Ethics And Tax Education: A Change In Focus Is Needed

Abstract

The corporate scandals of recent years have highlighted the failure of ethics, not only in corporate management, but also in the big accounting firms. For tax professionals, there is an inherent conflict of interest that makes studying ethics in the context of tax practice problematic.  On the one hand, the tax professional is a client advocate with the responsibility of helping the client to legally minimize tax liability. On the other hand, tax professionals who are lawyers or CPAs and who practice before the IRS have both ethical and legal obligations mandated by their professions and the Department of the Treasury. For the tax educator, the problem is finding a way to reinforce the importance of ethical behavior while promoting an understanding of the inherent conflict that anyone in the tax profession faces.  In this paper, we look at ethics in tax practice and consider the difficulties faced by faculty in providing an ethical grounding for undergraduate students in taxation.  First we will discuss the professional standards already in place for CPAs—the AICPA Statements on Standards for Tax Services and the Treasury Department’s Circular 230.  Next we will discuss the need for new guidelines, as demonstrated by the recent wave of lawsuits over tax shelters.   Then we will look at ethics as covered in several popular tax textbooks.  Finally, we will offer recommendations on improving the coverage of ethics and refining the focus of materials commonly available for educators.