Circular 230 tenets certainly should be admonished when you undertake writing a tax advisory opinion letter. But the IRS guidelines does not explicitly detail the elements of such an undertaking. Allow me to share my approach.
First, I do not write tax advisory opinion letters to promote ventures or where I may be found to have a conflict of interest. The courts take a dim view of the independence of such opinions as well. That being said, allow me to share my format. Chime in with your two cents so this issue may be publicly vetted.
I am a tax planner. I do not prepare the tax returns of taxpayers who benefit from my tax advisory opinion letters. The purpose of the tax advisory opinion letter is to provide guidance to compliance oriented professionals as to how to address complex tax matters addressed in the opinion letter in their clients’ tax returns.
Practically, I write a tax advisory opinion letter much like I would write an appellate brief. Mind you, I am not an attorney. But, I have had my share of consulting experiences in such affairs.
Here are the sections of my tax advisory opinion letters:
1. Introduction. This section is akin to the jurisdictional or right, power, and authority section of an appellate brief.
a. Engagement. Most errors and omissions carriers prefer your tax advisory opinion letter is engendered by an engagement letter. This is an important statement concerning your scope of authority. Cite the engagement letter and detail the provision concerning the scope of your engagement.
b. Authority. Not everyone has the authority to author a tax advisory opinion letter. First, recognize the activity involves the practice of law. If you are an attorney, like I am not, then you need to cite the authority enabling your authorship. This may involve your state supreme court’s rule governing exceptions to the unlawful practice of law; or it may involve a state statute on the subject as well. It will certainly involve Circular 230. Cite these authorities as enabling your tax advisory opinion authorship.
c. Credentials. Court decisions also require taxpayers rely on credible professional advice. You should spell out your credentials enabling your ability to opine on the tax advisory opinion subject matter.
2. Statement of Facts. This section may appear to be self-evident. But let me share a couple points nonetheless.
a. Numbering. Number each fact separately.
b. Simple Sentences. Do not compound the factual statements. That means each numbered fact should be one sentence; short, concise, and to the point.
c. Completeness. Tend to be more exhaustive in setting forth the statement of facts. After all, it drives the issues and your discussion of the issues.
d. Taxpayer Attestation. Do not allow the facts to be of your making. I require the taxpayers who will benefit from the tax advisory opinion letter to attest and avow, under penalty of perjury, the statement of facts is true and correct to the best of their knowledge, information, or belief.
3. Statement of the Issues. In appellate briefs, a Statement of the Issues usually follows the Statement of Facts or the Statement of Proceedings Below. All good tax planners have a sense about tax issues arising from the clients’ Statement of Fact. I usually organize my issues in an order that supports the tax advisory opinion letter’s conclusion. Like your Statement of Facts, your Statement of Issues should not be compounded. Build your issues like a maestro bringing the orchestra to crescendo. It is important to frame your issues for positive argument conclusion. For example, Is ABC LLC a disqualified person pursuant to 26 U.S.C. §4975?
4. Discussion. In appellate briefs, the argument or discussion follows the flow of the statement of issues. Moreover, you state the discussion point as an affirmative declaration regarding how the issue was framed in the Statement of Issues, to wit: ABC LLC is not a disqualified person pursuant to 26 U.S.C. §4975. Then in that Discussion section set out your argument and authorities supporting your opinion: In my opinion, ABC LLC is not a disqualified person pursuant to 26 U.S.C. §4975. It is important in the discussion section you either declare an unequivocal tax position or on what basis the tax position might reasonably be challenged.
5. Conclusion. The conclusion section of your tax advisory opinion should espouse a summary of the position counseled, to wit: It is my opinion that although taxpayer’s self-directed ERISA plan invested $X to acquire a capital equity interest in ABC LLC, since the plan owns less than a 50% capital equity interest in the plan, ABC LLC is not a section 4975 disqualified person with respect to the plan or the plan account holder.
6. Exhibits. The only exhibit I attach to the tax advisory opinion letter is the taxpayer beneficiaries’ attestations regarding the opinion letter’s Statement of Facts. I place all other exhibits in support of the Statement of Facts in an Appendix under separate cover. Always incorporate those exhibits in your tax advisory opinion letter as material and significant to that particular Statement of Fact.
Please post your comments below and let’s create an exchange of ideas on this important topic for tax planning professionals.
 See, e.g., Mortensen v. Commissioner, 440 F.3d 375 (6th Cir. 2006).
 Pursuant to Section 10.3(f)(3) of Circular 230, I may lawfully provide this tax advice inasmuch as it is given with an eye toward the preparation of tax returns to be filed before the Internal Revenue Service, whether or not I am the actual paid preparer of such returns.
 See, Mortensen, supra.