Trusts and Estates

Ca. Trs. & Estates Quarterly Volume 11, Issue 2, Summer 2005


By Thomas W. Shaver, Esq.*


In December 2004 the Internal Revenue Service issued final regulations that significantly change the scope of tax practitioner ethical standards.1 In response to concerns broadly expressed in the tax practitioner community, the Internal Revenue Service significantly revised the December regulations in May 2005.2 Generally, the new regulations, as revised, will apply to written advice rendered after June 20, 2005. The final regulations are incorporated into Circular 230 issued by the Treasury Department to govern the practice of attorneys, certified public accountants, enrolled agents, enrolled actuaries, and appraisers before the Internal Revenue Service (IRS). In Janury 2003 the IRS established the Office of Professional Responsibility to administer the regulations set forth in Circular 230.

The Circular 230 Regulations were proposed in December 2003.3 The preamble to the proposed regulations discussed standards and requirements for tax shelter opinions, including marketed tax shelter opinions and opinions that reach a conclusion of at least "more likely than not" for one or more material federal tax issues. The reference to tax shelter opinions would indicate that the new regulations were intended to curb over-aggressive tax strategies by major accounting firms and corporations of the Enron stripe. Nevertheless, the language of the final regulations omits the reference to tax shelter opinions and is expansive enough to cover many tax planning strategies, however legitimate or routine.4 Practitioners took considerable relief from the May 2005 revisions to the final regulations. Nevertheless, even as revised the new Circular 230 Regulations cover the waterfront of estate planning practice.

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