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Tax Notes (a publicaion of Tax Analysts)

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In this article, the authors revisit their prior article on Circular 230 (see Tax Notes, Apr. 4, 2005, p. 61), focusing in particular on the amendments Treasury adopted on May 18. They consider the meaning of an important, new safe harbor under which transactions that are consistent with the code and its purpose are subject to less rigorous standards. They go on to discuss strategies for making certain that the advice practitioners provide after June 20 will be in compliance with the circular. They also provide a decision tree that will enable practitioners to classify their written advice and thereby determine whether and how the circular applies. Finally, they suggest that because the circular adopts a system of rules that is not parallel to the penalty provisions in the code, it may be invalid as applied in estate planning and other contexts on First Amendment and statutory authority grounds.