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Abstract

Part II of this Article discusses the background, scope, and requirements of the Circular 230 rules. Part III discusses the ethical rules applicable to tax opinions, compares these rules to the Circular 230 opinion standards, and concludes that the Circular 230 standards impose substantially greater requirements on practitioners than, and in certain respects conflict with, the ethical rules. Part IV discusses First Amendment case law and commentary regarding professional speech, and proposes that professional speech regulations be analyzed by a model that defines permissible regulation of professional speech by reference to the role of the profession in society and accepted professional norms. Part IV also discusses the professional speech doctrine in the context of a more general “hearer-centered” First Amendment theory, which is relevant in evaluating the restrictions on professional opinions used to market tax shelters to third parties. Part V applies the professional speech model and the “hearer-centered” theory to the Circular 230 tax opinion requirements, and concludes that the “viewpoint-neutral” standards imposed by Circular 230, while perhaps furthering the legitimate government purpose of ensuring that taxpayers not enter into tax-motivated transactions without a full understanding of the risks, are not narrowly tailored to their purpose and distort the normal functioning of the profession based on accepted usage. Part V also concludes that the “viewpoint-based” standards imposed by Circular 230 are even less justified in terms of furthering a legitimate government purpose, and more seriously distort the role of a lawyer and interfere with the exercise of professional judgment. Finally, Part V considers what requirements the government could legitimately impose on tax opinions under the “professional speech” model and, in the case of opinions used to market tax shelters, under the “hearer-centered” theory.

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