Effective June 21, 2005, new IRS regulations impose even more restrictions on how accountants and lawyers provide written advice about federal tax issues.
These new requirements mean you will see revised practices in our communication with you. These requirements apply even to informal e-mail correspondence.
All written federal tax advice that we may provide to you must either:
- be a formal written opinion that addresses all material federal tax issues involved and complies with other stringent requirements; or
- contain the following legend: “This written communication was not intended or written to be used, and it cannot be used, for the purpose of avoiding penalties that may be imposed under federal tax law.” (This legend is provided according to Circular 230).
We recognize that in most cases the time, effort and expense involved in preparing a formal tax opinion on which you may rely to avoid federal tax penalties will not be cost-effective. We have chosen, out of an abundance of caution, to include the legend above automatically in all of our e-mail correspondence, memoranda, letters and other written advice, except where it is clear that no tax issue is involved or where the advice is given in the context of a formal opinion that complies with the new requirements under Circular 230 and intended to provide the recipient with penalty protection. Unfortunately, our policy may result in some communications bearing the legend in situations where no tax issue is addressed.
The presence of the legend on any written communication from us does not imply that any lesser degree of care or expertise has been brought to bear on the issues addressed. The sole effect of the legend is to notify you that the advice is not in a form that will permit anyone to rely upon it to avoid federal tax penalties. By using the legend we will be able to continue to provide federal tax advice in ways that are appropriate to the context in which the advice is requested, without forcing our clients to incur the significant costs associated with a formal opinion. Of course, when a formal opinion is appropriate and requested, we will comply with the requirements for preparing such an opinion and will not include the legend in the opinion.
If you have any questions or concerns about these new rules, please do not hesitate one of our CPAS in the tax department.
