[18610]
March 3, 2005
TO: FIXED-INCOME ADVISORY COMMITTEE No. 8-05
MONEY MARKET FUNDS ADVISORY COMMITTEE No. 6-05
TAX MEMBERS No. 4-05
RE: INSTITUTE LETTER REGARDING CIRCULAR 230 PROPOSED REGULATIONS
The Treasury Department (“Treasury”) recently issued final and proposed regulations
governing practice before the Internal Revenue Service that are contained in a document known
as “Circular 230.”1 Among other things, the revisions to Circular 230 modify the rules for tax
shelter opinions by requiring certain opinions called “covered opinions” to include additional
disclosures. “State or local bond opinions” are expressly excluded from the definition of
“covered opinion” and are not required to include the additional disclosures set forth in the
regulations. Instead, counsel must separately provide written advice to the issuer in the
transcript of proceedings or similar document.
The attached March 1, 2005 Institute letter generally supports the treatment given to
“State or local bond opinions” by the Proposed Regulations. The Institute urges Treasury to
include certain other transactions within the definition of “State or local bond opinion,”
including (1) “no adverse effect” opinions; (2) tender option bond (“TOB”) programs and TOB
“no adverse effect” opinions; and (3) 501(c)(3) bond opinions and other qualified bond opinions.
These types of opinions are provided in connection with investments that are similar to tax
exempt bonds and comprise a significant part of the municipal bond market. Subjecting these
investments to the additional disclosure requirements for “covered opinions” is inconsistent
and will disrupt the market. The Institute also requests clarification that the definition of “State
or local bond opinion” includes written advice in the form of electronic communications.
Lisa Robinson
Associate Counsel
Attachment (in .pdf format)
1 See Institute Memorandum to Fixed-Income Advisory Committee No. 14-04, Money Market Funds Advisory
Committee No. 15-04 and Tax Committee No. 39-04 (18351) dated December 20, 2004; and Institute Memorandum to
Tax Members No. 50-04 (18356) dated December 20, 2004.
2
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