Help! The answer seems contradicting to the explanation
A single-member LLC engages a CPA to prepare the year 2 income tax return. In the course of preparing the tax return, the CPA discovers that a partnership return was filed for year 1. Under the AICPA Statements on Standards for Tax Services, which of the following statements is not true regarding the CPA's duties upon discovering an error in filing the year 1 partnership return?
a.The CPA should make sure the LLC files the correct return for year 2; under the AICPA standard, the CPA has the duty to take reasonable steps not to repeat the error.
b.The CPA should let the LLC decide whether it wants to correct the error; under the AICPA standard, the CPA has the duty to let the LLC make the decision to correct the error.
c.The CPA must inform the IRS that the LLC filed an incorrect tax return for year 1; under the AICPA standard, the CPA has the duty to report the error to all relevant taxing agencies.
d.The CPA must inform the client that an incorrect return was filed; under the AICPA standard, the CPA has the duty to report the error to the taxpayer.
Explanation
Choice “c” is correct. Under the Statements of Standards for Tax Services, a CPA does not have the duty to report an error on a previously-filed tax return to taxing agencies, nor does the CPA have the responsibility of making the decision of whether to correct the error—that decision is left to the taxpayer
.