With the recent high profile cases on tax shelters and stepped up enforcement by the IRS on a range of fronts, tax professionals must take careful steps to stay within the rules. To help with creation of best practices for tax advisory practices, the IRS has changed the rules under Circular 230 effective in June. These new rules outline the category of “covered opinions” that will affect the advice tax practitioners can give under certain circumstances. But many tax professionals will be unaffected by these rules, notes Harvey Coustan in a recent issue of the Journal of Tax Practice & Procedure. Coustan outlines what is a covered opinion, what steps are necessary for tax practitioners who are issuing such opinions and he also outlines the new requirements for issuing written tax advice that does not fall under covered opinions. Note that the new regulations even specify how the typefaces of disclosures have to be bolder and larger than the rest of the type in written advice. There are penalties attached to these new regulations for firms that do not put adequate procedures in place to ensure compliance, so it’s critical to take a close look now at what your practice is doing and what needs to be done in the future to ensure compliance.
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This story is from the CCH’s monthly Focus on Tax newsletter, which provides advise and guidance on federal and state tax issues for tax and accounting professionals.
Read this article from CCH’s Journal of Taxation of Financial Products.