Accounting
Ethics in tax resolution: balancing client advocacy and legal compliance
CPAs specializing in tax resolution often walk a fine line between advocating for clients and adhering to
Navigating common ethical dilemmas in tax resolution
One frequent issue in tax resolution involves unreported income. It’s not uncommon for clients to believe that income not reported on a 1099 form is exempt from taxation. For example, some clients may assume that cash income doesn’t count if the IRS isn’t immediately aware of it. As one CPA likes to say, “I don’t look good in stripes, and neither do my clients.” The AICPA’s integrity principle mandates honesty in these situations. Educating clients about their obligations protects them legally and reinforces the public interest principle, which fosters trust between the profession and the public.
Conflicts of interest: identifying and resolving them ethically
Conflicts of interest are common in tax resolution, particularly when dealing with married couples or business partners. A typical example involves a couple whose spouse owes a significant amount to the IRS while the other has sufficient withholding to cover their liability. This can create a conflict, especially in divorce situations or where assets are shared. The AICPA emphasizes objectivity and independence in these cases, requiring CPAs to disclose any potential conflicts to all parties. In some cases, stepping away may be necessary to avoid compromising independence.
Clients also are tempted to suggest moving assets to a spouse’s name to avoid IRS scrutiny. One client, for instance, considered selling property and depositing the proceeds in a spouse’s account to avoid reporting it in an
Transparency and confidentiality: balancing ethical priorities
Transparency is critical in tax resolution. Clients must understand their options and the potential outcomes of different strategies. Whether
In one case, a client revealed they had an unreported gold bar and wished to exclude it from IRS submissions. The CPA refused to assist despite the client’s insistence, knowing that concealing assets violates ethical standards. Assisting clients in submitting inaccurate financial information undermines the profession’s integrity and carries severe legal consequences.
AICPA guidelines and their practical application
The AICPA’s Code of Professional Conduct is built on six principles: responsibilities, public interest, integrity, objectivity and independence, due care, and scope and nature of services. While these principles apply broadly across the profession, tax resolution requires nuanced application.
For example, due care requires CPAs to stay informed about IRS regulations and navigate complex tax laws effectively. When advising clients on whether to file jointly or separately for back taxes, CPAs must weigh the impact on both parties, especially in divorce scenarios or where significant assets are involved. Ensuring objectivity in these cases is crucial for providing unbiased advice.
The long-term benefits of ethical decision-making
Ethical missteps in tax resolution can have far-reaching consequences. Violations of IRS rules or involvement in fraudulent schemes can result in fines, loss of licensure, or even criminal charges. More importantly, ethical breaches damage the trust that clients, the IRS and the public place in CPAs.
Adhering to ethical standards fosters trust and builds long-term client relationships. Strong reputations with clients and IRS agents often lead to smoother negotiations and better outcomes. Upholding these standards is essential for sustaining a successful, reputable practice. In tax resolution, where the intersection of ethics and advocacy is particularly challenging, CPAs must remain committed to the AICPA’s Code of Professional Conduct. By balancing transparency, managing conflicts of interest, and maintaining the highest standards of integrity, CPAs can help clients resolve tax issues ethically and effectively, safeguarding their own reputations and public trust in the profession.
Carr, Riggs & Ingram, a Top 25 Firm based in Enterprise, Alabama, has added CapinCrouse, a Regional Leader based in Indianapolis, effective Jan. 17, 2025.
The deal is CRI’s biggest merger in its history, and the first since it
CapinCrouse focuses on exclusively serving nonprofits, such as faith-based organizations and private colleges. The merger will add 40 partners, 185 professionals and 15 offices to CRI, which has 437 partners and 2,304 staff
After the outside investment, CRI split its attest and non-attest practices, as is common when accounting firms receive private equity or venture capital funding. Carr, Riggs & Ingram, L.L.C., as an independent licensed CPA firm, is providing assurance, attest and audit services. CRI Advisors, LLC (including its subsidiary entities) operates as a separate legal entity, providing clients with tax and business consulting services.
“This merger represents an exciting milestone in our firm’s history and a significant advancement for both CRI and CapinCrouse,” said CRI Advisors LLC chairman Bill Carr in a statement Tuesday. “We have previously invested in firms that specialize in serving faith-based organizations and private colleges. With the addition of CapinCrouse, CRI is now positioned to become the leading national provider in these vital markets. By combining our strengths, we will enhance the value we offer and greatly expand our national geographical presence. We are proud to welcome CapinCrouse to the CRI family.”
Financial terms of the deal were not disclosed. CRI ranked No. 24 on Accounting Today‘s 2024 list of the Top 100 Firms, with $455.36 million in annual revenue. CapinCrouse ranked No. 27 on Accounting Today‘s Regional Leaders list of the Top Firms in the Great Lakes region, with $35.51 million in annual revenue.
“We are very pleased to join CRI,” said Fran Brown, Managing Partner of CapinCrouse. “For over 50 years, our focus has been on providing innovative service to nonprofit organizations whose outcomes are measured in lives changed. CRI’s commitment to client service, respect, and integrity is an excellent fit with our mission and firm culture. We will continue to operate under the CapinCrouse brand and are excited to now have access to more offerings and resources to further drive exceptional client service.”
Koltin Consulting Group CEO Allan Koltin advised both firms on the merger. “It is interesting to note that this is CRI’s biggest M&A deal in its history, and it comes on the heels of their private equity deal with Centerbridge Partners and Bessemer Venture Partners,” he said in a statement. “CapinCrouse, a top 125 firm nationally, is viewed by many as the preeminent firm in the country when it comes to the audit and related advisory services of nonprofits and religious organizations. My intuition suggests that going forward, we will see CRI expanding its geographic reach nationally by combining with more top 200 firms.”
Last August, CRI added
In 2022, CapinCrouse acquired the
President Donald Trump named Mark Uyeda, a Republican member of the Securities and Exchange Commission, as acting chairman of the SEC, while confirmation hearings await for Trump’s official pick as chairman, Paul Atkins.
Uyeda has been an SEC commissioner since 2022 and a member of the staff since 2006. Last month, he
“I am honored to serve in this capacity after serving as a Commissioner since 2022, and a member of the staff since 2006,” Uyeda said in a statement Monday. “I have great respect for the knowledge, expertise and experience of the agency and its people. The SEC has a vital mission—protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation—that plays a key role in promoting innovation, jobs creation, and the American Dream.”
Last month, Trump
As acting chairman, Uyeda announced Monday that he would be launching a crypto task force dedicated to developing a comprehensive and clear regulatory framework for crypto assets. The task force will be led by another Republican commissioner, Hester Peirce.
The task force plans to collaborate with SEC staff and the public to set the SEC on a regulatory path as opposed to pursuing enforcement actions to regulate crypto “retroactively and reactively,” according to a
“This undertaking will take time, patience and much hard work,” Peirce said in a statement. “It will succeed only if the Task Force has input from a wide range of investors, industry participants, academics and other interested parties. We look forward to working hand-in-hand with the public to foster a regulatory environment that protects investors, facilitates capital formation, fosters market integrity, and supports innovation.”
The task force plans to hold roundtables in the future, but in the meantime is asking for public input at [email protected].
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