Abstract
This paper was originally written for the Second Invitational Conference on Professionalism in Tax Practice, which was scheduled to be held in Washington in January 1996 under the sponsorship of the American Bar Association Section of Taxation, the American College of Tax Counsel, the American Institute of Certified Public Accountants, the National Association of Enrolled Agents, the National Association of Tax Practitioners, the National Society of Public Accountants, and the Tax Executives Institute. The Conference was postponed because of the Blizzard of 1996.Copyright © 1996 by Michael B. Lang.Our income tax system requires that taxpayers report their income annually and assess the correct amount of tax on this income. This selfassessment system, however, depends on taxpayers ferreting out the provisions of the tax law that apply to them and properly applying those provisions to their factual situations. The immensity and complexity of the tax law and the difficulty of applying even apparently clear legal provisions to complex sets of facts (the most difficult lesson in law school for the typical law student) make this process impossible for many taxpayers. As a result, they turn to tax professionals for assistance in preparing tax returns.These professionals generally fall into one or more of four groups: (1) lawyers licensed to practice law in at least one state or the District of Columbia (licensed lawyers); (2) certified public accountants (CPAs); (3) those admitted to practice before the IRS under the provisions of Circular 230; and (4) "income tax return preparers," as defined in section 7701 (a)(36 (return preparers). Professionals in each category are subject to their own set of practice standards. Many professionals in the tax field are members of more than one group and thus subject to multiple sets of standards. For example, licensed lawyers or CPAs may be subject to their respective state regulatory authorities, Circular 230 (because they are admitted to practice before the IRS), and the statutory provisions affecting return preparers.Once the taxpayer seeks the help of a professional, several difficulties inevitably mar the return preparation process. First, although the professional should be more skilled at finding the tax law relevant to the taxpayer's situation, the professional's knowledge of the facts underlying the taxpayer's tax situation depends entirely on the information known to and conveyed by the taxpayer. The way in which the professional inquires about the facts may influence how the facts are reported by the taxpayer. Hence, the taxpayer's response is a function of the professional's inquiry. Furthermore, the taxpayer may deliberately slant the facts in the hope of reducing her tax, or simply fail to report all of the relevant facts because of misunderstanding, misperception, forgetfulness, or the like. These considerations raise the prospect that a return prepared by even the most assiduous professional may be less accurate than what a well-informed, well-intentioned taxpayer might have prepared independently.
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