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Facts. Taxes-R-Us (TRU) is a medium-size tax firm that generates approximately $1,000,000 a year in gross receipts from tax preparation and has net...
Facts.
Taxes-R-Us (TRU) is a medium-size tax firm that generates approximately $1,000,000 a year in gross receipts from tax preparation and has net income of about $100,000 a year.
TRU has three levels of employees. It is headed by a CPA, and under the head of the firm are four CPAs in managerial roles. Everyone below manager is an entry-level employee currently taking the CPA exam.
The firm mails tax organizers to its clients each tax season. These organizers provide the firm with essential information to prepare the returns. The tax returns are then prepared from the information provided by the clients. The firm does not check the information for accuracy but only relies on the clients' information. The firm then reviews the tax returns at three levels for any typos or other errors before final approval.
For the past 10 years, TRU's sole method of advertising has been hiring a local firm that runs the same local television ad each year. The advertisement states, "Our licensed attorneys and CPAs will guarantee the largest refund you can get." The ad is also posted on YouTube. However, the firm does not, in fact, employ any attorneys. The firm's owner reviews and approves the advertisement. In a recent customer survey, 75% of the clients said they came to the firm because of the ad, and the other 25% of the clients came because of word of mouth.
Assignment.
Assume the role of an OPR professional. During the regular course of business you find the ad on YouTube. Solely because of the ad, you decide to open a case on the firm.
1. Describe potential violations of Circular 230.
2. Identify the party(ies) responsible for each separate violation and explain why the party(ies) identified should be subject to Circular 230 sanctions.
3. Recommend the "appropriate" (i.e., neither too lenient nor too excessive) nonmonetary and/or monetary sanctions to impose on the party(ies) identified.
4. Offer a personal perspective on the ethical nature of the case.
