TO:  Our Governmental Plan Clients

FROM: Ice Miller's Governmental Employee Benefits Group (Mary Beth Braitman, Terry A.M. Mumford, Lisa Erb Harrison, Eric D. Swank, and Katrina M. Clingerman)

RE:  US Treasury Department Circular 230, Effective 6/21/2005

New federal regulations under "Circular 230" provide that an attorney may be "censured, suspended or disbarred from practice before the Internal Revenue Service" for violating expanded requirements governing tax advice.  To view the new regulations, go here.

Effective immediately, 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.  Written advice provided by Ice Miller's Employee Benefits Group, among others in our firm, is covered by these new regulations.  A primary purpose of Circular 230 is to establish new standards to curtail the practice whereby tax professionals write letters to support questionable tax-motivated transactions.  However, the expanded requirements are applicable to a much broader range of tax advice than 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 whole firm's ability to practice before the IRS.  Obviously, the ability to practice before the IRS is very important to us, and we are working diligently to satisfy these new requirements.

Two provisions of Circular 230 will likely be applicable to much of the advice that we give you.  First, most of Circular 230 does not apply to written advice concerning the qualification of a qualified plan, as long as the principal purpose is not avoidance or evasion of taxes (and is not among certain abusive transactions identified by the IRS).  Second, Circular 230 excepts certain written advice that includes a disclaimer that the advice may not be relied upon for the purpose of avoiding penalties or to promote or market certain transactions.

We want you to be aware of these regulations because you will be seeing certain changes in our communications to you.  First, as part of our response to Circular 230, Ice Miller is adding a new disclaimer to all of our external emails, regardless of whether the email message includes federal tax advice.  This is an approach we believe (from consultations with associations to which the firm belongs) will be followed by most law firms and tax advisors.  The new disclaimer (as it will be included in email messages sent by our employee benefits group personnel) will be substantially as follows:

     Circular 230 Disclosure:  Except to the extent that this advice concerns the
     qualification of any qualified plan, 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 also see a similar disclaimer in our letters and other written communications to you that include a discussion of federal tax issues, unless we have prepared a formal opinion that complies with Circular 230's requirements or the advice provided is otherwise not within the scope of the regulations.  If a client wishes that Ice Miller provide a full formal opinion in compliance with the exacting requirements under Circular 230 for a "reliance" opinion in order to avoid the imposition of a federal tax penalty, then we may dispense with the non-reliance disclaimer.  We expect, however, that clients in many cases will determine that their purposes are served by accepting our written advice subject to the federally-mandated disclaimer.  We wish to assure you that Circular 230 disclaimers will have no effect on 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 case and upon what we have agreed to do for you.

Third, Ice Miller is following up with the IRS Office of Professional Responsibility to determine whether they will be issuing any additional guidance regarding the interpretation of the exception for qualified plans.  Particularly in the governmental plan arena, this definition raises a number of complex interpretive questions.  We will inform you if there are any developments on this front.

For these reasons, we do not believe the new regulations -- which primarily are intended to shut down certain abusive tax arrangements -- will significantly affect our delivery of services to our governmental plan clients.  However, we are required to comply with Circular 230 requirements.  We want you to be aware of these changes and to know that we are trying to develop a procedure that will provide minimal impact or inconvenience to you.  We appreciate very much your confidence in us, and we will continue to strive to provide you with the highest quality legal advice, while complying with these regulations and being sensitive to the needs and expectations of governmental plans. If you have any questions, concerns, or comments on this matter, please let one of us know.