The US Treasury Department and the Internal Revenue Service will shortly issue new standards for lawyers, accountants and other tax professionals as part of the government’s campaign to stamp out abusive tax sheltering activities, the Wall Street Journal has reported.
The new standards, known officially as the Circular 230 revisions, will be targeted particularly towards the use of ‘opinion letters’, documents which are penned by lawyers or accountants, and vouch for the legitimacy of a particular tax-planning scheme or transaction.
However, such opinion letters can be far from watertight when put under the IRS’s microscope.
"The Treasury has been concerned that some practitioners may be providing opinions based on unrealistic factual assumptions or without considering important legal doctrines, and taxpayers might be misled into thinking that such opinions protect them against the assertion of IRS penalties," observed one expert, according to the WSJ.
The new standards are expected to include detailed requirements for opinions issued by tax professionals, and will compel advisers to give overt warnings to their clients over the level of protection they can expect to receive from the opinion.
A comprehensive report in our Intelligence Report series describing tax shelters for investors is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report5.asp
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