Treasury proposes to modify rules under Circular 230, to eliminate covered opinions rules 

September 14: The Treasury Department today released for publication in the Federal Register proposed regulations [REG-138367-06] to modify the standards that govern written tax advice provided by individuals who are admitted to practice before the IRS.

Text of the proposed regulations: REG-138367-06 [PDF 160 KB]


In connection with the release of these proposed regulations, a notice of proposed rulemaking (December 2004) that proposed changes to §10.39 of the regulations governing requirements for state or local bond opinions is withdrawn.

Changes to covered opinion rules

To accommodate practitioner concerns regarding the written advice standards, and in particular, the covered opinion rules of §10.35 of Circular 230, Treasury and the IRS propose to significantly revise Circular 230. The proposed regulations would streamline the existing rules for written tax advice by deleting the written advice standards that are currently incorporated in §10.35 and by updating the standards that are presently incorporated in §10.37.


If finalized, the regulations would eliminate the current requirements for practitioners to 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. The regulations would also end the need to incorporate what are referred to as “Circular 230 covered opinion disclaimers” in documents and transmissions, including e-mails.


Proposed §10.37, as amended, would require tax practitioner to 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.

Overview of other changes

In addition to eliminating the complex rules governing covered opinions, today’s proposed regulations would amend Circular 230 by:


  • Broadening the scope of the procedures for compliance under §10.36, by requiring that a practitioner with principal authority for overseeing a firm’s federal tax practice take reasonable steps to ensure that the firm has adequate procedures in place to comply with the requirements of Circular 230
  • Broadening the scope of the procedures for compliance under §10.36, by requiring that a practitioner with principal authority for overseeing a firm’s federal tax practice take reasonable steps to ensure that the firm has adequate procedures in place to comply with the requirements of Circular 230
  • Clarifying that the prohibition on a practitioner endorsing or otherwise negotiating any check issued to a taxpayer in respect of a federal tax liability applies to government payments made by any means, electronic or otherwise
  • Expanding the categories of violations subject to the expedited proceedings in §10.82 to include failures to comply with a practitioner’s personal tax filing obligations that demonstrate a pattern of willful conduct
  • Clarifying the IRS Office of Professional Responsibility’s scope of responsibility



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For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.


©2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.


The KPMG logo and name are trademarks of KPMG International.


KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.


The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

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