IRS Circular 230 Requirements
On June 21, 2005, the U.S. Treasury Department issued amendments to Circular 230 Regulations. These rules relate to the provision of written tax advice. Under these rules, we are required to prepare a formal opinion that satisfies rigorous factual and legal diligence standards if we provide you with tax advice that you can rely upon. Failure to adhere to the formal opinion requirements will subject us to potential penalties. Any advice that fails to comply with the formal opinion requirements of the Treasury Department’s rules must include a disclaimer similar to the following:
“IRS Circular 230 Disclaimer. In accordance with IRS Circular 230, the content of this e-mail is not to be relied upon for the preparation of a tax return or to avoid tax penalties imposed by the Internal Revenue Code. If you desire a formal opinion on a particular tax matter for the purpose of avoiding the imposition of any penalties, please contact us to discuss the further Treasury requirements that must be met and whether it is possible to meet those requirements under the circumstances, as well as the anticipated time and additional fees involved.”
Unless you specifically request an opinion from us that satisfies the requirements of Internal Revenue Service Circular 230, you can expect to see the above disclaimer in our written communications.
We will serve you to the best of our ability on these tax-related issues and will provide you with advice that is both cost-effective and consistent with your needs. While the required disclaimer does not diminish the legal analysis that we undertake or the value of the applicable legal authorities, the IRS will no longer allow you to rely on anything less than an opinion in compliance with the requirements of Circular 230 for purposes of avoiding tax penalties. Tax penalties generally apply in circumstances where the position you took was successfully challenged. The existence of “substantial authority” may eliminate or mitigate any penalties.
The legal authorities discussed in our communications may constitute “substantial authority.” In the past, reliance on an opinion of counsel has served as an independent ground for the reduction or elimination of penalties. Now, unless written tax advice satisfies the stringent requirements described in Circular 230 for a formal opinion, it will not constitute such an independent ground for the reduction or elimination of penalties. Please discuss any situations with us where you might require formal opinions and analyses for purposes of avoiding penalties. However, most transactions and day-to-day legal advice you require.
Do not hesitate to contact us if you have questions about this procedure.
