Actuaries Weigh in on IRS Circular 230

In the September 2005 issue of Taxing Times, we raised a question as to whether § 10.35 of IRS Circular 230, issued June 20, 2005, could apply to in-house or consulting actuaries who prepare written tax analysis (e.g., under I.R.C. § 7702), but do not practice before the IRS. It appears that, in drafting that section of the Circular, the IRS intended that its provisions would apply to enrolled actuaries who prepare actuarial reports (Forms 5500, Schedule B) for qualified plans. Under Circular 230, any written tax advice that is expected to be relied upon to avoid penalties, to be used in marketing or is another type of “covered opinion,” must consider all the relevant facts and federal tax issues.

By letter dated October 28, 2005, the American Academy of Actuaries submitted comments on § 10.35 of Circular 230, which pointed out serious flaws in the IRS requirements as they relate to valuation reports prepared by pension actuaries.