Advisor tax opinion letter Circular 230 dictate standards

Yes. When a matter is unclear or a client seeks tax advisement, his or her tax advisor (attorney, CPA, etc.) will often write an opinion letter for the client. Essentially it advises the client about the possible or likely tax results of a proposed transaction.

Under Circular 230, a practitioner rendering a covered opinion must use reasonable efforts to identify and ascertain the pertinent facts, and must not base their opinion on unreasonable factual assumptions but must relate the correct applicable tax law to the correct relevant facts. Additionally the opinion must not unreasonably assume a favorable resolution of any significant relevant tax issues addressed and must consider all significant tax issues in reaching the practitioner’s conclusion as to the likelihood that the taxpayer will prevail on the merits with respect to each significant federal tax issue considered in the opinion. The opinion is prohibited from taking into account the possibility that a tax position will not be audited or that an issue will not be raised in any subsequent audit, or that an issue raised at audit will be favorably resolved through settlement.