Written Tax Opinions

Tax is a complex area of law that is constantly evolving as Congress passes new laws, the IRS issues new regulations and tax courts make new decisions. Some circumstances are cut and dry, but it is not uncommon for taxpayers to come across situations which are not exactly clear. In these circumstances it is appropriate for the taxpayer to take the position most advantageous to them, provided that position can be supported by substantial authority. It is in these situations that obtaining written tax opinions from qualified tax professionals can afford taxpayers with assurance that they will not be later penalized for a simple misinterpretation of the law.

Substantial authority is considered an opinion based on the US Tax Code, IRS regulations and interpretations and tax and civil court rulings. Seeking an written tax opinion from a licensed professional is typically sufficient to demonstrate due diligence and avoid a negligence penalty should a tax court later disagree with you at some point in the future. If you are going to rely on the advice, you are required to seek that advice contemporaneously, not when the IRS begins an examination of your tax return.

Written tax opinions can provide various levels of assurance. In the case where the taxpayer has more than a 50 percent chance of prevailing if the IRS knows all the facts and circumstances, experts may issue written tax opinions with a more likely than not conclusion. These positions can be taken on a tax return without disclosure. In the case that the expert comes to the conclusion that the position falls short of a more likely than not position, but determines that the position still has a reasonable possibility of upholding an IRS challenge (a one in three chance) the taxpayer may take the position and avoid the accuracy related penalty by disclosing the position on the tax return. Positions that do not meet the reasonable possibility standards are considered frivolous and may not be taken on a tax return under any circumstances.

We can provide expert advice and written tax opinions based on substantial authority to support positions taken on your tax return.

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Podraza CPA can provide expert advice and written tax opinions based on substantial authority to support positions taken on your tax return.