Compliance with IRS Circular 230 Notice & Tax regulations

IRS Circular 230 Required Notice–IRS regulations require that we inform you that to the extent fax or email communications contain any statement regarding federal taxes, that statement was not written or intended to be used, and it cannot be used, by any person (i) for the purpose of avoiding federal tax penalties that may be imposed on that person, or (ii) to promote, market or recommend to another party any transaction or matter addressed herein.

The United States Treasury Department and the Internal Revenue Service have been engaged in an effort to curb abusive tax shelters. As part of this effort, the IRS issued regulations known as IRS Circular 230 that have broad effects on tax-related communications sent by the firm to clients, including those communications relating to federal income tax planning techniques.

The new rules require us to add certain standard language to many of our letters, memos, e-mails, and other correspondence concerning federal tax matters, unless the advice is in the form of a formal opinion that complies with the requirements of IRS Circular 230.

The standard language follows:

IRS Circular 230 Required Notice–IRS regulations require that we inform you that to the extent this communication contains any statement regarding federal taxes, that statement was not written or intended to be used, and it cannot be used, by any person (i) for the purpose of avoiding federal tax penalties that may be imposed on that person, or (ii) to promote, market or recommend to another party any transaction or matter addressed herein.

In order to comply with the requirements of IRS Circular 230, the firm has adopted a policy of generally including language similar to that described in the previous paragraph in all written communications (including e-mails) sent by attorneys unless the writer specifically determines not to include it. As a result, you may see the disclosure language in e-mails from us that do not discuss any tax issues. The inclusion of the disclosure does not indicate that tax-related penalties would, or could, be asserted.

A practitioner who fails to satisfy the requirement of the new rules risks censure, disbarment and substantial penalties.

In those cases where a client does not want written advice to state that it cannot be used for the purpose of avoiding tax-related penalties, attorneys will often need to provide lengthy opinions which carefully evaluate all potential federal tax issues. These opinions will likely require a time-consuming investigation into the facts underlying the federal tax issues and a substantial amount of research of relevant law to determine whether we can issue such an opinion. Unfortunately, we believe that complying with Circular 230 in providing such tax advice may substantially increase costs to clients.

Should you have any questions about IRS Circular 230 or the disclosure, please call us 305.848.8585.