Assignment #1

1. A. In the article “CPA is Disbarred by the Office of Professional Responsibility-Lessons for Tax Practitioners,” a complaint was made by the OCR against Tim W. Kaskey, which alleged that he violated Circular 230 in multiple ways including: 1) willfully failing to file his own tax returns, 2) failing to exercise due diligence in preparing his client’s returns, 3) failing to exercise due diligence in determining the correctness of the written representations he made to the IRS when he prepared and submitted his client’s returns, 4) failing to exercise due diligence in making representations to the IRS during an audit, and 5) failing to disclose to his clients that they could avoid penalties associated with their tax positions.

B. Kaskey failed to initially respond to the complaint by OCR.

C. Kaskey did not appear at the administrative proceeding before the Administrative Law Judge.

D. Kaskey’s excuse was that he had an ongoing medical condition that prevented him from filing his own federal income tax returns.

E. Kaskey argued that he failed to perform due diligence because the errors in his clients’ tax returns were the result of his clients misrepresenting facts to him.

F. The following particular facts were persuasive to the Appellate Authority relating to Kaskey’s appeal: the taxpayer’s reported wages did not match the corporation’s reported officer compensation even though they were the sole officers of the corporation. Also, the corporate books clearly indicated that the taxpayers had expensed personal items through the corporation without reporting loans or distributions reflecting the payments.

2. Discussion question #5 at the end of Chapter 4 asks if you disclose errors to an agent when representing a taxpayer when you know there are substantial errors in the return. Circular 230 10.21 says that you must advise