Daily Tax Update - June 20, 2005

The new Circular 230 regulations governing written tax advice will go into effect tomorrow.

  • The Department of Treasury and the Internal Revenue Service promulgated these regulations to increase transparency between practitioners and clients and to deter abusive tax shelter opinions. However, the regulations are applicable to all written Federal tax advice.
  • If the written Federal tax advice does not satisfy the stringent requirements articulated in the regulations, the advice may contain a legend stating that the advice was not written or intended to be used, and cannot be used, by the taxpayer for the purpose of avoiding penalties under the Internal Revenue Code. (See the Internal Revenue Service Circular 230 Disclosure paragraph below.)
  • An article by Arthur Bailey and Alexis MacIvor titled, "New Circular 230 Regulations Impose Strict Standards for Tax Practitioners" can be accessed here.
  • If you have further questions or concerns about the Circular 230 regulations, or if you would like additional material discussing these regulations, please contact Arthur L. Bailey via email and Alexis A. MacIvor via email.
  • The regulations can be accessed here and here.

Today, the IRS announced that Richard Morgante and Pamela Watson have been named to the top two posts in the Wage and Investment (W&I) Division, the IRS unit that serves most individual taxpayers. Based in Atlanta, W&I has processing and customer service responsibility for virtually all taxpayers, processing approximately 175 million paper and electronic returns for individuals and businesses last year, answering 67.3 million automated and assistor calls and serving over 7 million customers face-to-face.

  • IRS Commissioner Mark Everson said, "Rich and Pam make a strong team, and their leadership and experience will help us effectively serve taxpayers and enforce the law."


  • H.R. 2968 sponsored by Rep. Peter King (R-NY) would allow penalty-free withdrawals from individual retirement plans for adoption expenses.
  • H.R. 2980 sponsored by Rep. Thomas Tancredo (R-CO) would provide for the nonrecognition of gain on real property which is involuntarily converted as the result of the exercise of eminent domain, without regard to whether such property is replaced.

As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country. The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court. The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving.  Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them.  Read  more information on Steptoe's tax practice