Treasury Department Circular 230 Disclaimer Eliminated Form 2848 Incorporates Circular 230

Practitioners should remove any reference to a Circular 230 or IRS requirement in disclaimers sent with any written correspondence.  The IRS Office of Professional Responsibility (OPR) may issue letters to practitioners if they continue to use the disclaimer on their emails.[1]  A brief explanation follows.

The Internal Revenue Service issued final regulations replacing Circular 230: Regulations Governing Practice before the IRS effective June 12, 2014.  The final regulations under 31 CFR, Subtitle A, Part 10 (TD 9668) were reprinted as Treasury Department Circular 230 (Rev 6-2014).  The revised Circular 230 modifies the standards that govern written advice by individuals who practice before the IRS.  Section 10.37 of the prior Circular 230 (issued in June 2005) required practitioners not to give written advice, including electronic communications, on Federal tax issues that included assumptions.  These regulations led to the ubiquitous disclaimer on email communications and websites regarding U.S. tax advice.

Under the new regulations the written disclaimer is not necessary.  The previous requirement for written advice instructed practitioners that they must not give written advice based on assumptions.  The revised Circular 230 Section 10.37 states that “A practitioner may give written advice (including by means of electronic communication) concerning one or more Federal tax matters subject to requirements… [that] [t]he practitioner must-

(i) Base the written advice on reasonable factual and legal assumptions (including assumptions as to future events);

(ii) Reasonably consider all relevant facts and circumstances that the practitioner knows or reasonably should know;

(iii) Use reasonable efforts to identify and ascertain the facts relevant to written advice on each Federal tax matter;

(iv) Not rely upon representations, statements, findings, or agreements (including projections, financial forecasts, or appraisals) of the taxpayer or any other person if reliance on them would be unreasonable;

(v) Relate applicable law and authorities to facts; and

(vi) Not, in evaluating a Federal tax matter, take into account the possibility that a tax return will not be audited or that a matter will not be raised on audit.”[2]

Continuing education presentations on Federal tax matters provided to practitioners are not considered written advice.  Marketing or promotional transactions do not fall under the continuing education presentation exception.[3]

The IRS will rely on the reasonable practitioner standard when evaluating whether a practitioner has violated the regulations in Circular 230.[4]

Practitioners and lawyers outside the tax arena should be aware that Circular 230 is initiated through the submission of Form 2848: Power of Attorney and Declaration of Representative[5].  Form 2848, Part II, explicitly states that the representative is subject to Circular 230 as amended.  Therefore, any attorney or representative designated on the Form 2848 must comply with Circular 230.

 

[1] Tax Notes Today, June 18, 2014.  http://www.irs.gov/pub/irs-utl/OPR_Will_Tell_Practitioners_to_Remove_Circular_230_Disclaimers.pdf

[2] Circular 230 Section 10.37 (a)(1) and (a)(2).  http://www.irs.gov/pub/irs-pdf/pcir230.pdf

[3] Circular 230 Section 10.37 (a)(1).

[4] Circular 230 Section 10.37 (c).

[5] Form 2848 (Rev. July 2014)  http://www.irs.gov/pub/irs-pdf/f2848.pdf

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