June 22, 2005

Alert: New IRS Regulations Will Result in Disclaimers on Certain Tax Advice to Clients

Holland & Knight Newsletter
Scott Johnston
In Circular 230, the Treasury Department and the Internal Revenue Service have issued broad new regulations effective June 20, 2005, that impact the form in which attorneys and other tax professionals render written advice to their clients. These regulations were originally intended to curb the practice of taxpayers entering into certain questionable tax shelter transactions, the principal purpose of which is to avoid or evade tax, and obtaining opinion letters from counsel in an effort to insulate themselves from the imposition of penalties. Unfortunately, the regulations were drafted and adopted in such a broad fashion that they arguably encompass many long-standing and well-accepted estate planning techniques.


Until the application of these regulations is clarified through practice or further amendment, in an abundance of caution, it will be necessary to include the following disclaimer on certain written correspondence:

To ensure compliance with Treasury Regulations (31 CFR Part 10, §10.35), we inform you that any tax advice contained in this correspondence was not intended or written by us to be used, and cannot be used by you or anyone else, for the purpose of avoiding penalties imposed by the Internal Revenue Code.

If you desire a formal opinion on a particular tax matter for the purpose of avoiding the imposition of any penalties, we will discuss the further Treasury requirements that must be met and whether it is possible to meet those requirements under the circumstances, as well as the anticipated time and additional fees involved.

We wanted to alert you to this development and explain the underlying rationale for Circular 230 so that such a disclaimer could be put in the proper context if it appears on advice received from a Holland & Knight lawyer.

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