Washington, (Dec. 9, 2002) -- The Internal Revenue Service's proposed tax shelter regs, set to go into effect Jan. 1, 2003, could have adverse impact on middle-market companies, according to Grant Thornton, a leading national accounting firm.In comments to the IRS, Grant Thornton singled out two areas of special concern. "The first area concerns the revised regulations language on contractual provisions, or transactions where taxpayers have contractual protection against the risk that the IRS or a court will deny the tax benefits they have claimed," said Mark Stutman, managing partner of Grant Thornton Tax Practice.

"Grant Thornton is of the position that the contractual protection provisions are arguably broad enough to include contingent fee arrangements. Contingent fees encourage tax advisors to provide services in an efficient and effective manner and are already permitted under IRS Circular 230, which provides the rules for practice before the IRS. Contingent fee arrangements are particularly valuable to middle-market firms to whom the advisor's fee constitutes a significant expense."

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