American Taxation Association

Circular 230 Rules - Written Tax Advice

New U.S. Treasury Circular 230 rules effective June 21, 2005 are impacting many forms of written tax advice. Treasury has not issued guidance explaining the scope of the Circular 230 rules or specifically excluding educational materials. As a result, in order to avoid any potential IRS penalties, some faculty have opted to use "legend out" language on all written communications including emails, published tax articles and similar writings, conference handouts, and education materials (PowerPoint slides, handouts, textbooks). An example of suggested "legend out" language is, "To comply with U.S. Treasury regulations, I advise you that unless otherwise expressly indicated, federal tax advice contained in this message was not intended or written to be used, and cannot be used, for the purposes of (i) avoiding tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions or (ii) promoting, marketing, or recommending to another party any tax-related matters addressed herein."

The ATA will monitor forthcoming guidance, provide comments to Treasury as necessary, and keep members updated. As of September 16, 2005 , the IRS has indicated that guidance will be issued soon on the nonshelter provisions of Circular 230.

For further discussion see "Practitioners Demanding Clear Outlines of Circular 230's Scope," Tax Analysts Document #2005-17652 and CCH Tax Briefing: Controversial Circular 230 Rules of Practice Now Effective, June 20, 2005 , CCH Tax Research Network.

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