A classmate of yours, Frank Lynn, is finishing his BS-Business degree at Franklin University. Frank...

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A classmate of yours, Frank Lynn, is finishing his BS-Business degree at Franklin University. Frank works full-time in the accounting department of a construction company. He’s married with two young kids. Despite his busy schedule, he’s thinking of doing income tax preparation beginning next month. Frank has taken several tax courses at Franklin and feels he has enough knowledge to get started. He’s planning to contact family members and friends and let them know he’s available to do their taxes. Because he’s so busy at year-end right now at his full-time job, he’s asked for your help in doing research regarding any limitations or restrictions on income tax preparers who are not CPAs or attorneys. Frank wants to make sure he’s in full compliance both legally and ethically. He also wants to know if there is any possible legislation on the horizon which might impact tax return preparers.
He has done some preliminary research and found these resources, which might be relevant. Frank asks for your assistance analyzing them, and doing follow-up research to other relevant resources.
IRS Office of Professional Responsibility
Circular 230
Loving vs. IRS 2014 Court of Appeals case House of Representatives Bill 4141 (Google News for “H.R. 4141”) currently being considered in the House of Representatives Please remember to use subheadings:
FACTS:
ISSUE:
AUTHORITIES:
CONCLUSION:
ANALYSIS:

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Robert · Accepted Answer

1 
 
Research Memo  
To: 
From: 
Date: 
Subject: Research Findings on the Issue of Roles and Responsibilities of a Non-CPA 
Income tax preparers, who are not CPAs or attorneys, have some limitations that have to be 
explained through the process of providing some specific examples and their analysis.  
Facts: Non-CPAs have some specific limitations. As per the requirement of some states, non-
CPAs, unlike CPAs, must have gone through certain number of qualified hours of study along 
with continuing education hours each year (Day, 2008). It is noteworthy that as financial 
statement required a methodical examination and testing of the financial records of a company, 
only a CPA, and not a non-CPA tax preparer, can prepare an audited financial statement (Day, 
2008). Moreover, a non-CPA tax prepare is not allowed, in most states, to audit or review 
financial statements (Day, 2008).  
Issues: Having mentioned the limitations, there are certain issues that have to be mentioned in 
respect of revealing the scopes and opportunities of a non-CPA tax preparer. It is fact that due to 
lacking some specific qualifications non-CPAs are not allowed to review or audit financial 
statements, but he/she is usually allowed to prepare a simple financial statement that is suitable 
for preparing a tax return (Day, 2008). The inexpensiveness of non-CPA tax preparers also make 
them the first choice for many small- and medium-scaled businesses, but as a responsibility, a 
non-CPA tax preparer should not use any given information for tax preparation without proper 
verification. In this respect a non-CPA tax preparer has to abide by the clauses of the 
professional code of conduct.  
Authorities:

A classmate of yours, Frank Lynn, is finishing his BS-Business degree at Franklin University. Frank works full-time in the accounting department of a construction company. He’s married with two young...

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