Circular 230: estate planners take note: Circular 230 standards can apply to you.

• Author: Dellinger, Kip

Much has been discussed about Circular 230's implications on CPAs regarding income tax advice and written communications. But the rules can apply to estate tax advice, including planning recommendations. What's more, the application of the rules is a little different when it comes to estate planning.

Written communications involved in estate and gift issues are likely:

* To be fewer in number than with regard to everyday tax advice;

* To constitute preliminary advice when communicated via e-mail;

* To commonly address "principal purpose" safe harbor advice;

* To be construed more often as a marketing opinion;

* To generate the "clash" between substantial authority vs. more likely than not permissible levels of assurance necessary for penalty protection; and

* Are less likely to take the form of e-mail communications.

Estate and gift tax planning written communications usually are tailored to a client's situation, which may make compliance with Circular 230's covered opinion regulations (Sec. 10.35) and other written advice standards (Sec. 10.37) somewhat less onerous than it may appear.

However, CPAs who provide estate planning services frequently will be able to exclude their written advice from the strict covered opinion standards as preliminary advice because the covered opinion will later come from the attorney, who will advise on or describe the plan that has evolved from the preliminary advice.

Still, it is fair to assume that even preliminary written advice is governed by Sec. 10.37 for other written advice.

Advice Directed to Clients

Communications directed to a specific client sometimes encourage the client to consider a particular technique. Such communication will explain the objective, structure and operational characteristics of the technique in broad terms.

This type of communication is usually not intended to be the final word; it is preliminary advice that falls outside of Circular 230's "written advice" with respect to a given client.

But a question arises whether or not such advice is a marketed opinion. This is not likely because it is intended to be read and used by the specific client and not third parties.

Firm Newsletters, Seminars and Sales Pitches

Another type of communication used by firms is the sales pitch, sometimes found in newsletters and seminars or similar gatherings. Sales pitches also are used by promoters of estate planning services, such as living trust seminars, or the ever-growing number of firms and...