White paper

IRS Circular 230
Achieving disclaimer compliance

IRS Circular 230
Achieving disclaimer compliance
Introduction
Section 10.35 of Circular 230 states that with every written tax advice, tax professionals, including financial planners, insurance agents, attorneys, CPA’s, enrolled agents and unenrolled return preparers, must either include all relevant and potentially relevant legislation, regulations, court cases and IRS rules that may be related to the subject of the tax advice, or include a disclosure stating that the opinion cannot be relied upon for penalty purposes. The disclaimer must be near the top of an opinion in a typeface the same size or larger than the typeface of the tax advice. Policy Patrol Disclaimers can ensure compliance with section 10.35 by prepending the required disclaimer in the specified format when an email message contains tax advice.

How can Policy Patrol aid compliance?
Policy Patrol can be configured to check for tax related words in an email message, and when these are present add a disclaimer to ensure compliance with Circular 230. Since you only require this particular disclaimer to be added when tax advice is given, a simple disclaimer package that adds the disclaimer to all messages is not sufficient. Policy Patrol Disclaimers also allows the disclaimer to be formatted in a larger font size and to place the disclaimer above the message or in a separate section, as stipulated by the new Treasury regulations. Policy Patrol offers the following features: Disclaimer can include formatting as stipulated by IRS. Disclaimer can be prepended or added in a separate section. Tax disclaimer can only be added when tax advice is present. Disclaimer can be suppressed if code is found in subject (in case a tax advisor wants to include a different disclaimer)

“With Policy Patrol installed we can rest assured that no email containing tax advice will unintentionally leave the organization without the required disclaimer. In addition, Policy Patrol Disclaimers allows us to add our standard disclaimer to all other non-tax related emails and only add the IRS imposed disclaimer when necessary and relevant."
Phillip Strickler, Partner of Wiener Strickler LLP (El Paso, Texas)

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How to configure Policy Patrol for IRS compliance
Policy Patrol already includes a sample rule that adds an IRS compliant disclaimer to outgoing messages containing tax advice. All you need to do is adapt it to your own needs. To do so, follow the next steps:

Step 1. Customize your disclaimer template
1. Go to Templates > Sample templates > Policy Patrol Disclaimers. 2. Double click on the ‘Circular 230 disclaimer’ template.

3. The template includes a sample disclaimer. You can use the template as it is or adjust it to your needs. Apart from changing the text, you can change the font type or size and apply bold, italic or underlined font styles. If you wish to edit the HTML source, for instance to make use of tables, you can do so by clicking on the HTML source button at the bottom of the text pane. When you have entered the text in the HTML tab, click on the button Copy to.. in the toolbar to copy the text to the RTF/Plain text tab. When you are done, click OK.

Step 2. Modify your tax words/phrases list
1. Go to Filters > Sample filters > Policy Patrol Disclaimers. 2. Double-click on the filter Tax related words.

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3. The filter already includes a number of words. You can use the filter as it is or add/remove words. Each word has been given a word score of 5 and the filter includes a threshold of 5. This means that by applying a word score of 5 to a word, the presence of this word in an email will trigger the disclaimer. When you are ready, click OK.

Step 3. Edit and enable your disclaimer rule
1. Go to Rules > Disclaimer rules > Disclaimers. 2. Double-click on the rule ‘Add circular 230 compliance disclaimer’.

3. Click on the ‘Circular 230 disclaimer link’ in the description. By default the disclaimer is prepended and multiple disclaimers are not avoided. If you wish to make any changes, you can do so in this dialog. Click OK and OK to close the rule. 4. Now right-click the rule in the list and choose Enable.

Step 4. Enable the remove [No disclaimer] rule
1. Go to Rules > Disclaimer rules > Disclaimers. 2. Select the rule ‘Remove [No disclaimer] from subject’

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3. Right-click and select Enable. You have now configured Policy Patrol to add the IRS compliant disclaimer when tax related words are present in an outgoing email message. If an advisor does not wish to add the disclaimer, they can enter [No disclaimer] in the subject of the email. Policy Patrol will then suppress the disclaimer and remove the code from the subject of the message.

Sample disclaimer
Below is a sample disclaimer that can be added when providing tax advice. Note that this disclaimer is only a sample and must still be checked by your legal department to ensure compliance. Tax opinion disclaimer This email contains tax advice. Please note that additional tax issues may exist that could affect the tax treatment of the tax shelter addressed in the advice. The advice does not consider or reach a conclusion with respect to those additional issues. Further, the advice was not written and cannot be used by the recipient for the purpose of avoiding penalties under code section 6662(d) with respect to those issues outside the scope of the advice.

Why choose Policy Patrol?
Compared to other email security products, Policy Patrol is an extremely comprehensive and flexible email filtering solution that offers the following disclaimer features: Formatted disclaimers: Policy Patrol offers formatted disclaimers including tables and images. Disclaimers can also be added as plain text attachments. User-based disclaimers: The program allows you to add a disclaimer for all users or to add different disclaimers for specific users or groups (and optionally select excluded users). Avoid multiple disclaimers: Policy Patrol can avoid multiple disclaimers when replying or forwarding, putting an end to the long string of disclaimers at the end of emails. It can also position each new disclaimer after the last entered message text. Merge fields: Policy Patrol can use message fields (such as recipient, date and subject) as well as user fields from Active Directory, Exchange 5.5 or Lotus Domino (such as name, address and telephone) to personalize a disclaimer or signature. Disclaimer positioning: Policy Patrol can append or prepend disclaimers but can also add disclaimers or signatures after the last entered message text. The program also allows you to add a disclaimer at the top of the message with a link to the disclaimer at the bottom of the message. Condition based: Policy Patrol can add or suppress a particular disclaimer depending on certain conditions, e.g. a code in the subject, a particular sender or recipient, the existence of an attachment or a word in the subject or body.

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Internal/External disclaimers: Policy Patrol is one of the few products that can add disclaimers to internal mails if installed on Exchange 2000/2003. The program can also apply different disclaimers depending on whether the message is sent internally or externally. Send blind copy: Policy Patrol includes the option of sending a blind copy of sent emails to a mailbox for archiving. These mails can then be used to prove that a disclaimer was sent. Cost effective: Policy Patrol only requires the users for whom rules are configured to be licensed. User friendly: Easy to configure and install. Rules wizard uses Outlook rule wizard logic, making it instantly comprehensible. Scalable: Policy Patrol is a complete email security solution, allowing you to add more users and features (anti-spam, content checking, archiving, compression, reporting etc.) at a later stage without requiring you to install a new program. Formatted disclaimers: Policy Patrol offers formatted disclaimers including tables and images. Disclaimers can also be added as plain text attachments. User-based disclaimers: The program allows you to add a disclaimer for all users or to add different disclaimers for specific users or groups (and optionally select excluded users). Avoid multiple disclaimers: Policy Patrol can avoid multiple disclaimers when replying or forwarding, putting an end to the long string of disclaimers at the end of emails. It can also position each new disclaimer after the last entered message text.

Conclusion
Policy Patrol is a flexible solution that can be configured to meet a company’s specific needs. The product can add standard disclaimers as well as IRS compliant disclaimers when appropriate. The software can also suppress a disclaimer when necessary. Policy Patrol is the optimum tool for deploying your disclaimer strategy and aiding IRS compliance.

About Red Earth Software
Red Earth Software is a Microsoft Certified Partner that specializes in the development of content security solutions that help companies regulate and optimize the use of their email and Internet systems. Policy Patrol currently filters emails for more than 250.000 users worldwide and is used by customers in nearly every industry including educational, non-profit, financial, legal, health care, manufacturing and government. Included among Red Earth Software clients are large international organizations such as Nissan, Targus, Canadian Pacific Railway, USA.net, Lotto, Fujitsu Services (Central Government customer), Daewoo and Sony of Canada Ltd.

More information
For more information about Policy Patrol or to download a 30-day evaluation version, please visit http://www.policypatrol.com.

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More articles and white papers by Red Earth Software can be downloaded from http://www.policypatrol.com/download_documentation.htm.

Disclaimer
The contents of this document do not constitute legal advice and should not be relied upon as such. If you need legal advice on a specific matter, please contact a lawyer.

Contacting Red Earth Software
Red Earth Software, Inc. 595 Millich Drive, Ste 210 Campbell, CA 95008-0550 United States Toll-free: 1-800-921-8215 Phone: (408) 370 9527 Fax: (408) 608 1958 Sales: sales@redearthsoftware.com Support: support@redearthsoftware.com Red Earth Software Ltd Sonic House, Suite 301 43 Artemidos Avenue 6025 Larnaca Cyprus Tel: +357-24 828515 Fax: +357-24-828516 Sales: sales@redearthsoftware.com Support: support@redearthsoftware.com
Policy Patrol® is a registered trademark of Red Earth Software®. Copyright © 2001- 2009 by Red Earth Software.

Red Earth Software (UK) Ltd 20 Market Place Kingston-upon-Thames Surrey KT1 1JP United Kingdom Tel: +44-(0)20-8328 9830 Fax: +44-(0)20-8711 5771 Sales: sales@redearthsoftware.co.uk Support: support@redearthsoftware.co.uk

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