Which of the following is CORRECT about a CPA's responsibility with regard to tax return positions under Statements on Standards for Tax Services No. 1 (SSTS No. 1):
A) A CPA may not base his or her position on authority that is not approved by the IRS under Section 6662 (accuracy-related penalty).
B) A CPA may sign a return which has a tax position that has a realistic possibility of being sustained on the merits.
C) A CPA may not sign a return which has any tax position that is not fully disclosed.
D) All of the above statements are correct.

Question

Quizplus · Accepted Answer

According to SSTS No. 1, a CPA may sign a return that has a tax position that has a realistic possibility of being sustained on the merits. A CPA is not required to base his or her position on authority approved by the IRS under Section 6662, but the CPA should have a reasonable basis for the position taken. Additionally, a CPA must fully disclose all relevant information and should not sign a return that contains any position that is frivolous or contrary to law. However, option A is incorrect because the standard requires the CPA to have a reasonable basis for the position taken, not that the authority must be approved by the IRS. Option C is also incorrect because SSTS No. 1 does not require full disclosure of all relevant information, only tax positions taken on the return.

Which of the Following Is CORRECT About a CPA's Responsibility