Final answer:
The question pertains to the ethical and legal responsibilities of a CPA in relation to defending taxpayer positions under tax law, emphasizing that defenses should have a good faith basis in current law or argumentation for legal change. It also addresses the principles upon which taxes are based, namely the benefit and ability-to-pay principles.
Step-by-step explanation:
The question touches on the ethical standards and legal considerations that a Certified Public Accountant (CPA) should abide by when advocating for a taxpayer's position in relation to tax laws. According to these standards, the CPA must believe in good faith that the taxpayer's position is justified by current laws or can be backed by a solid argument for a change in the law. Notably, for a position to be considered defensible, it should stand a realistic chance of being upheld if challenged in an administrative or judicial setting.
Tax Requirements and Principles dictate that taxes need to be equitable, simple, and efficient to ensure that taxpayers understand and accept why they are being taxed. This understanding can lead to greater receptiveness towards paying taxes. Public policy advocates often start with an objective and create proposals to achieve it, using facts and evidence to persuade others of their benefits.
The two primary tax principles are the benefit principle, which suggests that taxes should be paid in proportion to the benefits received, and the ability-to-pay principle, which posits that those who can afford to pay more should contribute a larger share. Deciding between these principles can be challenging, as personal beliefs and societal norms might influence one's preferences.
Cases like Flast v. Cohen highlight the legal complexity of tax positions and the ability of taxpayers to challenge the use of federal funds in certain circumstances.