March 2000

Editor's Note: Ethics in Action is a new feature that educates members on ethics issues and provides a greater understanding of the profession's self-disciplinary process. Authored by members of the NYSSCPA Professional Ethics Committee, columns summarize actual ethics case investigations, with names and other details changed to protect the identity.

CPA Fails to File Own Tax Returns on Time: A Cautionary Tale

By Rona L. Cherno, CPA

An NYSSCPA member was suspended from practice before the IRS for failure to file her personal income taxes for several years. Her name was published in the IRS Bulletin as a violator of its rules. Following its normal routine under the Joint Ethics Enforcement Program (JEEP), the AICPA notified the NYSSCPA Professional Ethics Committee of the IRS suspension, and the Society committee launched its own investigation.

The member was overwhelmed by an unfortunate series of professional and family crises that went on for years. No matter how hard she tried to catch up on her responsibilities, there was always a new crisis. The CPA, her practice, and her family all suffered. She sought assistance from the Society's confidential help line for professional counseling and information.

The CPA's problems persisted and grew worse. Her partners and staff tried to no avail to deal with the mounting backlog of work, and work for clients suffered. The family problems did not abate. The CPA enrolled in CPE time management courses and caught up on her work, filed her returns, and began to see daylight. But by this time, it was too late.

Under JEEP, the AICPA and the various state societies work to apply standards uniformly in enforcing rules of professional conduct. Current policy with regard to Rule 501 (Acts Discreditable) is suspension of at least six months in the case of a member's failure, however explained, to timely file his or her own income tax return.

The CPA argued that her situation did not warrant a strong sanction like suspension because of her extenuating personal circumstances and her ultimate payment of the taxes. The Society's Professional Ethics Committee disagreed. After ascertaining the facts, the committee found that the member violated Rule 501 and imposed a six-month suspension as the penalty. The AICPA concurred. *

Rona L. Cherno is a member of the NYSSCPA Professional Ethics Committee and a consultant to Global Execution Network Associates Inc., a financial services company in Briarcliff Manor, N.Y.

The NYSSCPA Professional Ethics Committee encourages Society members to join its committee. Current and former committee members state that its member and public service work is challenging, interesting, and rewarding, and that the interaction with peers is a valuable and memorable experience. The Society mailed committee applications to members in February. To serve on the Professional Ethics Committee, or any other Society committee, please contact NYSSCPA Committee Relations Manager Nereida Gomez at (212) 719-8358,(800) 633-6320, or ngomez@nysscpa.org.