New Rules Govern Communications Regarding Federal Tax Advice

Effective June 21, 2005, written tax advice issued by law firms and other tax professionals (including email advice) is subject to new regulations issued under the Treasury Department's Circular 230.  Go here for a link to the full text of these regulations. Generally, these new regulations require all attorneys and tax professionals to issue either a written communication that meets the requirements of a formal opinion or place a legend on any written communication (including emails and text messages) which states that such advice cannot be relied on for the purpose of avoiding federal tax penalties or to promote or market certain transactions. 

The stated purpose of Circular 230 is to establish new standards to curtail "abusive tax shelters."  However, the expanded requirements apply to much more than tax advice that pertains to aggressive or questionable transactions.  The compliance requirements for written communications that are covered by Circular 230 are complex and extensive.  Failure to abide by the new requirements could result in monetary penalties and even, in egregious cases, suspension of the entire firm's ability to practice before the IRS.  Because the ability to practice before the IRS is very important to us, we are working diligently to satisfy these new requirements.

We are telling you about these regulations because you will notice certain changes in our communications to you.  First, as part of our response to Circular 230, Ice Miller has added a new legend to all of our external emails, regardless of whether the email message includes federal tax advice.  Many law firms and tax advisors have adopted a similar practice.  The following legend (the exact wording of which may vary for certain practice groups) is now included in emails that you receive from us:

Circular 230 Disclosure: To ensure compliance with recently-enacted U.S. Treasury Department Regulations, we are now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including any attachments, is not intended or written by us to be used, and cannot be used, by anyone for the purpose of avoiding federal tax penalties that may be imposed by the federal government or for promoting, marketing, or recommending to another party any tax-related matters addressed herein.

Second, you will see a similar legend in our letters and other written communications to you when a discussion of federal tax issues is included in the correspondence, unless the advice provided otherwise is not within the scope of the regulations.  Instead of complying with the Circular 230 requirements for issuing a formal opinion (which could substantially affect our response time to you and the cost of providing the advice), including a legend in written advice generally will allow us to continue to provide you with timely and cost-effective service. If you want us to issue a full, formal opinion that does not contain the non-reliance legend, we can do so, in which case, you would be entitled to rely on the advice to avoid federal tax penalties.

We want to assure you that inclusion of the required Circular 230 legend will not affect the accuracy of our advice, nor the degree of care or consideration that we give to your tax matters.  Our advice will continue to be based upon the facts and circumstances of each situation and upon what we have agreed to do for you. We appreciate very much your confidence in us, and we will strive to continue to provide you with the highest quality legal and tax advice at all times.