CircuLar 230 changes: final modifications to written tax advice standards.

• Author: Josephs, Stuart R.
• Position: Fed Tax

Final regulations were issued June 9 (T.D. 9668) that made various changes to Circular 230. The most important provisions eliminate the complex rules for "covered opinions" and expand written tax advice requirements.

Therefore, tax practitioners will no longer need to follow a separate set of standards regarding covered opinions when providing written advice to clients. The Treasury Department anticipates that the removal of' this requirement will eliminate the use of' a Circular 230 disclaimer in email and other written communications because the new See. 10.37 rules on written opinions do not include the disclosure provisions in the old covered opinion rules (discussed in California CPA, December 2012, Page 26).

These final regulations are effective June 12, 2014.

Recommendation: Circular 230 disclaimers should be discontinued immediately for all emails and other written communications.

'Federal Tax Matter' Defined

The proposed regulations did not define a "federal tax matter." However, under Rep. Sec. 10.37(d), a federal tax matter is any matter concerning the application or interpretation of:

* A revenue provision as defined in IRC Sec. 6110(i)(1)(B);

* Any provision of law impacting a person's obligations under the internal revenue laws and regulations, including, but not limited to, the person's liability to pay tax or obligation to file returns; or

* Any other law or regulation administered by the IRS.

Government Submissions

Government submissions on matters of general policy are not considered written advice on a Federal tax matter for purposes of Regs. Sec. 10.37.

CPE Presentations

Continuing education presentations provided to an audience solely For the purpose of enhancing practitioners' professional knowledge on federal tax matters are not considered written advice on a federal tax matter for purposes or Regs. Sec. 10.37. However, this does not apply to presentations that market or promote transactions.

New Standards

The proposed regulations provided that the IRS will apply a heightened standard of review to determine whether a practitioner has satisfied the written advice standards when the practitioner knows or has reason to know that the written advice will be used in promoting. marketing or recommending an investment plan or arrangement a significant purpose of which is the avoidance or evasion of any tax imposed by the Internal Revenue Code.

The final regulations clarify that the IRS will apply a reasonable practitioner...