Did you know Circular 230 disclaimers are no longer required?

On Monday, June 9th, the IRS issued final regulations which eliminate the need for tax professionals to ever use the Circular 230 disclaimers on documents, e-mails and any other written communications.

In 2004, the Internal Revenue Service promulgated changes to Circular 230 to introduce the “covered opinion” rules of Section 10.35 (thank you Enron).  These rules dictated how Circular 230 providers, such as enrolled agents, needed to communicate tax advice and opinions to clients.  Included in these revisions was the requirement to disclosure to clients when written advice WAS NOT designed to comply with the Circular 230 covered opinion rules and could not be used to rely on for penalty abatement purposes.  This led us to the so-called “Circular 230 Disclaimer”.

Professionals became so concerned about properly notifying clients that the “Circular 230 Disclaimer” was attached to ALL communications, even those which were not tax-advice related.  As stated by IRS OPR Director Karen Hawkins on numerous occasions, the ubiquity of the disclaimer made it useless – no one paid attention to it after 10 years of seeing it attached to all communications.

The new regulations adopt a single standard for written tax advice.  Practitioners need to exercise reasonable reliance, consider all relevant facts they know or should know, and base written advice on reasonable and factual assumptions.

These regulations are effect as of June 12.