JERRY E. BARTRAM
CERTIFIED PUBLIC ACCOUNTANT
35460 Beech Avenue Yucaipa, CA 92399
Telephone (909) 790-1583 Fax (909) 790-3862
To my Clients and Friends:
I have implemented new procedures to comply with recently issued Treasury Department rules relating to written tax advice, which became effective on June 21, 2005. Under these rules, if I provide you with tax advice
on which you can rely for purposes of avoiding tax penalties, I am required to prepare a formal opinion that satisfies rigorous factual and legal diligence standards. Failure to satisfy those requirements will subject me to
potential penalties. Any advice that fails to comply with the formal opinion requirements mentioned above must include a disclaimer along the following lines:
"IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, I inform you that any tax advice contained in this communication (including any attachments) was not intended or
written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any matters addressed
Effective June 21, 2005, unless you specifically request an opinion that satisfies the requirements of Circular 230, you will see the above disclaimer in most of my tax-related communications to you.
In the past, I have provided you with tax advice in forms that were most appropriate for your inquiry and your needs. These have covered the entire range: a quick reaction, a cold review, an analysis limited to
principal legal authorities, tax disclosure for your offerings, a memorandum of law based on your facts and formal opinions for your transactions or offerings. Through my course of dealings with you, I have earned your trust
and you have been able to rely on my advice in whatever form delivered. I will continue to serve you to the best of my ability and provide advice that is cost-effective and consistent with your needs. The required disclaimer
does not denigrate the logic of my tax analysis or the force of the relevant legal authorities. But the IRS will no longer permit you to rely on that less formal advice for purposes of avoiding tax penalties.
Generally, penalties only apply in circumstances where the position you took was successfully challenged. In many cases, the existence of "substantial authority" may eliminate any penalties. The legal
precedents discussed in my communications may constitute "substantial authority." However, in some circumstances reliance on an opinion of a CPA is an independent ground for elimination of penalties. Unless my written
advice satisfies the new stringent requirements described above for a formal opinion, it will not constitute such an independent ground.
I encourage you to discuss with me the situations where you might need formal opinions and analyses for purposes of avoiding penalties. I work with a group of tax attorneys that can provide such an opinion if
you need one. However, I believe in most transactions and day-to-day advice you will not need such formal opinions. Therefore, you can expect to see the above disclaimer in my written communications, unless you
specifically ask us for a formal opinion that satisfies the requirements of Circular 230.
Do not hesitate to call us if you have questions about this matter.