We have recently added a new notice to our Firm emails and correspondence. It states that if there is any tax advice in the email it may not be relied upon to avoid any penalties the government may attempt to impose on the recipient in the future. This may seem strange to you. We therefore would like to provide you with a brief explanation of why we need to include the notice in our correspondence.

On June 20, 2005 stringent new provisions went into effect under "Circular 230," which is a body of rules and regulations established by the IRS governing the practice of tax advisors. The new provisions, among other things, dictate the manner and form in which tax advisors provide written tax advice to their clients. As you would expect the rules are very complex and vague on many points, making it difficult to pin down exactly what the IRS wants to see done in a wide variety of circumstances.

In general terms the new provisions require that written tax advice either (1) include a notice of the type you see at the bottom of our emails or (2) satisfy a very lengthy and detailed set of requirements concerning the verification and description of relevant facts, formatting of legal analysis and conclusions, and the inclusion of yet more disclosures and disclaimers. There are numerous exceptions to the rules for certain types of transactions and certain kinds of advice that in some instances relax the rules and in others make them even more onerous.

The penalties for failing to satisfy the new rules range from public censure, to temporary suspension from tax practice to disbarment from tax practice. The IRS soon will also adopt monetary fines for violation of the rules.

"Tax advice" is defined very broadly under the new provisions. It includes, for example, a general reference to the deductibility of a litigation settlement payment or a preliminary statement about the ability to depreciate newly acquired equipment in any kind of written communication, including an email. Email is often treated as a relatively casual form of communication. We think it unlikely that clients intend for us to spend the time and generate the fees necessary to comply with Circular 230 rules governing factual assumptions, content and format. Therefore, we are concerned we may inadvertently violate those requirements by communicating tax advice without including the notice required to avoid them. That is why, as a precaution, we and many others have added the notice to our emails.

The addition of the notice does not reflect any lack of confidence in the legal advice we provide to you or any change in our commitment to provide you with the highest level of legal analysis. We can and will provide you with written advice that satisfies the Circular 230 requirements for written advice in the appropriate circumstances. Inclusion of the new notice is purely a protective response to the uncertainty created by how the IRS will interpret and enforce Circular 230.

We hope this explanation has put to rest any questions or concerns you may have had about the notice. If you have any further questions, however, please do not hesitate to contact us and we would be pleased to discuss the matter with you in more detail.

****************************************************

Internal Revenue Service Circular 230 Statement Applicable
To Tax Advice, If Any, Contained In This Communication

New Treasury Regulations require us to inform you that neither you nor any other recipient may use any tax advice in this communication to avoid any penalty that may be imposed under federal tax law. To obtain penalty protection, the new Regulations require attorneys, accountants and other tax advisors to perform increased due diligence to verify all relevant facts and to format the written tax advice in a lengthy number of separately enumerated sections with numerous disclosures. If you would like us to prepare written tax advice designed to provide penalty protection, please contact us and we will be pleased to discuss the matter with you in more detail.

****************************************************