambiguities which are challenging to all practitioners. There are several courts that have questioned the application of several regulatory frameworks that are there such as Circular 230 when looking at the conduct of attorneys and firms with the IRS (Frecknall-Hughes, 2017). The presence of these ambiguities can leave the various tax practices with several questions that are both theoretical and practical. The following paper looks at the ethical issues that are there in tax practices and is a comparison between several laws and regulations that are there today. It is important to look at several scenarios that exist in the modern world and the ethical issues that they bring about.

Importance of Ethics in Taxation

Ethics involves the understanding of whether something is wrong or right. At the surface the discussion would seem simple but there are a lot of complexities when it comes to practicing of tax. The ethical questions in tax are important to look at because they will arise regularly (Lyer & Reckers, 2017). The laws are laid out by the local and federal government but there are several decisions that need to be made on a daily basis. The tax professionals have to use the training that they have to make daily informed judgments (Frecknall-Hughes, 2017). Tax professionals understand the tax code and the litany of local and state laws that govern the tax practice but training does not touch a lot on the ethics. The circular 230 is provided as guidance to any tax professional that is interfacing indirectly or directly with the IRS.

It is important to look at this topic and increase the understanding and awareness of several tax related ethical guidelines. The code of ethics is required in the process of enforcement, analysis, litigation, and investigation. Taxation is an important part of the economy today and it is important to ensure that all tax professionals are adhering to the standards that have been established (Fatemi, 2018). It is important to look at the guidelines that are there when it comes to practice of tax to make sure there are fairness and the well-being of the whole society.

Purpose of the Research

The purpose of this research is to understand the complexity in taxation and the majority of decisions that are made using the ethical codes that are established. The research will be used in understanding informed judgment when it comes to tax practice. The research is important in understanding the ethics that are there in tax practice together with the laws and regulations that are already established. Understanding the ethics in tax practice will help in taking the reasonable steps in ensuring that one is meeting all of the requirements that are there in the US tax laws (Lyer & Reckers, 2017). The research also assists in ensuring that all of the procedures are adhered to and where there are gaps there is the remedial action to take the corrective measures available. The understanding will also make sure that the necessary people are informed where there are gaps present.

Review of Literature

There are several ethical issues that are there in tax practice. The first one and most important is the conflict of interest. There are several standards that are set by various governing frameworks and when a professional has been subjected to several, there is a potential ethical dilemma when it comes to conflict of interest. The conflict of interest will especially arise when the professional goes into representing various parties in the tax practice. There are cases where there is conflict of interests especially where representing one of the clients will adversely affect another client (Lyer & Reckers, 2017). At the same time, there is a conflict where there is a significant risk that representing one client will limit the responsibilities that they have to another client. These are conflicts that are there but the law says that an attorney can undertake various representations where there is a waiver by the client when they already have informed consent.

There are cases when there is multi-party representation and the client will divulge confidential information to the professional that can lead to creation of conflict of interest. One of the areas that this commonly occurs is trust fund recovery penalty especially where there is a partnership. The tax professional owes confidentiality to the client but it can be limiting if failure to disclose prohibits competent representation of another client. There are also ethical challenges when it comes to the fees that are paid to the tax professional. The area in the fees which is problematic is the contingent fees. The AICPA, Model Rules, and Circular 230 all provide various standards when it comes to application of the contingent fees. Circular 230 prohibits any unconscionable fees for issues before the IRS although it does not provide a definition of the same (Fatemi, 2018). The AICPA, on the other hand, has its own strict code when it comes to arrangement involving contingent fees.

Conclusion

The tax practice is one which is guided by various laws and regulations by the government and other regulatory bodies. Taxation is one of the most important issues when it comes to the modern world and the running of the economy. It is important for a tax professional to understand the ethical issues that are there in practice. The understanding of the ethics is limited by the fact that there are various frameworks that are established as a guide to tax professionals. Conflict of interest is a major ethical issue especially when it comes to representation of multiple parties. The confidentiality of information becomes a major concern in the taxation. The second major issue in ethics today is the one on contingent fees. Various regulatory frameworks have varying guidance on the application of these fees when it comes to representation.

Personal Thoughts

Ethics in tax practices is a complex process that will require a lot of research. It is important to take a look at various academic journals that are peer-reviewed together with a study of the laws. The IRS is also an important guide when it comes to ethics and one need to understand the standards and the procedures that are already established. It is important to look at all of the sources that are available because the issues of ethics in taxation are complex ones. One must understand the various complex issues that are there in the tax practices so as to provide a guide on where the ethical issue lies.

References

Fatemi, D., Hasseldine, J., & Hite, P. (2018). The Influence of ethical codes of conduct on professionalism in tax practice. Journal of Business Ethics, 1-17.

Lyer, G., & Reckers, P. (2017). Leader-follower dynamics in ethical lapses in tax practice. Advances in accounting, 36, 1-10.

Frecknall-Hughes, J., Moizer, P., Doyle, E., & Summers, B. (2017). An examination of ethical influences on the work of tax practitioners. Journal of Business Ethics, 146(4), 729-745.