You are a tax preparer who is also a Certified Public Accountant meeting a potential client for the first time. During your discussion your potential client informs you that he has a business, a small vegetable farm, which sells produce to the public predominately at farmers’ markets on weekends. He states, adamantly, that because he receives payment in cash he is not required to report it as income.
- Research relevant tax code and write one or two paragraphs that explain whether or not there is any basis to your client’s statement. Please be sure to reference the relevant tax code(s) in your discussion and clearly state your position.
- Research the Internal Revenue Service (IRS) requirements for tax preparers and write one to two paragraphs that explain your responsibilities as a tax preparer and the potential problems you would encounter if you did not properly understand the tax code or inform your client of his obligations with respect to the preparation of his tax return.
- Using the AICPA’s Statement on Standards for Tax Services, write one or two paragraphs that explain your obligations as a tax preparer related to your potential client’s tax return.
Use the following website: http://www.aicpa.org and access “Statements on Standards for Tax Services – Effective January 1, 2010” for assistance with requirement number 3.
Be sure your paper is free of spelling and grammar errors.