Pamplona, Emylene Mutya B. A3A Article: Representing Clients with tax delinquencies and deficiencies (Donald L.

Ariail, Michael M. Smith and L. Murphy Smith, April 2009, Journal of Accountancy) One of the CPAs niches is to help their clients encountering tax issues especially if it involves the latters tax deficiencies. It is important that accountants have adequate knowledge and awareness on the updated tax laws when facing this kind of work. As a part of an effective client management, successful tax resolution and representation services are essential in gaining their loyalty. These services refers to assisting taxpayers in filing returns in cases that they have inability to pay what is due to them. However, CPAs should also be aware of potential criminal problems that may occur when auditing the books. It is included in the accounting ethics that they have the freedom of speech or to whistle-blow any action that is considered illegal. They should be careful if there are indications that the clients are involved in tax evasion like not reporting illegal income, using fictitious accounts or filing as tax protesters. It is to be noted that tax evasion is significantly different from tax avoidance. Tax avoidance is minimizing the payment of taxes through means not contrary to law. Before beginning tax resolution negotiations, it is required that an engagement letter was processed. It should include the taxpayers current and past due returns with the corresponding tax resolution procedure. The CPA, on the other hand, should state in the letter that he will represent the taxpayer to the best of his ability. The doctrine of compromises is the solution when the tax due violates the ability-to-pay principle among the taxpayers. If the taxpayer is under the non-collectible status, the taxing authorities may stop the levies through compromise. It is the duty of the CPAs to inspect if the taxpayer really has unavailability of assets to pay. The internal revenue laws are considerate on abating taxes if the person demonstrates a reasonable cause for failing to file or pay. But limiting their responsibility is when frivolous tax return filers are under criminal investigation, in which cases like this should be handled by a tax or criminal attorney. Once the CPA has resolved the tax problem of his client, rewarding incidents will follow. It will give rise to long-term clients and a good reputation.

Thus, tax resolution and representation services are very beneficial to taxpayers in our society. It is imperative that a review of tax filing is conducted because we might not know that this will result to overpayment of taxes. It should immediately be settled so that claim of refund will be possible. The doctrine of compromise is also valuable in times of bankruptcy or other cases that the taxpayer has inability to pay what is due to him. Moreover, the taxpayer always has the right to appeal if the levied amount of tax liability disagrees with the expected amount filed by the taxpayer. Taxing authorities may have over-assessed tax liability by mistake. This is sometimes unavoidable so the taxpayer should really refer to consultants that can aid him in solving his dilemma. Equal protection of law is a constitutional limitation of taxation which states that all persons subject to legislation shall be treated alike under similar circumstances and conditions. From this, it is simply a statement that no one shall be deprived in paying taxes. The government has the grant to enforce contributions from its citizens while the citizens have the right to appeal if what is due to them is unlawful. It should follow the principle that higher taxes are collected from those who earn more and use the funds collected for the welfare of the people in general. Of course, higher taxes should be demanded from those who have higher sources of income. This follows the principle of theoretical justice in producing a sound taxation system. The society is advantageous of having accountants to conduct audit investigation. It is very helpful that a review of the entitys books is made to assess if we are paying right taxes. Thus, helping us to compromise our liabilities in times of deficiency is a great answer to the threats of legal sanctions. As accounting students, it is favorable to us to be aware of the compromise process because it is an incident that is really happening in the society. Besides, it is truly a part of our responsibility in handling clients to provide advices to those tax problems. It is important that our clients should be satisfied with our service because it is the rewarding area of our practice. Moreover, a CPA should be observed of holding competence and integrity in his interaction with people especially to clients.