Question to Ask the Prof:
Under any professional codes of conduct, does a CPA have an obligation (ethical , moral or otherwise) to advise a long-term client ( then 97 years old), that the taxpayer is NOT required to file a Federal (nor State) Tax return? Or alternatively, would it be more ethical and proper for the CPA to recommend to this taxpayer to utilize a FREE tax prep service provided by the IRS VITA program for exactly this scenario. background: for at least the prior 22 years, the (recently deceased) taxpayer had (only) tax returns prepared by the CPA in question. Recently, (over at least the prior 7 tax years) the taxpayers annual income was always less than the federal poverty level (excluding S.S. benefits; none being taxable). So, those recent tax returns all report $0.00 taxable income (Federal & State). According to the the State and IRS 1040 instructions (Chart A), this aged taxpayer clearly was NOT required to file income tax returns. But, the CPA continued to file these unnecessary returns and collect preparation fees.
A (Professor Dresnack): This violates the American Institute of CPAs’ Code of Professional Conduct. The standard involving client advocacy states:
“…there is a possibility that some requested professional services involving client advocacy may appear to stretch the bounds of performance standards, may go beyond sound and reasonable professional practice, or may compromise credibility, and thereby pose an unacceptable risk of impairing the reputation of the member and his or her firm with respect to independence, integrity, and objectivity. In such circumstances, the member and the member’s firm should consider whether it is appropriate to perform the service.”
The AICPA is a voluntary organization, so its rules primarily apply to members, but some of its rules have been adopted into law by various states.
In NY, licensed CPAs are prohibited from engaging in “unprofessional conduct,” which includes “exercising undue influence on the patient or client, including the promotion of the sale of services, goods, appliances or drugs in such manner as to exploit the patient or client for the financial gain of the practitioner or of a third party.” (Rules of the Board of Regents).
It’s clear from this that at a minimum this violates ethics (AICPA) and probably violates law (Board of Regents). To me it is obviously immoral.
A (Professor Zhang): The Code of Ethics of the National Association of Tax Consultants states that the tax consultants should “maintain the highest standards of honesty, integrity and confidentiality in all relationships with clients, keeping as the utmost concerns the client’s best interest.” In a word, the behavior stated in the first issue was not in the client’s best interest and thus should be unethical.