Circular 230 has provided guidance with respect to the preparation of tax opinions issued to investors in federal income tax credit investments.  Circular 230 has required tax lawyers to analyze all material tax issues to provide an overall opinion that the “bulk” of the anticipated tax benefits available with respect to a transaction “should” be available to the investor to permit the investor to rely upon the opinion for purposes of avoiding the imposition of penalties.  In 2013, Treasury proposed the repeal of the current portion of Circular 230 that governs tax opinions and other written communications and replacement  with a substantially modified set of rules.  Rumors of the imminent issuance of major revisions to the Circular 230 rules have surfaced again.

Most tax professionals would welcome a substantial revision of the rules, including the elimination of the disclaimer typically found on emails and memorandums that the advice contained in the communication cannot be relied upon to avoid the imposition of penalties.  Tax professionals would also welcome the elimination of most of the standard “Circular 230″ compliance language  from opinions.

Assuming that the Circular 230 rules are revised as anticipated,  will the content and scope of the tax credit opinions substantially change?  Investors will still insist upon receipt of comfort that the anticipated tax results of an investment should be realized.  As a result, tax professional will in all likelihood continue to address all of the material issues in their opinion and will continue to issue such opinions at a “should” level.  Projections will continue to be carefully analyzed and investors are likely to insist that the opinion provider state that, in its view, the projections are not unreasonable.  Accordingly, while some familiar language will disappear, the substance and scope of tax credit opinions will remain much the same even after any Circular 230 revisions.