Drew Edmundson wrote:

- quote -

It seems to me that you can avoid this entire mess by simply
NOT concluding (in writing) that the position has better
than a 50-50% chance. Unless, of course, the outcome is
sufficiently certain that the matter is not a "significant
federal tax issue" in the first place.

So, it looks to me like there is now a "no man's land"
between 50% and 100%. If, on the other hand, you are
absolutely certain (100%) or sitting on the fence (not over
50%), you don't have a problem. (I guess... <grin> )

In any event, I agree with your overall analysis as to how
this situation will impact the "average" practitioner.

MTW

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

"Stuart A. Bronstein" <spamtrap[at]lexregia.com> wrote:

snip
- quote -

See 10.35(b)(2) of Circular 230:

Covered opinion -- (i) In general. A covered opinion is
written advice (including electronic communications) by a
practitioner concerning one or more Federal tax issues
arising from --

(A) A transaction that is the same as or substantially
similar to a transaction that, at the time the advice is
rendered, the Internal Revenue Service has determined to be
a tax avoidance transaction and identified by published
guidance as a listed transaction under 26 CFR 1.6011-4(b)(2);

(B) Any partnership or other entity, any investment plan or
arrangement, or any other plan or arrangement, the principal
purpose of which is the avoidance or evasion of any tax
imposed by the Internal Revenue Code; or

(C) Any partnership or other entity, any investment plan or
arrangement, or any other plan or arrangement, a significant
purpose of which is the avoidance or evasion of any tax
imposed by the Internal Revenue Code if the written advice--
(1) Is a reliance opinion;
(2) Is a marketed opinion;
(3) Is subject to conditions of confidentiality; or
(4) Is subject to contractual protection.

For most of us A is not an issue. We aren't involved in
this type transaction. Rarely will B apply as the principal
purpose is not usually tax savings. But as an example of a
possible principal purpose transaction consider the decision
to take Section 179 or depreciate. What purpose other than
tax avoidance is involved? I am not talking about the
decision to buy the property, hopefully there is some other
purpose for buying it. But the decision to take 179 or not
could be argued to be a separate decision and therefore the
only purpose, therefore the principal purpose, is tax
avoidance. Put the Section 179 advice in writing and it has
to meet the rigorous requirements of Circular 230. The
disclaimer won't help as it only applies to "significant"
purpose transactions.

I would argue that the Section 179 advice is not a covered
opinion because it doesn't rise to the level of a "federal
tax issue" because IRS does not have a reasonable basis to
challenge the deduction. An ABA member asked about Section
179, a Dentist, and an SUV at an IRS meeting. The IRS
employee said that the practitioner needed to know what the
business use would be based on evidence beyond just the
Dentist's representation - i.e. must follow the Dentist
around to verify his driving habits. This is a ridiculous
rule if the IRS representative is right. Now give this
advice verbally and it isn't a covered opinion, but verbal
advice won't help with penalties anyway.

In reality though C is the crux of the matter for most of us
most of the time. Under C subparagraphs 2, 3 and 4 aren't
likely to be an issue either. So the real issue is (C)(1).
A reliance opinion is defined as:

(4) Reliance opinion--(i) Written advice is a reliance
opinion if the advice concludes at a confidence level of at
least more likely than not a greater than 50 percent
likelihood) that one or more significant Federal tax issues
would be resolved in the taxpayer's favor.

And this is where the disclaimer comes in. If you disclaim
then the opinion is not a reliance opinion.

For many issues, some argue for most, a "significant"
purpose is tax avoidance. I will ignore evasion since that
is illegal and I hope most people here are not knowingly
advising the violation of any laws. This is where the some
are arguing that a blanket disclaimer is the best answer
cause then you don't have to judge each quick e-mail, etc.
as to whether it is a significant purpose transaction or
not.

Anyone able to practice before the IRS should read Circular
230. It is available from the GPO at:

http://tinyurl.com/b5osx

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Stuart A. Bronstein wrote:

- quote -

At first, I thought it was one that came in a fancy binder.
<smirk
But, it turns out to be one described in Circular 230,
Section 10.35 "Requirements for covered opinions." Other
written advice (they don't call it "uncovered" or
"non-covered" or whatever) is described in Section 10.37
"Requirements for other written advice."

Sounds simply, but it really, really isn't !!!

MTW

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Stuart A. Bronstein wrote:
- quote -

Well then. (GRIN!) If you don't like it, just toss
circular 230 into the "circular" file! (another grin)

ChEAr$,
Harlan

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Harlan Lunsford <lunstax[at]belllsouth.net> wrote:
- quote -

So circular 230 covers an opinion if it's a covered opinion?
Sounds pretty circular to me.

Stu

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Stuart A. Bronstein wrote:

- quote -

A "covered opinion" is one that covers the client from
civil and criminal penalties.

Dick

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The IRS really appreciates humor. So just tell them > << you read it on the Information Highway. But don't > << mention my name at your trial. <G> > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

MTW wrote:

- quote -

Concur and further recommend to our esteemed moderator
adoption of said change.

Either that or, "Remember; you gets what you pays for."

ChEAr$,
Harlan

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Stuart A. Bronstein wrote:
- quote -

It is one that is "covered" by the provisions of circular
230.

ChEAr$,
Harlan

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Harlan Lunsford wrote:

- quote -

Having had a little over a week to consider this issue
further, I agree 100%. The new disclaimer language should
only be used in the somewhat narrow circumstances where it
is required or permitted by Section 10.35 of the new
Circular 230.

With that thought in mind, I now think that the disclaimer
sentence beginning with "It may not be relied upon..."
should be removed from this group's standard signature. Yes,
I know, I was one of the people who originally suggested it.
But, additional research has caused me to revise my
thinking.

Nevertheless, I do like the first sentence of the signature
(borrowed from Katie), and I suggest that it remain.

MTW

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << It may not be relied upon for the purpose of avoiding > << penalties that may be imposed on the taxpayer or the > << tax preparer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

"MTW" <mtwingcpa[at]yahoo.com> wrote:
- quote -

Unfortunately I think some of the small guys are just as bad
but not as sophisticated. I am dealing with another tax pro
who wants to ignore a specific Code Section and actual
history. He says amending the returns will change the prior
facts, ignoring all the written and electronic documents
that support the original returns. There is absolutely no
written or electronic evidence supporting the amended return
position he proposes nor can any testimony be obtained from
the parties involved as they are unavailable.

His reps one to my citing the Code and facts was "We have an
argument." Well I have an argument that a cat is really a
dog but I don't think anyone is going to buy it. Anything
can be argued, just ask my teenage sons, but that doesn't
mean that it is right or even has a ghost of a chance to be
right.

Sorry for not providing more details but this one is
sensitive.

Now stepping down from my soapbox.

I do agree with you that 230 won't effect the problem Tax
Pros. At least not until they are caught.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << It may not be relied upon for the purpose of avoiding > << penalties that may be imposed on the taxpayer or the > << tax preparer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Harlan Lunsford <lunstax[at]belllsouth.net> wrote:

- quote -

Ok, I should have asked this before - what is a "covered
opinion"?

Stu

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << It may not be relied upon for the purpose of avoiding > << penalties that may be imposed on the taxpayer or the > << tax preparer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Harlan Lunsford wrote:

- quote -

Since I mentioned the above in response to the thread
started by Drew, I can now add to it. It was not for
TAxTalk Today however.

The comments by Whitlock occurred during the taping of an
NAEA session among the principals listed below

"During the course, which was a lively panel discussion
among Whitlock, NAEA President Frank Degen, EA, and NAEA
past president Mary McGuire, Whitlock answered a number of
questions about the new rules on covered opinions. E[at]lert
has included two just to whet your appetite for the course:

Q: Do the new rules on covered opinions mean that EAs need
to put a warning on all of their e-mail, telling clients
that they cannot rely on the e-mail for penalty protection?

A: No. An EA needs to consider the nature of the inquiry
and response. Most routine e-mail is not a 'covered
opinion' and responsible EAs should not be using a default
e-mail footer as a protective 'opt out' of the standards.
Your clients have a right to expect more from you than that.
"

There now, that relieves my mind considerably and I hope
Drew's also.

ChEAr$,
Harlan Lunsford, EA in LA

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << It may not be relied upon for the purpose of avoiding > << penalties that may be imposed on the taxpayer or the > << tax preparer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

"D. Stussy" <kd6lvw[at]bde-arc.ampr.org> wrote:
- quote -

Perhaps they were "wrong" at the time. But since they make
the rules, they are right in retrospect, and in terms of
determining whether prohibiting specific speech (for
example) is permissible or not.

Stu

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << It may not be relied upon for the purpose of avoiding > << penalties that may be imposed on the taxpayer or the > << tax preparer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

D. Stussy wrote:

- quote -

I haven't read that particular article. But, my current
guess is that the new rules will have a "chilling effect" on
the average tax practitioner, while to the big players (to
whom this thing was really addressed) will simply retool a
bit and then proceed with their "damn the torpedoes"
approach.

MTW

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << It may not be relied upon for the purpose of avoiding > << penalties that may be imposed on the taxpayer or the > << tax preparer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Stuart A. Bronstein wrote:
- quote -

Aside: Just because the Supreme Court spoke doesn't
convince me that it's right. Look at their ruling this week
on Emminent Domain. The informal CNN poll (at www.cnn.com -
"Lou Dobbs' page") has a 99% response rate saying that the
Court is WRONG on this point - and I agree that they were
wrong.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << It may not be relied upon for the purpose of avoiding > << penalties that may be imposed on the taxpayer or the > << tax preparer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Drew Edmundson wrote:
- quote -

Tax Analysts, in a recent article they wrote on this topic
in "Tax Practice," June 17, 2005 (Vol. 46, #12), gave me the
impression that the IRS/Treasury made their new regulation
overly broad. On page 215, they use the phrase "any written
expression" - which could easily include ANY online posting.
It also gave me the impression that if statute didn't
already say "written", they'd try to apply it to recorded
(with permission) telephone conversations and any/all other
advice-like communications.

In going way beyond the "Tax Shelter" arena, I think that
the new regulation may be more damaging to the tax industry
than the good it causes. Did anyone else read that article
- and if so, did you get that impression too?

- quote -

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << It may not be relied upon for the purpose of avoiding > << penalties that may be imposed on the taxpayer or the > << tax preparer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

- quote -

But you do put it in writing when you post it here. The
writing can be electronic. Do you ever reply to your
clients' e-mails?

I'm not trying to be difficult. I just want to point out
that the way this is worded can be read to cover everyday
advice.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << It may not be relied upon for the purpose of avoiding > << penalties that may be imposed on the taxpayer or the > << tax preparer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Drew Edmundson <drewsbeagles[at]hotmail.com> wrote:
- quote -

I wish to clarify my last sentence above. Being right does
count if the IRS does not have "a reasonable basis for a
successful challenge...."

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << It may not be relied upon for the purpose of avoiding > << penalties that may be imposed on the taxpayer or the > << tax preparer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Drew Edmundson wrote:

- quote -

I think it borders on a First Amendment issue, but so long
as the only restriction is a requirement to add a
disclaimer, and that requirement doesn't appear to be
~terribly~ burdensome, I'm not going to get into a big
"knot" over it. The problem is, the provision really appears
to be overly broad and overly vague (ie: does a public
discussion group, such as this one, ~really~ need such a
disclaimer???), thereby leading to a "chilling effect." A
lot will depend on just how aggressive the IRS becomes in
enforcing this.

MTW

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << It may not be relied upon for the purpose of avoiding > << penalties that may be imposed on the taxpayer or the > << tax preparer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

- quote -

If it's going to be at the top (which I find very
intrusive), it should say "the following" instead of "the
foregoing." But I'd prefer to keep "the foregoing" and move
it to the bottom.

- quote -

MTW's comments, and the IRS language quoted by Drew
Edmundson, seem to allow the possibility that the disclaimer
could be at the bottom, as long as it's a separate section
and the same size type as the rest of the post, both of
which are true. The double << > > brackets make it prominent.

Bob Sandler

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << It cannot be used by any taxpayer for the purpose of > << avoiding penalties that may be imposed on the taxpayer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >