Statements of Position



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In August 1988 the AICPA Tax Division issued revised Statements on Responsibilities in Tax Practice (SRTPs). The primary purpose of these advisory statements on appropriate standards of tax practice is educational. SRTP (1988 Rev.) No. 1, 'Tax Return Positions," contains the standards a CPA should follow in recommending tax return positions and in preparing or signing tax returns and claims for refunds. The standard in SRTP (1988 Rev.) No. 1 requires that a CPA have "a good faith belief that the [tax return] position [being recommended] has a realistic possibility of being sustained administratively or judicially on its merits if challenged." This standard is referred to in this exposure draft as the "realistic possibility standard." Pursuant to SRTP (1988 Rev.) No.1, if a CPA concludes that a tax return position does not meet the realistic possibility standard, the CPA may still recommend the position to the client, or prepare and sign a return containing the position, if the position is not frivolous and is adequately disclosed on the tax return or claim for refund. This exposure draft interprets the realistic possibility standard. Its purpose, like that of the SRTPs themselves, is educational. This interpretation of the realistic possibility standard was approved by both the Responsibilities in Tax Practice Committee and the Federal Taxation Executive Committee. After the termination of the comment period, the Responsibilities in Tax Practice Committee will consider what changes should be made to the interpretation in light of comments received from the AICPA Tax Division membership and others. The interpretation will again be put to the vote of the Responsibilities in Tax Practice Committee and the Federal Taxation Executive Committee and, if approved in each committee by a two-thirds majority, will become effective.

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Accountants -- Professional ethics -- Standards -- United States; Tax accounting -- United States


Accounting | Taxation


Originally published by: American Institute of Certified Public Accountants; Copyright and permission to reprint held by: American Institute of Certified Public Accountants.

Proposed interpretation of statement on responsibilities in tax practice (1988 revision) no. 1 : Realistic possibility standard ;Realistic possibility standard, includes SRTP no. 1, 1988 rev;Statements on responsibilities in tax practice, no. 1, 1988 rev; Exposure draft (American Institute of Certified Public Accountants), 1990, Aug. 15



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