Comments on Circular 230

In August, I posted excerpts from and links to letters from Leslie Samuels and Diana Wollman to Cono R. Namorato, Director,Office of Professional Responsibility, of the IRS and Stephen A. Whitlock, Deputy Director, Office of Professional Responsibility, IRS, confirming that the Service agreed with their interpretation of Circular 230 as applied to certain types of agreements, term sheets and educational materials. Today, Tax Analysts is reporting that:

The government recognizes that the final Circular 230 rules are not perfectly targeted to the transactions they are intended to address, acknowledged Michael J. Desmond, Treasury’s acting deputy tax legislative counsel, appearing on various panels September 16 at the American Bar Association Section of Taxation’s meeting in San Francisco. But there is a view that the problems should be addressed on a more deliberate basis, he said, so as to avoid having to revise them every three months. While fixing the rules is a high priority, there is also some desire to “let the dust settle,” Desmond said.

The government is looking at focusing and simplifying the rules, according to Desmond. Adding exceptions and definitions is “not the way to go,” he said.

Among the ideas being considered for providing interim guidance is setting up a Frequently Asked Questions page on the Web site for the IRS Office of Professional Responsibility (OPR), he said. The government could use more suggestions, Desmond added.

Unanswered letters to the IRS are not guidance, Desmond said in response to questions about recently published letters from New York lawyers who refer to agreements reached with OPR officials during private meetings. From a policy perspective, the best approach is to fix the rules, he said.

(Emphasis supplied.)

I will edit the August posting to provide a link forward to this posting.