LEGAL DISCLOSURE: IRS CIRCULAR 230

You may have noticed a new disclosure on written communications from us or other advisers concerning tax-related matters.  Late last year, the IRS and Treasury Department amended IRS Circular 230 to require that attorneys who practice before the IRS must follow specific requirements in providing written tax advice.  The Circular 230 changes were intended to curb abusive tax transactions. 

The new rules focus on the ability of taxpayers to use written tax advice to protect themselves from federal tax penalties.  The new rules provide that any written advice from a lawyer involving federal tax matters will either be (1) a "covered opinion," i.e., a tax opinion that satisfies detailed requirements and upon which a taxpayer may rely for purposes of the penalty provisions of the Internal Revenue Code, or (2) "other written advice," which must contain a prominent disclosure that the advice may not be used to avoid federal tax penalties.  The disclosure will appear in a separate paragraph above the confidentiality notice, and will be distinguished by boldface print. 

When a client requests a formal tax opinion, we will render one in compliance with the new rules.  However, the inclusion of a disclosure on all other written advice, including correspondence, emails, letters, faxes and memoranda, will allow us to avoid the additional time and client expense of providing a formal opinion, or determining whether the new rules even apply to the written advice. 

In compliance with the new rules, any written advice from us concerning federal tax matters that is not a formal tax opinion will include the following disclosure:

IRS Circular 230 requires us to inform you that any statements contained herein are not intended or written to be used, and cannot be used, by you or any other taxpayer, for the purpose of avoiding any penalties that may be imposed by federal tax law.

The IRS Circular 230 requirement does not change our commitment or professional responsibility to render the best possible tax advice.  The disclosure does not reflect any change in the degree of quality and concern given to each attorney-client communication.  We will continue to stand behind our work product, regardless of whether it contains an IRS Circular 230 disclosure.

We ask that our clients be sensitive to our need to implement these practices to comply with the new rules that govern our tax practice.  If you have any questions concerning this disclosure or the new IRS Circular 230 requirements, please contact any member of the Taxation and Estate Preservation Group.