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Ethics Support

CSEA is proud to offer Members the support of an Ethics & Professional Conduct Committee that is focused on assisting Members who are grappling with an ethical dilemma or facing a client complaint.

The Ethics & Professional Conduct Committee (E&PC) supports Members by responding to questions about tricky ethical situations and offering peer-to-peer advice and suggestions for avoiding or resolving client complaints. CSEA also has a formal ethical review process to handle complaints lodged against a Member through the Society. This is a valuable public service as it helps educate clients about ethical and legal conduct in the tax industry and is a Member benefit because it can in many instances lead to resolution and prevent the issue from being escalated to a governmental agency.

The committee is dedicated to resolving consumer complaints about Member behavior in an equitable non-confrontational mutually beneficial manner and increasing the awareness and observation by Members of the National Association of Enrolled Agents’ Bylaws and Code of Ethics the California Society of Enrolled Agents Bylaws Treasury Department Circular 230 and applicable provisions of the Internal Revenue Code. The E&PC Committee operates based on guidance from its Charter and Procedures.

Any questions you have regarding the Ethics Support please call the CSEA office at 916-366-6646.

As Members of both CSEA and the National Association of Enrolled Agents (NAEA), Enrolled Agent Members are expected to honor NAEA’s Code of Ethical Conduct and Rules of Professional Conduct.

  1. Members and associates will, in personal and public life, strive to enhance the status
    of enrolled agents (EA) and promote their qualifications to serve the public.
  2. Members and associates will demonstrate honesty, integrity, and objectivity in all
    their professional actions and relationships.
  3. Members and associates will continually strive to improve upon their competence to
    practice by keeping informed and educated about tax practice and representation.
  4. Members and associates will maintain the confidentiality of professional
    relationships.
  5. Members and associates will support efforts to advance the reputation and prestige of
    the EA license.
  6. Members and associates will comply with the most current provisions of Treasury
    Department Circular 230 and the NAEA Code of Ethics and Rules of Professional
    Conduct.
  7. Members and associates will not knowingly misrepresent or omit information when
    preparing or approving and filing tax returns, documents, affidavits, and other papers
    relating to Internal Revenue Service (IRS) matters. If a client insists on the
    misrepresentation or omission, the Member or Associate should withdraw and refuse
    to prepare the return or other documents.

Click here to view Rules of Professional Conduct

Circular 230 restricts Enrolled Agents from working with individuals who have been sanctioned by the IRS Office of Professional Responsibility (OPR). However it is often difficult to identify someone who has been sanctioned. As a service to Members, the E&PC Committee has provided a link to OPR’s Disciplinary sanctions web page.
Are you interested in being an Ethics Investigator? Please fill out the Ethics Investigator Interest Form and attach your resume to the interest form. Return completed interest form and resume to CSEA EVP Scarlett Vanyi CAE at svanyi@csea.org. In addition, Members interested in ethics investigations can become familiar with the process by reviewing the Ethics Investigation Self Study Manual.

Thank you for your willingness to serve CSEA!

Section 7216 FAQ’S  

Can I send a greeting card to my clients without timely prior consent? General greeting cards such as a “Happy New Year” greeting may be sent out if sent indiscriminately to all clients. However, a greeting card to celebrate a specific client’s birthday, where that birth date is derived from the tax return information you received, is a use of tax return information for which prior approval would be required.

What authorization is needed from a client to forward a copy of their tax return to a bank or mortgage broker? Disclosure of a client’s tax return information to a bank or mortgage broker is one of the classic cases of a disclosure to a third party. Such a disclosure does not fit within any of the exceptions under the second revised regulation (301.7216-2) to the requirement of prior written consent. Accordingly, you should have the taxpayer sign an appropriate consent form before making the disclosure to the third party. A letter, email, or note is not sufficient.

From a practical perspective, does it make sense for preparers to consider sending information to taxpayer directly and let them forward onto third parties where disclosure is at request of taxpayer/client? Yes. That is true from a practical perspective and from the perspective of risk management. Because in many jurisdictions the ability of third parties to maintain a claim against an accountant is dependent on the existence of a direct relationship between the third party and the firm, the better policy is for firms to refrain from dealing directly with third parties whenever possible.  

Is consent required relevant to technology providers (software, hardware) who have access to our system?No. Pursuant to the second revised regulation, at 301.7216-2(d)(2), such disclosure may be made as long as it is only to the extent necessary to service hardware/software used to prepare income tax returns, and as long as the firm provides the contractor with a written notice informing the contractor that IRC §6713 and 7216 apply to the contractor (which is deemed a preparer under those sections) and describing the requirements and penalties of those sections.

Is a signed consent form needed before disclosing information regarding a company to an employee of the company (i.e. the bookkeeper)? As an initial point of clarification, the written consent requirements of IRC §7216 and its revised regulations apply only to disclosures and uses of tax return information. Therefore, if the information to be disclosed or used does not fit within the definition of tax return information (see 301.7216-1(b)(3)), the written consent requirements we are discussing would not apply. That being said, if the firm needs to disclose tax return information of a business entity to an employee of the entity in order to perform other accounting services for that entity, the disclosure appears to fit within one of the exceptions set forth in the second revised regulation, at 301.7216-2(h)(1)(i), negating the need for prior written consent, unless the client entity has expressly instructed otherwise. 

If your client wants you to work with a payroll company directly to set up their account by providing all of the client’s info (name, address, EIN) to help get the account open. Is this a service we should stop doing since we don’t have written consent from the client to release this info to the payroll company? Because it appears that the payroll company would not be providing the firm with auxiliary services in connection with income tax return preparation, disclosure of tax return information to the payroll company does not appear to fit within one of the exceptions identified in the second revised regulation (301.7216-2). Therefore, you should not disclose tax return information to the payroll company unless and until you first obtain a signed consent form from the taxpayer.

Do we need the client’s prior written consent to authorize other preparers within my own firm to work on the return (employees or per diem)? No. The second revised regulation, at 301.7216-2(c)(2), provides that as long as the preparing firm is located within the U.S., the firm may disclose the taxpayer’s tax return information with others in the firm for the purpose of assisting in the preparation of the tax return.

We have multiple return preparers in our firm. In the consent form do we need to specifically name the person who prepared the return or would the firm name be sufficient? Under the first revised regulation, at 301.7216(b)(2) and the examples in that section, the firm and any member or employee of the firm who participates or assists in the preparation of a return would qualify as a prepare of the return. Although the regulation doesn’t speak directly to the issue you raise, it would appear reasonable under the circumstances to identify the firm as preparer on the consent forms.

Will the IRS also disclose taxpayer information to third parties? No. The IRS, by federal law, is strictly prohibited from sharing taxpayer return information with any third party except with taxpayer consent or in circumstances specifically authorized by Congress. These regulations affect only tax return information in the hands of tax preparers.

For additional information:

http://www.irs.gov/Tax-Professionals/Section-7216-Information-Center
http://www.irs.gov/uac/Section-7216-Frequently-Asked-Questions

Return of Client Records and Fee Disputes

Following a heated disagreement between us, my client called and demanded his records back but is refusing to pay me for prior services. He also threatened to sue me if I don’t give him a backup of my QuickBooks files for his new preparer to use going forward. What am I required to give him?

You must return the client’s own records, including any financial statements, workpapers, and schedules that you prepared IF the client has paid you for them. Circular 230 says “in the case of a dispute over fees for services rendered, the practitioner need only return those records that must be attached to the taxpayer’s return,” but under California law, all documents owned by the client must be returned. You may charge a reasonable fee for duplicate copies if the client has already received their copy of the work (such as tax returns and/or financial statements) but you do not have to hand over your own work product if you have not been compensated for it.

After spending two hours with a new tax client (preparing her return, explaining that her personal expenses are not deductible, and calculating an approximate balance due figure), she left my office with a short list of additional information necessary to complete her return.  Three days later she called to ask for her records back, saying she’s found someone else who can get her a big refund. Can I demand that she pay me for my time as a condition of returning her records? Is there anything else I should do, since I’m certain she plans to ignore the rules as I correctly explained them to her?

You can certainly suggest she should pay you for your time, but you cannot withhold her records if she does not pay you.  If she signed an engagement letter that specifies how fees are handled, that may be helpful for collecting from her, but you still need to return her source documents, including your own organizer if she completed it.

You may keep a copy of the documents used in work you accomplished and advice you provided. You do not need to cooperate with her new preparer and have no obligation to provide any additional services, but you cannot “turn her in” for her suspected cheating, as that would violate the disclosure rules under IRC §7216.