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One Year Later, Circular 230 Still Causing Confusion, CCH Says
(RIVERWOODS, ILL., June 8, 2006) – In June 2005, the Treasury Department sought to end the complicity of professional advisors in illicit tax shelters by revising Circular 230, the document that governs practice before the IRS. But the most obvious effect of the revision has been a flood of disclaimers in communications to the clients of accountants and tax lawyers that seem to bewilder and antagonize more often than they enlighten, according to CCH, a Wolters Kluwer business and a leading provider of tax information, software and services (CCHGroup.com). To explore the impact of the revised Circular 230 and other IRS initiatives regarding practitioner/client communications, CCH is sponsoring a 100-minute audio conference on June 28, 2006 at 2:00 p.m. Eastern, 1:00 p.m. Central, featuring subject experts, attorney Michael G. Goller and CPA Harvey Coustan (CCHgroup.com/AudioConferences).
The principal target in the IRS’s sights when it revised Circular 230 was the “opinion letter” used to market dubious, if not downright illegal, tax shelters to high-income individuals and corporations. The revision attempted to distinguish such “covered opinions” from ordinary professional tax advice and hold their preparers to a high standard of research and disclosure. Only if those exacting standards are met can a taxpayer rely on a professional’s written advice as a defense against penalties if a position taken on his or her tax return is later disallowed by the IRS or the courts. Conversely, practitioners are supposed to disclose when their written advice is not based on a heightened examination of the facts and the law, and hence cannot be relied upon for defense against penalties.
But that research takes time and costs money.
“Rather than pay the price, many clients say that they just want informal advice, without penalty protection,” Goller observed. “But other clients are confused and angry when they get a letter or an e-mail from a professional with a prominent disclaimer that it can’t be relied upon. They wonder whether such seemingly unreliable advice is worth anything at all,” Goller added.
Coustan noted that the IRS has formed a task force to revise the revision. The aim would be to make it easier for professionals to give “routine” advice without the use of off-putting disclaimers. And, the IRS suggested a set of “best practices” as an “aspirational” goal for all written tax advice.
“It’s hard to see how an ‘aspirational’ standard endorsed by the IRS won’t become mandatory as a matter of practice,” Coustan observed. “Professionals don’t want to be caught in a situation where they can be sued for malpractice and have to admit that they didn’t follow the best practices that were promulgated by the IRS,” said Coustan, who has served as an expert witness in malpractice suits.
About the Audio Seminar
In the June 28, 2006 seminar, Goller and Coustan will provide in-depth discussion and analysis of how Circular 230 has changed the use of written advisory opinions, discuss what Sec. 7216 means to the practitioner, detail what enforcement actions the IRS is taking and what to expect next. They will also outline how to distinguish between covered and non-covered opinions and point out the unanswered questions that remain a year after the changes became effective.
In addition, they will discuss the impact Circular 230 has on advice relating to federal taxes other than income taxes, show how the “aspired to” standards of practice outlined by the IRS will become the minimum standard plaintiff attorneys will use in litigation against practitioners, point out the traps for the unwary, detail the ramifications of oral opinions and provide necessary insight to help keep professional practices in the safe zone as the IRS begins to enforce the new rules.
About the Speakers
Michael G. Goller is a shareholder in and head of the federal tax controversy practice for the law firm of Reinhart Boerner Van Deuren s.c. His clients range from large public corporations to mid-sized, privately-held businesses and their owners. He works on behalf of his clients in disputes with the IRS, Department of Justice and various other taxing authorities. He represents his clients before the U.S. Tax Court, various Federal District courts, the U.S. Court of Federal Claims and the Seventh Circuit Court of Appeals. Goller is a faculty member at the University of Wisconsin Milwaukee’s School of Business where he teaches Tax Practice and Procedure in the Graduate Tax Program.
Harvey Coustan, CPA is a retired Ernst & Young partner. During his career with Ernst & Young, he led the Washington National Tax Practice and held various other tax positions within the firm. Currently, Coustan writes columns for the Illinois CPA Society and for the CCH Journal of Tax Practice and Procedure. He has chaired the AICPA and Illinois CPA Society Tax Executive Committees and served on both the AICPA and Illinois CPA Society Boards of Directors.
Coustan has also served on the Commissioner of Internal Revenue’s Advisory Committee and served on the JJ Pickle House Ways and Means Committee Task Force on Civil Tax Penalties. He is presently the co-chair of the National Conference of Lawyers and CPAs as well as the co-chair of the AICPA Tax Shelter Task Force.
For More Information
For more information or to register for the audio conference, go to CCHGroup.com/AudioConferences or call 800-775-7654. Those interested can register online using a credit card at www.krm.com/cch or send an e-mail to Seminars@cch.com . To register by phone, call Customer Service at 1-800-775-7654. Please have your credit card information ready. The per-site fee for the conference is $249. Two hours of CPE credit are available for an additional $25 per person wishing to receive a CPE certificate for their participation.
About CCH, a Wolters Kluwer business
CCH, a Wolters Kluwer business (CCHGroup.com) is a leading provider of tax and accounting law information, software and services. It has served tax, accounting and business professionals and their clients since 1913. Among its market-leading products are The ProSystem fx® Office, CCH® Tax Research NetWork™, Accounting Research Manager® and the U.S. Master Tax Guide®. CCH is based in Riverwoods, Ill.
Wolters Kluwer is a leading multinational publisher and information services company. The Company’s core markets are health, corporate services, financial services, tax, accounting, legal, regulation, and education. Wolters Kluwer has annual revenues (2005) of €3.4 billion, employs approximately 18,400 people worldwide and maintains operations across Europe, North America and Asia Pacific. Wolters Kluwer is headquartered in Amsterdam, the Netherlands. Its depositary receipts of shares are quoted on the Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. For more information, see www.wolterskluwer.com.
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