IRS Proposes Major Revisions to Circular 230

IRS Proposes Major Revisions to Circular 230

The IRS issued a notice recently that proposes some major revisions to Circular 230.  The notice would change the way disclaimer footers are displayed in attorney communications, possibly eliminating the need for them altogether. 

Following are some excerpts from the notice:

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Another concern that the government has heard from practitioners relates to the unrestrained use of disclaimers on nearly every practitioner communication regardless of whether the communication contains tax advice... The disclaimers also lead to confusion for clients because clients often do not understand why the disclaimer is present and its consequences. In addition, practitioners have complained that the disclaimer's widespread overuse causes clients to ignore the disclaimers altogether, and may render their use in some circumstances irrelevant.

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The proposed removal of §10.35 will eliminate the requirement that practitioners fully describe the relevant facts (including the factual and legal assumptions relied upon) and the application of the law to the facts in the written advice itself, and the use of Circular 230 disclaimers in documents and transmissions, including e-mails.

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Because proposed §10.37 does not include the disclosure provisions in the current covered opinion rules, Treasury and the IRS expect that these amendments, if adopted, will eliminate the use of a Circular 230 disclaimer in e-mail and other writings.

For more information, see the U.S. Tax Alert published by DLA Piper tax partner Diana Erbsen.

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