Circular 230 Tax Disclaimers Head to the Trash: Business of Law

To everyone but tax attorneys, the disclaimers referring to “Circular 230” that appear in the legends of most law firm e-mails are inscrutable as well as ubiquitous. The Internal Revenue Service has now changed its rules so that those disclaimers can be deleted permanently.

Circular 230 is the Internal Revenue Service’s compilation of regulations governing tax practice by lawyers, accountants and other professionals that became effective in 2005. The rules resulted from the tax shelter abuses of the 1990s, Christopher Rizek, a tax attorney said last week in a phone interview.

Circular 230 established minimum standards of conduct “with respect to written tax advice,” threatening disciplinary action or even disbarment for those who fail to comply.

As a result of the broad language, disclaimers stating that e-mails don’t constitute tax advice “wound up on everything,” Rizek said.

“Once law firms agreed on language, then firms had to question what to put it on -- either just on e-mails for which it really applies or on everything,” he said. “Even those that say, ‘Can you make lunch at 1 o’clock?’” contained the language.

New rules issued by the IRS on June 12 include this statement: “Treasury and the IRS expect that these amendments will eliminate the use of a Circular 230 disclaimer in e-mail and other writings.”

Rizek expects law firms to continue to incorporate broader disclaimers that specify that communications in an e-mail aren’t legal advice.

As of last week, many law firms evidently hadn’t gotten the memo, since most hadn’t deleted the Circular 230 wording.

Among them: Rizek’s firm, Caplin & Drysdale.

“I’ll have to check on that,” he said.

Lawsuit News

NFL Players Union Wins Chance to Reopen Its Salary-Cap Lawsuit

The National Football League Players Association will get another chance to argue before a judge that the league instituted a secret salary cap in 2010, in violation of a contract with the union.

The U.S. Court of Appeals in St. Louis on June 20 reversed a ruling of U.S. District Judge David S. Doty’s refusing to reopen the lawsuit and sent the case, originally filed under the name of now-deceased Hall of Fame player Reggie White, back to the judge in Minneapolis for reconsideration.

The players, seeking to reopen the 1992 case, claimed they’d sustained at least $1 billion in damages, which if proved true, would automatically be trebled to $3 billion under the collective agreement.

NFL, the biggest U.S. sports league, had record revenue of $10 billion last season.

Law Firm Moves

Edwards Wildman Partner Joins London Office of Orrick

Shawn Atkinson, who was a partner at Edwards Wildman Palmer LLP, is joining the London office of Orrick Herrington & Sutcliffe LLP as a partner.

Atkinson advises venture-capital funds and technology companies in late-stage venture transactions and early-stage private equity transactions in Europe and emerging markets. He is joining Orrick’s venture-capital and emerging-companies practice in London.

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