Academic journal article Journal of Accountancy

Rules for Written Tax Advice Finalized: Circular 230 Final Regs. Make Ubiquitous Email Disclaimer No Longer Necessary

Academic journal article Journal of Accountancy

Rules for Written Tax Advice Finalized: Circular 230 Final Regs. Make Ubiquitous Email Disclaimer No Longer Necessary

Article excerpt

The IRS issued final regulations under Circular 230, Regulations Governing Practice Before the Internal Revenue Service (31 C.F.R. Part 10), on the rules for practitioners to provide written tax advice and certain other related provisions, adopting the proposed regulations (REG-138367-06) issued in September 2012 with some modifications.

The new rules withdraw the covered opinion rules in Circular 230, Section 10.35, which were widely considered unworkable, and replace them with one standard for written tax advice in Circular 230, Section 10.37. These rules apply only to practice before the IRS and do not change or replace other ethical or legal standards applicable to individuals subject to Circular 230.

Under the new Section 10.37 in the final regulations, practitioners must base all written advice on reasonable factual and legal assumptions; exercise reasonable reliance on the statements, representations, findings, agreements, and advice of taxpayers and others; and consider all relevant facts that the practitioners know or reasonably should know. Practitioners must use reasonable efforts to identify the facts relevant to written federal tax advice.

In a change from the proposed regulations, made in response to comments the IRS received, a requirement is added that practitioners consider all relevant legal authorities and relate the law to the relevant facts. Another change from the proposed regulations is a clarification that practitioners should consider what is reasonable under the facts and circumstances of a case when providing written advice.

A more significant change in the final version of Section 10.37 is the added clarification that government submissions on matters of general policy (e. …

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