IRS P UTS R ISK ON T AX P RACTITIONERS ON A LL A DVICE
On June 21, 2005, new Circular 230 became effective. It has been a matter of
discussion between the IRS and tax practitioners for the last year or more, as the IRS has
sought ways to limit or prevent the sale of tax shelters based on tax opinions. This is
another example of the government using a hammer to kill a fly.
The Circular was issued by the United States Treasury Department. It sets forth
rules that tax practitioners, including lawyers and certified public accountants, must
follow in providing written statements about certain Federal tax issues.
A Federal tax issue is a question concerning the Federal tax treatment of an item
of income, gain, loss, deduction or credit, the existence or absence of a taxable transfer of
property (such as whether a transfer to another is subject to Federal gift tax), or the value
of property for Federal tax purposes.
The Circular covers much more than formal legal opinions and may apply to any
writing relating to any Internal Revenue Code matter, including e-mail messages.
Practitioners who fail to comply with the Circular may be suspended or disbarred from
practice before the Internal Revenue Service (such as filing a return or participating in the
audit of a United States tax return), be publicly censured or be fined. Unfortunately, we
and many others anticipate that the Circular may increase the cost of delivering certain
written materials to taxpayers.
The Circular requires that certain written statements contain disclaimers or
warnings and you will see new statements in some messages from us, including e-mail
messages. All responsible tax practitioners will follow the requirements of the Circular. It
is our intention to continue to deliver the highest quality services to you and in a cost
efficient manner. Please call us if you have any questions about how the Circular may
affect our representation of you.
Charles H. Moses, III