Federal Register / Vol. 69, No. 243 / Monday, December 20, 2004 / Proposed Rules 75887

contents created, with the financial 

assistance of USAID. The contents of this 

study/report/audio/visual product are the 

responsibility of <name of organization> and 

do not necessarily reflect the views of USAID 

or the United States Government.

(e) Events financed by USAID such as 

training courses, conferences, seminars, 

exhibitions, fairs, workshops, press 

conferences and other public 

communications, must be marked 

appropriately with the USAID Identity. 

Unless directly prohibited and as 

appropriate to the surroundings, 

recipients should display additional 

materials such as signs and plaques 

with USAID and United States 

Government symbols. In circumstances 

in which the USAID identity cannot be 

displayed visually, recipients are 

encouraged to otherwise acknowledge 

USAID funding and support. 

(f) USAID Mission Directors may 

waive USAID marking requirements for 

each USAID funded commodity, 

program, project, activity or public 

communication, or in exceptional 

circumstances may make a blanket 

waiver by sector, region or country, for 

up to six months from the date of the 

waiver, if the Mission Director 

determines that otherwise USAIDrequired marking would pose 

compelling political, safety or security 

concerns. The waiver determination 

must be made in a manner 

commensurate with the United States 

Government’s ‘‘no double standard’’

policy, i.e., on the basis of the same 

information that applies to 

determinations of the safety and 

security of U.S. Government employees 

in the host country. When making a 

waiver determination, Mission Directors 

should consider whether or not to 

recommend to USAID contractors, 

grantees and other partners that in 

addition, they remove their 

organization’s own logos or markings, as 

part of the determination of the 

existence of compelling political, safety, 

or security concerns. Waiver 

determinations may be extended beyond 

the initial six months after mission 

director consultation with the 

responsible USAID Assistant 

Administrator.

(g) The USAID Partner Branding 

Guide, specific marking instructions, 

and information about Mission Director 

approved waivers (if any) may be 

obtained from the Cognizant Technical 

Officer or the Agreements Officer, who 

will consult with award recipients on 

USAID marking requirements after the 

making of an award. Recipients of 

USAID-funded grant or cooperative 

agreement or other assistance award or 

subaward should retain copies of any 

specific marking instructions or waivers 

in their project, program or activity files. 

Cognizant Technical Officers will be 

assigned responsibility to monitor 

marking requirements. 

(h) The marking provision is a 

material provision of USAID grants or 

cooperative agreements or other 

assistance awards or subawards. In 

cases where the marking requirements 

have not been complied with, the 

Agreements Officer will initiate 

corrective action. Such action may 

involve informing the recipient of a 

USAID grant or cooperative agreement 

or other assistance award or subaward 

of instances of noncompliance and 

requesting that it carry out its 

responsibilities as set forth in this 

provision. Major or repeated noncompliance with the marking 

requirements will trigger a notice of 

non-compliance with a material 

provision of the USAID grant or 

cooperative agreement or other 

assistance award or subaward and an 

opportunity to cure promptly, with 

possible termination if the recipient 

does not address the material 

noncompliance with marking 

requirements. 

(i) Non-retroactivity: These marking 

requirements apply to any obligation of 

USAID funds, including incremental 

funding, as of [USAID will insert the 

effective date of this provision in the 

final rule]. In the event of a waiver of 

marking requirements, the marking 

requirements shall apply from the date 

forward that the waiver is rescinded. In 

the event of the rescinding of a waiver 

after the completion of USAID funded 

programs, projects, activities or public 

communications, the USAID mission or 

operating unit with initial responsibility 

to administer the marking requirements 

shall make a cost benefit analysis as to 

requiring USAID marking requirements 

after the completion of the affected 

programs, projects, activities or public 

communications. 

(j) The USAID Identity, the USAID 

Partner Branding Guide, and other 

marking materials and guidance will be 

provided at no cost to recipients of 

USAID grants, cooperative agreements 

or other assistance awards or 

subawards. Additional costs associated 

with marking requirements will be met 

by USAID if reasonable, allowable and 

allocable under the cost principles of 

OMB Cost Circular A–110. The standard 

cost reimbursement provisions of the 

grant, cooperative agreement, other 

assistance award or subaward should be 

followed when applying for 

reimbursement of additional marking 

costs. 

(k) If recipients of USAID grants or 

cooperative agreements or other 

assistance awards or subawards permit 

their employees to engage in public 

speaking, writing, teaching or 

promotion efforts such as press 

conferences concerning the USAID 

funded program, project, activity or 

public communication, such recipients 

must have an organizational policy that 

requires the organization and all its 

employees to state that they are not 

representing USAID or the United States 

Government and that their public 

speaking, writing, teaching or 

promotional efforts do not necessarily 

reflect the views of USAID or of the 

United States Government. 

(l) If recipients of USAID funded 

grants and cooperative agreements or 

other assistance awards or subawards 

have an organizational policy permitting 

employee use of the USAID Standard 

Graphic Identity on business cards or 

other personally identifying material, 

such a policy must require employee 

business cards or other personally 

identifying material to bear the USAID 

Identity along with the legend ‘‘USAID 

grantee,’’ while prohibiting employees 

from claiming status as a USAID 

employee, United States Government 

employee, or member of the United 

States diplomatic mission.

Dated: December 15, 2004. 

Fred W. Schieck, 

Deputy USAID Administrator.

[FR Doc. 04–27791 Filed 12–17–04; 8:45 am] 

BILLING CODE 6116–01–P

DEPARTMENT OF THE TREASURY

Office of the Secretary 

31 CFR Part 10 

[REG–159824–04] 

RIN 1545–BE13 

Regulations Governing Practice Before 

the Internal Revenue Service

AGENCY: Office of the Secretary, 

Treasury.

ACTION: Notice of proposed rulemaking 

and notice of public hearing. 

SUMMARY: This notice proposes 

amendments to the regulations 

governing practice before the Internal 

Revenue Service (Circular 230). These 

regulations affect individuals who are 

eligible to practice before the IRS. The 

proposed modifications set forth 

standards for State or local bond 

opinions. This document also provides 

notice of a public hearing regarding the 

proposed regulations.

75888 Federal Register / Vol. 69, No. 243 / Monday, December 20, 2004 / Proposed Rules 

DATES: Written or electronically 

generated comments and outlines of 

topics to be discussed at the public 

hearing scheduled for March 22, 2005, 

must be received by March 1, 2005.

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–159824–04), room 

5203, Internal Revenue Service, POB 

7604, Ben Franklin Station, Washington, 

DC 20044. Submissions may be hand 

delivered Monday through Friday 

between the hours of 8 a.m. and 4 p.m. 

to: CC:PA:LPD:PR (REG–159824–04), 

Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue, 

NW., Washington, DC. Alternatively, 

taxpayers may submit comments 

electronically via the IRS Internet site 

at: http://www.irs.gov/regs. The hearing 

will be held in the Internal Revenue 

Service auditorium on the seventh floor.

FOR FURTHER INFORMATION CONTACT:

Concerning issues for comment, Heather 

L. Dostaler at (202) 622–4940 or Vicki 

Tsilas at (202) 622–3980; concerning 

submissions of comments, Treena 

Garrett of the Publications and 

Regulations Branch at (202) 622–7180 

(not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act 

The collection of information 

contained in this notice of proposed 

rulemaking has been submitted to the 

Office of Management and Budget for 

review in accordance with the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3507). Comments on the 

collection of information should be sent 

to the Office of Management and 

Budget, Attn: Desk Officer for the 

Department of the Treasury, Office of 

Information and Regulatory Affairs, 

Washington, DC 20503, with copies to 

the Internal Revenue Service, Attn: IRS 

Reports Clearance Officer, 

SE:W:CAR:MP:T:T:SP, Washington, DC 

20224. Comments on the collection of 

information should be received by 

February 18, 2005. Comments are 

specifically requested concerning: 

Whether the proposed collection of 

information and retention is necessary 

for the proper performance of the Office 

of Professional Responsibility, including 

whether the information will have 

practical utility; 

The accuracy of the estimated burden 

associated with the proper collection 

and retention of information (see 

below); 

How the quality, utility, and clarity of 

the information to be collected may be 

enhanced; 

How the burden of complying with 

the proposed collection and retention of 

information may be minimized, 

including through the application of 

automated collection techniques or 

other forms of information technology; 

and 

Estimates of capital or start-up costs 

and costs of operation, maintenance, 

and purchase of services to provide 

information. 

The collection of information in these 

proposed regulations is in § 10.39. This 

information is required to ensure 

practitioners comply with minimum 

standards when writing a State or local 

bond opinion. This information will 

assist the Commissioner, through the 

Office of Professional Responsibility, to 

ensure that practitioners properly advise 

taxpayers regarding state or local bonds. 

The collection of information is 

mandatory. The likely recordkeepers 

and respondents are individuals. 

To comply with § 10.39, a practitioner 

may provide a single State or local bond 

opinion or may provide a combination 

of documents, but only if the 

documents, taken together, satisfy the 

requirements of § 10.39. The estimates 

below are based on an average of 10 

opinions given by a practitioner per year 

with an average increased time of 1 to 

3 hours per opinion. 

Estimated total record keeping and 

reporting burden is 30,000 hours. 

Estimated annual burden per 

practitioner varies from 10 to 30 hours, 

depending on individual circumstances, 

with an estimated average of 20 hours. 

Estimated number of affected 

practitioners is 1,500. 

Estimated annual frequency of 

responses (providing a State or local 

bond opinion or a combination of 

documents) is on occasion. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to a collection of information 

unless it displays a valid control 

number assigned by the Office of 

Management and Budget. 

Books or records relating to a 

collection of information must be 

retained as long as their contents may 

become material in the administration 

of any internal revenue law. Generally, 

tax returns and tax return information 

are confidential, as required by section 

6103 of the Internal Revenue Code. 

Background 

Section 330 of title 31 of the United 

States Code authorizes the Secretary of 

the Treasury to regulate the practice of 

representatives before the Treasury 

Department. The Secretary has 

published the regulations governing 

standards of practice in Circular 230 (31 

CFR part 10). Municipal bond opinions 

have been excluded from the standards 

for tax shelter opinions since the 

Treasury Department and the IRS first 

published standards for tax shelter 

opinions in Circular 230. On December 

30, 2003, the Treasury Department and 

the IRS proposed amendments to the 

standards of practice that would have 

eliminated the exclusion for municipal 

bond opinions. See 68 FR 75186. Public 

comments were submitted in response 

to the proposed amendments addressing 

the special characteristics of the market 

for municipal bond opinions.

After careful consideration, the 

Treasury Department and the IRS have 

concluded that practitioners rendering 

opinions concerning the tax treatment of 

municipal bonds should be subject to 

the same professional standards that are 

applicable to other practitioners. 

Recognizing the special characteristics 

of the bond market, the Treasury 

Department and the IRS are proposing 

regulations that provide standards of 

practice for practitioners rendering 

municipal bond opinions. 

The proposed regulations are 

substantially similar to the standards of 

practice for covered opinions that were 

promulgated on December 20, 2004, 

which included final regulations 

providing best practices for tax advisors, 

minimum standards for covered 

opinions and other written advice and 

procedures to ensure compliance with 

the minimum standards. Under the final 

regulations, a practitioner providing a 

covered opinion must comply with the 

minimum standards set forth in § 10.35. 

Specifically, a practitioner providing a 

covered opinion must: (1) identify and 

ascertain all relevant facts; (2) relate the 

applicable law to the relevant facts; (3) 

evaluate each significant Federal tax 

issue; and (4) provide an overall 

conclusion. In addition, covered 

opinions may be required to contain 

certain disclosures provided in 

§ 10.35(e), if applicable. Under § 10.35, 

the definition of a covered opinion 

excludes State or local bond opinions. 

The definition of a State or local bond 

opinion contemplates opinions that 

issuers routinely receive at the time 

bonds are issued. Specifically, a State or 

local bond opinion is written advice 

that is included in the offering materials 

for the issuance of a State or local bond 

and that concerns only the excludability 

of interest on a State or local bond from 

gross income under section 103, the 

application of section 55, the status of 

the bond as a qualified tax-exempt 

obligation under section 265(b)(3), the 

status of the bond as a qualified zone 

academy bond under section 1397E, or 

any combination of these issues. 

Offering materials include any written 

material delivered to a purchaser of a 

State or local bond in connection with 

Federal Register / Vol. 69, No. 243 / Monday, December 20, 2004 / Proposed Rules 75889

the issuance of the bond in a private or 

public placement (bond offering 

materials). 

Explanation of Provisions 

Under § 10.35(b)(2)(ii)(B)(2), a covered 

opinion does not include a State or local 

bond opinion. Under proposed 

§ 10.35(b)(9), a State or local bond 

opinion is written advice, included in 

bond offering materials for the issuance 

of a State or local bond, if (1) the written 

advice as to Federal tax matters 

addressed in the bond offering materials 

consists only of advice that concerns 

specified issues under section 103, 

section 55, section 265(b)(3), or section 

1397E, or any combination of those 

issues; and (2) the practitioner 

separately provides to the issuer of the 

bond, and includes in the transcript of 

proceedings if one is prepared, written 

advice that satisfies the requirements set 

forth in § 10.39. 

An opinion is a State or local bond 

opinion even if the written advice 

addresses matters not directly related to 

a Federal tax issue, e.g., a State law 

issue. An opinion also is a State or local 

bond opinion if the opinion is 

redelivered unchanged, e.g., if the 

opinion is redelivered with a qualified 

tender bond that is tendered to the 

remarketing agent and remarketed. If the 

State or local bond opinion with respect 

to that bond issue is changed or 

otherwise updated after bonds are 

issued, the altered opinion is not a State 

or local bond opinion, and is subject to 

the requirements of § 10.35.

The Treasury Department and the IRS 

recognize the special characteristics of 

the market for municipal bonds and are 

proposing amendments to the 

requirements of Circular 230 that take 

into account these characteristics. The 

manner in which practitioners provide 

State or local bond opinions suggests 

that the form of these bond opinions 

should be more flexible than § 10.35 

permits. The proposed regulations 

exclude a State or local bond opinion

from the requirements of § 10.35, if the 

practitioner provides the issuer with 

separate written advice that satisfies the 

requirements of § 10.39. 

Proposed § 10.39 sets forth the 

minimum requirements for a State or 

local bond opinion. Although the 

minimum requirements are 

substantially similar to those of 

§ 10.35(c), § 10.39 is tailored to take into 

account the customary practice and 

special circumstances of the market for 

municipal bonds. Furthermore, the 

proposed regulations provide 

practitioners flexibility in determining 

how the separate written advice should 

be conveyed. The practitioner may 

provide the separate written advice in a 

tax certificate that customarily would be 

prepared for inclusion in the transcript 

of proceedings, or in a tax certificate 

and an additional memorandum or 

letter, or in any other combination of 

documents that are made available to 

the issuer and included in the transcript 

of proceedings, if one is prepared. The 

requirements for all State or local bond 

opinions include: (1) Identifying and 

considering all relevant facts and not 

relying on unreasonable factual 

assumptions or unreasonable 

representations; (2) relating the 

applicable law (including potentially 

applicable judicial doctrines) to the 

relevant facts and not relying on any 

unreasonable legal assumptions, 

representations or conclusions; and (3) 

considering all significant Federal tax 

issues relevant to reaching the overall 

conclusion with respect to the Federal 

tax treatment of the bonds and reaching 

a conclusion, supported by the facts and 

the law, with respect to each significant 

Federal tax issue. As provided in 

§ 10.35(b)(3), a Federal tax issue is 

significant if the Internal Revenue 

Service has a reasonable basis for a 

successful challenge and its resolution 

could have a significant impact, 

whether beneficial or adverse and under 

any reasonably foreseeable 

circumstance, on the overall Federal tax 

treatment of the transaction(s) or 

matter(s) addressed in the opinion. 

A practitioner must not base the 

written advice on an assumption or 

factual representation, statement or 

finding of any person unless the 

practitioner has exercised due diligence 

in identifying and ascertaining the 

relevant facts. Even if a third party has 

certified a representation, the 

practitioner is responsible for exercising 

due diligence. For example, a 

practitioner may not rely on a 

representation, certified or otherwise, to 

conclude that the requirements of the 

safe harbor for establishing the fair 

market value of a guaranteed investment 

contract in 26 CFR 1.148–5(d)(6)(iii) 

were met if the representation does not 

include a specific description of how 

those requirements were satisfied or if 

the practitioner knows or should know 

that the representation was incorrect or 

incomplete. 

Proposed § 10.39 permits a 

practitioner to incorporate the facts, 

factual assumptions, and findings, 

representations and statements of any 

person by reference to another 

document, such as a tax certificate, 

provided that the document is included 

in the transcript of proceedings. 

Similarly, the legal analysis may be 

appended or included in a tax certificate 

or similar document, provided that it is 

clear that the practitioner provided the 

written advice. Unlike § 10.35(e) with 

respect to covered opinions, proposed 

§ 10.39 does not require any disclosures 

in the written advice. 

Proposed §§ 10.35(b)(9) and 10.39 will 

require that the written advice the 

practitioner is required to provide 

separately to the issuer of a state or local 

bond be included in the transcript of 

proceedings if one is prepared or in a 

document available to the issuer if no 

transcript is prepared. Inclusion of the 

written advice in the transcript of 

proceedings is intended to ensure that 

the practitioner’s written advice is made 

available to the issuer and is intended 

to be consistent with the current 

practice of including the tax certificate 

and other documents supporting the 

State or local bond opinion in the 

transcript of proceedings. The Treasury 

Department and the IRS request 

comments regarding this requirement. 

Proposed Effective Date 

Consistent with Announcement 2004–

29 (2004–17 I.R.B. 828) (April 26, 2004), 

these proposed regulations will be 

applicable no sooner than 120 days after 

the final regulations are published in 

the Federal Register. 

Special Analyses 

It has been determined that this notice 

of proposed rulemaking is not a 

significant regulatory action as defined 

in Executive Order 12866. Therefore, a 

regulatory assessment is not required. It 

is hereby certified that these regulations 

will not have a significant economic 

impact on a substantial number of small 

entities. Persons authorized to practice 

before the IRS have long been required 

to comply with certain standards of 

conduct. Therefore, a regulatory 

flexibility analysis under the Regulatory 

Flexibility Act (5 U.S.C. chapter 6) is 

not required. Pursuant to section 7805(f) 

of the Internal Revenue Code, this 

notice of proposed rulemaking will be 

submitted to the Chief Counsel for 

Advocacy of the Small Business 

Administration for comment on its 

impact on small businesses. 

Comments and Public Hearing 

Before the regulations are adopted as 

final regulations, consideration will be 

given to any written comments and 

electronic comments that are submitted 

timely to the IRS. The Treasury 

Department and the IRS specifically 

request comments on the clarity of the 

proposed regulations and how they can 

be made easier to understand. All 

comments will be available for public 

inspection and copying. 

75890 Federal Register / Vol. 69, No. 243 / Monday, December 20, 2004 / Proposed Rules 

The public hearing is scheduled for 

March 22, 2005, at 10 a.m., and will be 

held in the Internal Revenue Service 

auditorium on the seventh floor. Due to 

building security procedures, visitors 

must enter at the Constitution Avenue 

entrance. All visitors must present 

photo identification to enter the 

building. Visitors will not be admitted 

beyond the immediate entrance area 

more than 30 minutes before the hearing 

starts. For information about having 

your name placed on the building 

access list to attend the hearing, see the 

FOR FURTHER INFORMATION CONTACT

section of this preamble. 

The rules of 26 CFR 601.601(a)(3) 

apply to the hearing. Persons who wish 

to present oral comments at the hearing 

must submit written or electronic 

comments and submit an outline of the 

topics to be discussed and the time to 

be devoted to each topic by March 1, 

2005. A period of 10 minutes will be 

allocated to each person for making 

comments. 

An agenda showing the scheduling of 

the speakers will be prepared after the 

deadline for receiving outlines has 

passed. Copies of the agenda will be 

available free of charge at the hearing. 

Drafting Information 

The principal authors of the 

regulations are Heather L. Dostaler and 

Brinton T. Warren of the Office of the 

Associate Chief Counsel (Procedure and 

Administration), Administrative 

Provisions and Judicial Practice 

Division, and Vicki Tsilas of the Office 

of the Associate Chief Counsel (Tax 

Exempt/Government Entities).

List of Subjects in 31 CFR Part 10 

Administrative practice and 

procedure, Lawyers, Accountants, 

Enrolled agents, Enrolled actuaries, 

Appraisers.

Proposed Amendments to the 

Regulations 

Accordingly, 31 CFR part 10 is 

proposed to be amended as follows.

PART 10—PRACTICE BEFORE THE 

INTERNAL REVENUE SERVICE 

Paragraph 1. The authority citation for 

subtitle A, part 10 is revised to read as 

follows:

Authority: Sec. 3, 23 Stat. 258, secs. 2–12, 

60 Stat. 237 et. seq.; 5 U.S.C. 301, 500, 551–

559; 31 U.S.C. 330, as amended by Pub. L. 

108–357; Reorg. Plan No. 26 of 1950, 15 FR 

4935, 64 Stat. 1280, 3 CFR, 1949–1953 

Comp., p. 1017.

Par. 2. Section 10.35 is amended by 

revising paragraph (b)(9) to read as 

follows:

§ 10.35 Requirements for covered 

opinions.

* * * * *

(b) * * * 

(9) State or local bond opinion.

Written advice, included in bond 

offering materials (as defined in 

§ 10.39(c)) for the issuance of a State or 

local bond, is a State or local bond 

opinion if—

(i) The written advice as to Federal 

tax matters addressed in the bond 

offering materials consists only of 

advice that concerns the excludability of 

interest on a State or local bond from 

gross income under section 103 of the 

Internal Revenue Code, the application 

of section 55 of the Internal Revenue 

Code to a State or local bond, the status 

of a State or local bond as a qualified 

tax-exempt obligation under section 

265(b)(3) of the Internal Revenue Code, 

the status of a State or local bond as a 

qualified zone academy bond under 

section 1397E of the Internal Revenue 

Code, or any combination of the above; 

and 

(ii) The practitioner separately 

provides to the issuer of the bond 

written advice that satisfies the 

requirements set forth in § 10.39.

* * * * *

Par. 3. Section 10.36 is revised to read 

as follows:

§ 10.36 Procedures to ensure compliance. 

(a) Requirements for covered 

opinions. Any practitioner who has (or 

practitioners who have or share) 

principal authority and responsibility 

for overseeing a firm’s practice of 

providing advice concerning Federal tax 

issues must take reasonable steps to 

ensure that the firm has adequate 

procedures in effect for all members, 

associates, and employees for purposes 

of complying with §§ 10.35 and 10.39, 

as applicable. Any such practitioner 

will be subject to discipline for failing 

to comply with the requirements of this 

paragraph if—

(1) The practitioner through 

willfulness, recklessness, or gross 

incompetence does not take reasonable 

steps to ensure that the firm has 

adequate procedures to comply with 

§§ 10.35 and 10.39, as applicable, and 

one or more individuals who are 

members of, associated with, or 

employed by, the firm are, or have, 

engaged in a pattern or practice, in 

connection with their practice with the 

firm, of failing to comply with §§ 10.35 

and 10.39, as applicable; or 

(2) The practitioner knows or should 

know that one or more individuals who 

are members of, associated with, or 

employed by, the firm are, or have, 

engaged in a pattern or practice, in 

connection with their practice with the 

firm, that does not comply with §§ 10.35 

and 10.39, as applicable, and the 

practitioner, through willfulness, 

recklessness, or gross incompetence 

fails to take prompt action to correct the 

noncompliance. 

(b) Effective date. This section is 

applicable on the date that is 120 days 

after publication of the final regulations 

in the Federal Register. 

Par. 4. Section 10.38 is revised to read 

as follows:

§ 10.38 Establishment of advisory 

committees. 

(a) Advisory committees. To promote 

and maintain the public’s confidence in 

tax advisors, the Director of the Office 

of Professional Responsibility is 

authorized to establish one or more 

advisory committees composed of at 

least five individuals authorized to 

practice before the Internal Revenue 

Service. The Director should ensure that 

membership of an advisory committee is 

balanced among those who practice as 

attorneys, accountants, and enrolled 

agents. Under procedures prescribed by 

the Director, an advisory committee may 

review and make general 

recommendations regarding 

professional standards or best practices 

for tax advisors, including whether 

hypothetical conduct would give rise to 

a violation of §§ 10.35, 10.36 or 10.39. 

(b) Effective date. This section is 

applicable 120 days after publication of 

the final regulations in the Federal 

Register. 

Par. 5. Section 10.39 is added to read 

as follows:

§ 10.39 Requirements for State or local 

bond opinions. 

(a) In general. A practitioner who 

provides a State or local bond opinion

shall comply with the standards of 

practice in this section. 

(b) Requirements for separately 

provided written advice. A practitioner 

providing a State or local bond opinion

must separately provide to the issuer of 

the bond written advice that satisfies 

each of the following requirements. For 

purposes of this section, the written 

advice may be set forth in a tax 

certificate or in other documents 

included in the transcript of 

proceedings, or, if no transcript is 

prepared, in one or more other 

documents made available to the issuer, 

provided that the documents 

constituting the written advice taken 

together satisfy each of the following 

requirements. 

(1) Factual matters. (i) The 

practitioner must use reasonable efforts 

to identify and ascertain the facts,

Federal Register / Vol. 69, No. 243 / Monday, December 20, 2004 / Proposed Rules 75891

which may relate to future events, and 

to determine which facts are relevant. 

The written advice must identify and 

consider all facts that the practitioner 

determines to be relevant.

(ii) The practitioner must not base the 

written advice on any unreasonable 

factual assumptions (including 

assumptions as to future events). An 

unreasonable factual assumption 

includes a factual assumption that the 

practitioner knows or should know is 

incorrect or incomplete. A factual 

assumption includes reliance on a 

projection, financial forecast or 

appraisal. It is unreasonable for a 

practitioner to rely on a projection, 

financial forecast or appraisal if the 

practitioner knows or should know that 

the projection, financial forecast or 

appraisal is incorrect or incomplete or 

was prepared by a person lacking the 

skills or qualifications necessary to 

prepare such projection, financial 

forecast or appraisal. The written advice 

must identify in a separate section all 

factual assumptions relied upon by the 

practitioner. 

(iii) The practitioner must not base 

the written advice on any unreasonable 

factual representations, statements or 

findings of any person. An unreasonable 

factual representation includes a factual 

representation that the practitioner 

knows or should know is incorrect or 

incomplete. The written advice must 

identify in a separate section all factual 

representations, statements or findings 

relied upon by the practitioner. 

(iv) If the facts required to be 

identified and considered under this 

paragraph (b)(1) are set forth in a tax 

certificate or other similar document 

that is included in the transcript of 

proceedings and the analysis required 

by paragraphs (b)(2) and (b)(3) of this 

section is set forth in a separate 

document, the practitioner may 

incorporate the facts required to be 

identified or considered in the separate 

document by reference to the tax 

certificate or other document. 

(2) Relate law to facts. (i) The written 

advice must relate the applicable law 

(including potentially applicable 

judicial doctrines) to the relevant facts. 

(ii) The practitioner must not assume 

the favorable resolution of any 

significant Federal tax issue except as 

provided in paragraph (d) of this 

section, or otherwise base an opinion on 

any unreasonable legal assumptions, 

representations, or conclusions. 

(iii) The written advice must not 

contain internally inconsistent legal 

analysis or conclusions. 

(3) Evaluation of significant Federal 

tax issues—(i) In general. The written 

advice must consider all significant 

Federal tax issues that are relevant to 

the overall conclusion provided in the 

State or local bond opinion with respect 

to the application of section 103 of the 

Internal Revenue Code, section 55 of the 

Internal Revenue Code, section 265(b)(3) 

of the Internal Revenue Code, or section 

1397E of the Internal Revenue Code, or 

any combination thereof, except as 

provided in paragraph (d) of this 

section. 

(ii) Conclusion as to each significant 

Federal tax issue. The written advice 

must provide the practitioner’s 

conclusion as to the likelihood that a 

taxpayer will prevail on the merits with 

respect to each significant Federal tax 

issue considered in the written advice. 

The written advice must describe the 

reasons for the conclusions, including 

the facts and analysis supporting the 

conclusions. 

(iii) Evaluation based on chances of 

success on the merits. In evaluating the 

significant Federal tax issue(s) 

addressed in the written advice, the 

practitioner must not take into account 

the possibility that a tax return will not 

be audited, that an issue will not be 

raised on audit, or that an issue will be 

resolved through settlement if raised. 

(c) Bond offering materials. The term 

bond offering materials means any 

written materials delivered to a 

purchaser of a State or local bond in 

connection with the issuance of the 

bond in a public or private offering, 

including an official statement (if one is 

prepared). 

(d) Competence to provide opinion; 

reliance on opinions of others. (1) The 

practitioner must be knowledgeable in 

all of the aspects of Federal tax law 

relevant to the opinion being rendered, 

except that the practitioner may rely on 

the opinion of another practitioner with 

respect to one or more Federal tax issues 

unless the practitioner knows or should 

know that the opinion of the other 

practitioner should not be relied on. If 

a practitioner relies on the opinion of 

another practitioner regarding a 

significant Federal tax issue, the relying 

practitioner must identify the other 

opinion and set forth in the written 

advice the conclusions reached in the 

other opinion. 

(2) The practitioner must be satisfied 

that the combined analysis of the 

opinions, taken as a whole satisfy the 

requirements of this section. 

(e) Effective date. This section applies 

to State or local bond opinions that are 

rendered on a date that is on or after 120 

days after publication of the final 

regulations in the Federal Register. 

Par. 6. Section 10.52 is revised to read 

as follows:

§ 10.52 Violation of regulations. 

(a) Prohibited conduct. A practitioner 

may be censured, suspended or 

disbarred from practice before the 

Internal Revenue Service for any of the 

following: 

(1) Willfully violating any of the 

regulations (other than § 10.33) 

contained in this part; or 

(2) Recklessly or through gross 

incompetence (within the meaning of 

§ 10.51(l)) violating §§ 10.34, 10.35, 

10.36, 10.37 or 10.39. 

(b) Effective date. This section is 

applicable 120 days after publication of 

the final regulations in the Federal 

Register.

Mark E. Matthews, 

Deputy Commissioner for Services and 

Enforcement, Internal Revenue Service. 

Approved: December 8, 2004. 

Arnold I. Havens, 

General Counsel, Department of the Treasury.

[FR Doc. 04–27679 Filed 12–17–04; 8:45 am] 

BILLING CODE 4830–01–P

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 300 

[FRL–7848–6] 

National Oil and Hazardous Substance 

Pollution Contingency Plan National 

Priorities List

AGENCY: Environmental Protection 

Agency.

ACTION: Notice of intent to partially 

delete 9.84 acres within the Uravan 

Superfund Site from the National 

Priorities List. 

SUMMARY: The Environmental Protection 

Agency (EPA) Region 8 is issuing a 

notice of intent to partially delete 9.84 

acres within the Uravan Superfund Site 

located in Montrose County, Colorado, 

from the National Priorities List (NPL) 

and requests public comment on this 

notice of intent. The NPL, promulgated 

pursuant to section 105 of the 

Comprehensive Environmental 

Response, Compensation, and Liability 

Act (CERCLA) of 1980, as amended, is 

found at Appendix B of 40 CFR part 300 

which is the National Oil and 

Hazardous Substances Pollution 

Contingency Plan (NCP). The EPA and 

the State of Colorado, through the 

Colorado Department of Public Health 

and Environment, have determined that 

all appropriate response actions under 

CERCLA, other than operation and 

maintenance and five-year reviews, 

have been completed for the 9.84 acres 

including two historic structures.