Circular 230 Requirements: Are you in compliance?
To promote ethical practices by tax professionals, the IRS and the Treasury Department announced revisions to Circular 230 on December 17, 2004. These revisions went into effect on June 21, 2005. Circular 230 is applicable to attorneys, accountants and other tax professionals who practice before the IRS.
If your business involves giving written advice (even via electronic mail) concerning federal tax issues, you need to be concerned about compliance with the revised requirements of Circular 230. Written advice that relates to a plan or arrangement the “principal purpose” of which is federal tax avoidance, or if a “significant purpose” of the plan or arrangement is avoidance of federal tax, Circular 230 may require that you deliver your written advice in the form of a so-called “covered opinion.”
Appending a legend to written tax advice stating that the advice may not be used to avoid the imposition of tax penalties may be unwise and, more significantly, may be totally ineffective to avoid the drastic penalties that Circular 230 imposes on those who violate its provisions, even inadvertently.
Challenges abound in making a determination as to whether the “principal purpose,” or a “significant purpose,” of a given plan or arrangement is to avoid federal tax. Numerous complications are involved in crafting a letter, memorandum, email or other writing that complies with the requirements of Circular 230.
Sonnenschein’s Circular 230 Consulting Group are intimately familiar with Circular 230 requirements. We offer individual compliance solutions to lawyers, accountants, brokers, financial planners, insurance professionals and other professionals potentially affected by Circular 230.
Clary Redd leads our Circular 230 Compliance Consulting team. Partners and Fellows of the American College of Trust and Estate Counsel, Clary recently presented at 2006 Heckerling Institute on Estate Planning on compliance with Circular 230. He has also provided primers on Circular 230 as part of the Cannon Financial Institute’s well-known Estate Planning Teleconference Series.
We are available to help you to understand the onerous requirements, to determine which apply to you, to navigate your way through them, and to effectively avoid Circular 230’s draconian sanctions. We provide on-site presentations about Circular 230, and we can include, upon request, a presentation outlining the latest in estate and related tax planning and administration.
To find out how Circular 230 could potentially affect you and your business or to learn more about what you should be doing in order to comply, please contact Clary Redd, at 1-800-369-0012 or credd@sonnenschein.com.
