As part of efforts to tighten ethical standards for tax professionals and curb abusive tax shelters, the Treasury has issued final regulations amending Treasury Circular 230, which governs the practice of attorneys, accountants and other tax professionals before the Internal Revenue Service.
The revisions provide standards of practice for written advice that reflect current best practices and are intended to curtail the use of opinion letters to provide protection from tax shelter penalties, according to the IRS. The regs provide mandatory requirements for practitioners who provide such opinions.
Under the final regs, written advice will not be treated as a "reliance opinion " -- one the taxpayer can rely on to escape certain penalties -- if the practitioner prominently discloses that it was not written to be used and cannot be used for the purpose of avoiding penalties. The Treasury intends to add rules that clarify that a taxpayer may not rely upon written advice containing this disclosure to establish a defense against accuracy-related penalties.
"These new standards send a strong message to tax professionals considering selling a questionable product to clients," said IRS Commissioner Mark W. Everson. "The new provisions give us more tools to battle abusive tax avoidance transactions and to rein in practitioners who disregard their ethical obligations."
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