August 2005

Dear clients, forwarders and friends:

We want to advise you that because of new rules adopted by the IRS we will be including on all written communications the following notice:

"Nothing contained in this communication was intended or written by the author to be used, or can be used by any taxpayer, for the purpose of avoiding penalties that may be imposed by the taxpayer under the Internal Revenue Code of 1986, as amended.”

The primary purpose of the rules adopted by the IRS is to prevent taxpayers from relying on the advice they receive from their attorneys and accountants to avoid tax penalties in the event of a  dispute with the IRS.  The new rules are so broad that tax practitioners will generally be required to either meet a new standard of diligence and review to render a written opinion on which a client may rely upon to avoid certain penalties, or to add a disclaimer to the written advice that the client cannot rely on the advice to avoid tax penalties.  As a result, unless a formal opinion letter is warranted and requested, many of the written communications you receive from us will now include the above notice.

These new rules will affect not only the written advice given by our tax/trusts and estates attorneys but also written advice given by other attorneys in the firm where written communications may include tax advice (such as one of our litigation attorneys offering general advice regarding the taxation of payments received in the settlement of a litigation matter or when one of our corporate or real estate counsel renders advice regarding the tax treatment of a proposed business or real estate transaction).

We expect that unless the IRS changes these rules (and there has been considerable discussion since the rules were adopted because of their all-encompassing nature) the above notice may become nearly as common as the confidentiality notice that you will find on our e-mails and faxes.  Our new practice will be to include this standard form of notice on our letters, e-mails, faxes and other documents.

Please be assured that this new practice does not diminish in any way the quality of the advice and counsel we have and will continue to provide to our clients on tax issues.  We regret the implication and effect of the disclaimer notice but feel we have no choice in order to comply with these new procedures.

For more information, please click on the link to see IRS publication Circular 230. 

www.irs.gov/pub/irs-pdf/pcir230.pdf

If any of you have any questions about the IRS notice, or any comments or questions about our website, please feel free to call us.