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IRS Circular 230

Accountants Professional Liability Insurance Adviser

IRS Circular 230

Circular 230 is a publication of certain U.S. Treasury regulations which include the rules governing practice before the U.S. Internal Revenue Service (IRS). These rules require attorneys, those qualified to practice as Certified Public AccountantsEnrolled Agents, and other persons who prepare tax returns and provide tax advice to do certain things. The rules in Circular 230 also prohibit certain conduct. Penalties may be imposed for noncompliance. The rules in Circular 230 are codified as Title 31 of the Code of Federal Regulations, Subtitle A, Part 10.

Tax advice may consist of a “covered opinion,” other written tax advice, or oral advice. No standards are provided for oral advice. Written tax advice must not be based on unreasonable factual or legal assumptions or unreasonably rely upon representations of the client or others. It must consider all relevant facts and law

A taxpayer may rely on a covered opinion by a licensed or enrolled tax adviser to avoid certain penalties. A covered opinion includes any written tax advice not otherwise disclaimed in the advice, with certain exceptions. The disclaimer must prominently state that the advice was not “intended or written by the practitioner to be used, and that it cannot be used by the taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer.”

An example disclaimer from Ralph Picardi, risk management consultant to CPAGold™ is as follows:

Unless the above message (“this message”) expressly provides that the statements contained therein and in any attachments thereto (“the statements”) are intended to constitute written tax advice within the meaning of IRS Circular 230 §10.37, the sender intends by this message to communicate general information for discussion purposes only, and you should not, therefore, interpret the statements to be written tax advice or rely on the statements for any purpose. The sender will conclude that you have understood and acknowledged this important cautionary notice unless you communicate to the sender any questions you may have in a direct electronic reply to this message.

This wording should be included at the end of each email.

This suggested disclaimer wording follows the 2014 Revisions to Treasury Regulations. Please check with the IRS to see if there have been any recent updates.

Also, the information in this blog is not intended to provide direct legal advice, please note the following:

This example email disclaimer is intended solely for general educational purposes. It is not intended for the purpose of providing specific legal, accounting, or other professional advice to any particular recipient or with respect to any particular jurisdiction. The author, publisher, and distributor of this document (1) make no representations, warranties, or guarantees as to its technical accuracy or compliance with any law ( federal, state, or local) or professional standard; and, (2) assume no responsibility to any recipient of this document to correct or update its contents for any reason, including changes in any law or professional standard. Before using any engagement letter in your practice, you should formally retain the counsel of an attorney knowledgeable as to the accounting industry, your practice, and the laws of any jurisdiction(s) within which you conduct your practice to ensure the document’s maximum usefulness and compliance with applicable laws and professional standards.  

Ralph may be contacted at: (866) 668 7475.

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