The proposed regulations will streamline the existing rules for written tax advice by removing the current Section 10.35 and applying one standard for all written tax advice under a proposed Section 10.37. The proposed Section 10.37 provides that the practitioner must base all written advice on reasonable factual and legal assumptions, exercise reasonable reliance, and consider all relevant facts that the practitioner knows or should know. The proposed removal of Section 10.35 will eliminate the requirement that practitioners fully describe the relevant facts (including the factual and legal assumptions relied upon) and the application of the law to the facts in the written advice itself, and the use of Circular 230 disclaimers in documents and transmissions, including e-mails.
Other provisions, including Sections 10.31, 10.36, and 10.82, are also being updated at this time to reflect the current practice environment, the IRS noted. In addition, a general competence standard is being proposed in the new Section 10.35. “The proposed regulations also clarify that the Office of Professional Responsibility has exclusive responsibility for matters related to practitioner discipline, including disciplinary proceedings and sanctions,” said the IRS.Caveat: These are proposed regs only. The do not have effect until promulgated and, based on the comments received, may be modified. Since they are proposed only, they do not affect the current Federal Tax Procedure book.