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Proposed revisions to the AICPA tax standards (SSTS)

To keep pace with the evolving tax profession, the updates to the AICPA’s Statements on Standards for Tax Services (SSTSs) will guide tax practitioners into the future, help them enhance their services and maintain their professional edge. Learn more about the goals, timeline and FAQs for the proposed revisions and how you can provide input.

Proposed revisions to the AICPA tax standards (SSTS)

To keep pace with the evolving tax profession, the updates to the AICPA’s Statements on Standards for Tax Services (SSTSs) will guide tax practitioners into the future, help them enhance their services and maintain their professional edge. Learn more about the goals, timeline and FAQs for the proposed revisions and how you can provide input.

Exposure Draft and Invitation to Comment

The combined Exposure Draft (ED) and Invitation to Comment (ITC) presents the findings and conclusions of the SSTS Revision Task Force as approved by the Tax Executive Committee (TEC). The document is divided into two sections: Part 1: ED and Part 2: ITC.

The ED presents changes the AICPA proposes to make to the SSTSs. Following consideration of comments received, the changes outlined in the ED, if adopted, are expected to be included in a revised SSTSs document to be approved no later than May 31, 2023, and effective Jan. 1, 2024.

The ITC is separate and independent from the ED and presents items for consideration that will require additional research and investigation regarding the concept of quality management in tax.

Exposure Draft and Invitation to Comment

The combined Exposure Draft (ED) and Invitation to Comment (ITC) presents the findings and conclusions of the SSTS Revision Task Force as approved by the Tax Executive Committee (TEC). The document is divided into two sections: Part 1: ED and Part 2: ITC.

The ED presents changes the AICPA proposes to make to the SSTSs. Following consideration of comments received, the changes outlined in the ED, if adopted, are expected to be included in a revised SSTSs document to be approved no later than May 31, 2023, and effective Jan. 1, 2024.

The ITC is separate and independent from the ED and presents items for consideration that will require additional research and investigation regarding the concept of quality management in tax.

Feedback needed

Respondents are asked to provide comments on the proposed SSTS changes and questions listed in the ED and the ITC. Comments are most helpful when they refer to specific questions and include the reasons for the comments. When a respondent agrees with proposals in the ED or ITC, it will be helpful for the AICPA to be made aware of this view.

Please complete the Comments Form or email feedback to SSTScomments@aicpa-cima.com by Dec. 31, 2022. Comments will be available for viewing on the AICPA’s website at the conclusion of the comment period.

Feedback needed

Respondents are asked to provide comments on the proposed SSTS changes and questions listed in the ED and the ITC. Comments are most helpful when they refer to specific questions and include the reasons for the comments. When a respondent agrees with proposals in the ED or ITC, it will be helpful for the AICPA to be made aware of this view.

Please complete the Comments Form or email feedback to SSTScomments@aicpa-cima.com by Dec. 31, 2022. Comments will be available for viewing on the AICPA’s website at the conclusion of the comment period.

Timeline

The following graphic demonstrates the anticipated timing of the SSTSs updates and the research and exploration period on quality management in tax.

ssts-timeline

Timeline

The following graphic demonstrates the anticipated timing of the SSTSs updates and the research and exploration period on quality management in tax.

ssts-timeline

Objectives of the SSTS updates

The revisions to the SSTSs aim to strengthen and modernize member tax practices in areas such as data protection, reliance on tools and the representation of tax clients before taxing authorities. These potential revisions reinforce members as the premier providers of tax services.

Frequently asked questions (FAQs)

What are the SSTSs and who must comply with them?

The AICPA® Tax Executive Committee (TEC), an AICPA standards setting committee designated to promulgate tax practice standards, issues the Statements of Standards for Tax Services (SSTSs). The General Standards Rule (AICPA, Professional Standards, ET secs. 1.300.001 and 2.300.001) and the Compliance With Standards Rule (AICPA, Professional Standards, ET secs. 1.310.001 and 2.310.001) of the AICPA Code of Professional Conduct require compliance with these standards.

Many state boards of accountancy also incorporate the SSTSs as part of their professional rules of conduct for CPAs.

Why update the SSTSs?

The SSTSs need to be updated to:

  • Ensure the standards are better aligned to reflect the current state of the tax profession.

  • Address emerging needs of today’s members.

  • Reinforce members as the premier providers of tax services by emphasizing that they adhere to the highest ethical standards.

What are the proposed changes to the SSTSs?

Proposed updates to the standards include:

  • Reorganization of the SSTSs by type of tax work performed and

  • Promulgation of three new standards surrounding data protection, reliance on tools and the representation of tax clients before taxing authorities.

Please refer to the ED and ITC which maps the current SSTSs to the reorganized SSTSs and provides additional details related to the proposed revisions.

Why are the standards being reorganized?

Included in its efforts to update the SSTSs, the SSTS Revision Task Force developed a new practice-based organizational structure for the standards. Under the new organizational framework:

  • Standard 1 includes general tax guidance with broad applicability (includes new standards on data protection and reliance on tools).

  • Standard 2 includes tax return preparation guidance.

  • Standard 3 includes guidance specific to providing tax advice.

  • Standard 4 includes guidance for members providing tax representation services (new standard).

The existing standards broadly applied to all types of tax services and were drafted to be general, to allow for their use, no matter what kind of tax service was being delivered. When drafting the original standards, most tax services provided were compliance-oriented and involved tax return preparation.

This revision project has reorganized the standards so that most of the existing standards have been incorporated into either general standards (Standard 1) or compliance standards (Standard 2). Because the proposed new standards around data protection and reliance on tools apply to different types of tax services, they were also included with the general standards. The existing standard related to tax advisory services (Standard 3) and the new standard related to representation services (Standard 4) were determined to be unique and have been separately stated. This alignment is intended to assist members in applying standards to specific tax practice situations and to help them understand the scope and expectations of these standards.

What is being proposed regarding data protection?

The subject of the protection of taxpayer data has exponentially grown over time and has gained global importance as technology now allows for the transfer and storage of large amounts of confidential financial information with the simple press of a button. This data is rarely seen in a hard copy format.

The AICPA is proposing a new data protection standard. Members should make reasonable efforts to safeguard taxpayer data, including data transmitted or stored electronically, and members should consider applicable privacy laws when collecting and storing data.

The AICPA Tax Section offers the Gramm-Leach-Bliley Act Information Security Plan Template to help members with their due diligence.

What is being proposed regarding reliance on tools?

Tax is not a static subject, given regular changes resulting from various legislative and regulatory amendments and judicial decisions. However, these changes have become more frequent, extensive and complex over time, with related authoritative guidance from the taxing authorities often delayed or incomplete. This situation usually leaves members struggling to (1) provide clients or firm departments with the necessary information to allow the correct and accurate preparation and filing of their respective tax returns and (2) plan for future events to manage potential tax liabilities efficiently.

The AICPA is proposing a new reliance on tools standard. Members should exercise appropriate professional judgment and professional care when relying on a tool. Using a tool does not absolve a member of their professional obligations under AICPA or other applicable ethical standards.

What is being proposed regarding representation of tax clients before taxing authorities?

Best practices that were the forerunner of the existing SSTSs were written over 50 years ago. At that time, tax preparation was the overwhelming service that members provided. Since then, tax practices have expanded to offer a wide variety of services, including tax representation services.

The AICPA is proposing a new standard related to representing tax clients before taxing authorities. A member, and individuals working with or for the member, should have or take steps to obtain technical competence in the subject matter involved. The member should also take appropriate steps to ensure compliance with all relevant professional and regulatory obligations when representing a taxpayer and act with integrity and professionalism in all dealings with the taxing authorities. With taxpayer approval, a member should provide information that taxing authorities request on a timely basis unless there is a good faith belief that the information is privileged. The member should consider if the taxpayer’s conduct may be fraudulent or criminal and, if so, advise the taxpayer to retain legal counsel and refrain from further representation. Upon completion of the examination, the member should review any documents or computations detailing the examination results for the correctness and discuss with the taxpayer consequences of agreeing to these conclusions.

Is a new quality management standard being proposed?

No.

As part of updating the SSTSs, the SSTS Revision Task Force held extensive discussions around the importance of additional concepts with the potential to significantly affect the tax practice of the future. A resonating theme emerged in many discussions related to quality management in tax, defined as a proactive, risk-based, scalable approach to ensure that an individual or firm possesses the necessary competence to practice. Based on the discussions, members agreed that quality is a key market differentiator in their practices; however, its implementation is inconsistent, and the environment in which members operate is dynamic.

Given the importance of this topic, the AICPA invites members and stakeholders to comment on the questions raised in the ITC. The task force and the TEC will consider all comments in determining the best approach to address quality within the tax function.

Is peer review for tax being considered?

No.

Some members believe that initiating an approach to quality management in tax may be perceived as a step toward peer review. The TEC and the AICPA consider the concept of quality management and peer review to be independent and distinct from one another.

What is the difference between the ED and ITC?

The ED presents changes the AICPA proposes to make to the SSTSs. Following consideration of comments received, the changes outlined in the ED, if adopted, are expected to be included in a revised SSTSs document to be approved no later than May 31, 2023, and effective Jan. 1, 2024.

The ITC is separate and independent from the ED and presents items for consideration that require additional research and investigation and thus will require extra time to define and potentially implement. Depending on the nature of the comments received in response to the ITC, the AICPA will pursue further research to determine the appropriateness of future modifications to the SSTSs or other guidance. It is unknown if or when any changes resulting from the ITC will be implemented.

When are comments due?

The comment period for this ED and ITC ends on Dec. 31, 2022.

How should I provide comments?

Respondents are asked to comment on the proposed changes and questions in the ED and the ITC. Comments are most helpful when they refer to specific questions and include the reasons supporting the respondent’s view. When a respondent agrees with proposals in the ED or ITC, it will be helpful for the AICPA to be aware of this view.

Written comments on the ED and ITC will become part of the public record of the AICPA and will be available on the AICPA’s website after Dec. 31, 2022. The AICPA will consider all responses received on or before Dec. 31, 2022.

Please submit comments via our online form. Alternatively, you may email your submission to: SSTScomments@aicpa-cima.com.

Responses may be submitted in Word format or directly in the body of the email with an appropriate signature (name, firm). Unless the respondent explicitly permits otherwise, comments will be posted without the sender’s email address. Respondents may also submit a PDF version of their response for posting to the AICPA website.

When and where will comments be available for viewing?

Comments will be available for viewing on the AICPA’s website at the conclusion of the comment period.

Related resources

Current tax standards

The SSTSs are enforceable tax practice standards for AICPA members.

Tax Section resources

The go-to-source for tax practitioners.

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