Presentation on theme: "Presented by Joseph Gulant, Jennifer Bell, Manuela Morais, and Tara Leiter March 27, 2012 Tax Issues in Connection with Non-U.S. Companies Doing Business."— Presentation transcript:
Presented by Joseph Gulant, Jennifer Bell, Manuela Morais, and Tara Leiter March 27, 2012 Tax Issues in Connection with Non-U.S. Companies Doing Business in the Gulf
1 Our Speakers Joseph T. Gulant Partner & Practice Group Leader, Tax Practice Jennifer Lynn Bell Associate, Tax Practice Manuela M. Morais Of Counsel, Employment, Benefits & Labor Practice Tara L. Leiter Associate, Blank Rome Maritime
2 Circumstances in which foreign companies will become subject to U.S. federal income taxes (and tax return filing obligations) when doing business in the Gulf of Mexico; When payments made to these foreign companies become subject to U.S. federal income tax withholding; When employees/ship crew become subject to employment taxes in the U.S. (income, social security, etc.); and Update on hot legal (non-tax) issues in connection with doing business in the Gulf. Our Discussion
3 Industry Director’s Directive #1 – United States Outer Continental Shelf Activity (October 28, 2009, “IDD 1”) Industry Director’s Directive #2 – Employment Tax and the Employees on the U.S. Outer Continental Shelf (March 30, 2011) Chief Counsel Advice 201027046 (July 9, 2010) “The OCS Tax Trap: U.S. and Foreign Companies Beware!” The Maritime Executive (March/April 2011) Supplemental Materials
4 Definition of “United States” includes the OCS for U.S. federal income tax purposes Generally two types of taxes may be applicable to U.S.-source income of a foreign corporation: Income effectively connected with a U.S. trade or business; and U.S.-source passive income (e.g., rents from bareboat charter, compensation, etc.). Certain additional U.S. federal income taxes and/or exemptions may apply: Branch Profits Tax; Tax on income from the sale of a U.S. real property interest; The reciprocal exemption; and Tax on U.S. source gross transportation income. Considerations and strategies applicable to the oil and gas industry Overview of U.S. Federal Income and Withholding Tax Considerations
5 Definition of “United States” includes the OCS for U.S. federal income tax sourcing rules. Source of services, transportation, and rental income depend on where the services are performed, where the transportation begins and ends, and where the rental property is used. Means that a foreign contractor that provide services on the OCS is generally considered to perform those services in the United States and derive U.S. source income. Misconception that 12 mile limit is relevant. Section 638(1): Defines the OCS as the “seabed and subsoil of those submarine areas which are adjacent to the territorial waters of the U.S. and over which the U.S. has exclusive rights, in accordance with international law, “with respect to the exploration and exploitation of natural resources.” Treasury Regulations broadly interpret “with respect to the exploration and exploitation of natural resources.” Definition of U.S. Includes OCS
6 Includes all persons, property, or activities which are engaged in or “related to” the exploration for or exploitation of mines, oil and gas wells, and other natural deposits, whether or not physically upon, connected, or attached to the seabed or subsoil. Examples in Treasury Regulation Section 1.638-1(f): Lawyer that is physically present on offshore oil drilling platform for the sole purpose of interviewing his client for a domestic relations matter NOT engaged in the exploration/exploitation of natural deposits Doctor examining employees that are engaged in the exploitation of oil while on the platform to determine for employer if employees should continue to work on the platform IS engaged in the exploration/exploitation of natural deposits Engineer designs equipment for use on oil drilling platforms affixed to OCS and engaged in exploitation of oil NOT subject to Section 638 Definition of U.S. Includes OCS Cont. – Treasury Regulations
7 Corp A (non-U.S.) enters into a contract with Corp B (U.S.) to engage in exploratory oil drilling activities on a leasehold held by Corp B located on OCS Corp A IS engaged in and has property and activities subject to Section 638, amounts paid to Corp A under contract are U.S. sour ce PLR 200823005 (6/6/08): Vessel operators who receive payments made under time charter arrangements which involve the transportation of divers and equipment on the OCS are performing services related to the exploration and exploitation of natural resources. Revenue Ruling 80-64: Section 638 applies to a drill ship operating in the OCS even though the ship does not rest on, and is not anchored to, the seabed and does not penetrate the subsoil except to remove core samples. PLR 7590039 (9/13/79): Operation of a foreign corporation’s dynamic positioning drilling ship in the drilling of a Continental Offshore Stratigraphic Test in the OCS falls within Section 638. Definition of U.S. Includes OCS Cont. – Additional Examples
8 The U.S. generally imposes a tax on the net income of a foreign corporation that is engaged in a U.S trade or business and has income that is effectively connected with that trade or business (“ECI”). Facts and circumstances test; and Activities in the U.S. must be considerable, continuous and regular. Graduated rates apply (corporate rate is currently 35%). May be reduced by Treaty under the business profits provision unless permanent establishment (may include a mine, oil well, etc.). Deductions are allowed against ECI (provided return is timely filed). Required to file IRS Form 1120-F with respect to its U.S. operations. Taxation of Income Effectively Connected with a U.S. Trade or Business
9 Additional 30% tax (subject to reduction by Treaty) imposed on the foreign corporation’s effectively connected after-tax earnings that are not reinvested in the U.S. trade or business (the so-called “Branch Profits Tax”). May be reduced by Treaty Last year rule Time v. Bareboat Charterers According to IDD #1, foreign time charterers may be engaged in a U.S. trade or business because their employees continue to navigate and manage the vessel during the time charter period. Arguably no BPT for bareboat charters Taxation of Income Effectively Connected with a U.S. Trade or Business Cont.
10 Example: Foreign contractor receives $100 of income that is treated as ECI. Foreign contractor takes $60 vessel depreciation/other deductions that year. The amount of tax due is calculated as follows: Net income is $100 minus $60, or $40, multiplied by 35% (assuming no Treaty reduction), or $14. Deductions are permitted because the foreign contractor timely files its U.S. income tax return. In addition, the Branch Profits Tax is imposed on the $40 net income, resulting in a $12 Branch Profits Tax. The total U.S. federal income tax due is $26. Taxation of Income Effectively Connected with a U.S. Trade or Business Cont.
11 Flat 30% tax on the gross amount of the foreign corporation’s U.S.- source passive income that is not ECI. No deductions are permitted. Applies to certain passive income including interest, dividends, rents, royalties, compensation, etc. Bareboat and time charter income: treated as rents, key is where vessel is used Generally requires withholding at the source (unless provided W-8ECI, W-8BEN or W-8IMY). U.S. company is required to withhold tax on payments made to foreign corporations otherwise U.S. company may be liable for taxes. May be reduced or eliminated by Treat y. Comparison of ECI versus passive income – depends on the facts Taxation of U.S.-Source Passive Income
12 Example: Foreign corporation bareboat charters a vessel to U.S. corporation for $100 rental payments that are not ECI. U.S. corporation is required to withhold and remit to IRS 30% of the gross rental payments, or $30, assuming no Treaty reduction/exemption. Taxation of U.S.-Source Passive Income Cont.
13 Gains or losses of a foreign corporation from the disposition of a U.S. real property interest (“USRPI”) are treated as ECI and, therefore, subject to tax on a net basis at graduated rates. A USRPI includes: An interest in real property (including an interest in a mine, well or other natural deposit) located in the U.S.; Fee ownership and co-ownership of land or improvements; and Leaseholds of land or improvements thereon. “Real property” includes land and unsevered natural products of the land, improvements, and personal property associated with the use of real property. Includes land with mines, wells, and other natural deposits. “Personal property” may include mining equipment. Taxation of Income from the Sale of U.S. Real Property Interests
14 “Disposition” of real property: Includes a sale of a USRPI or an interest in an entity owning a USRPI; Does NOT include the extraction of minerals. Examples Sale of an Operating Interest USRPI Operating Interest = Direct ownership interest in oil and gas that is burdened with the cost of developing and operating the property (e.g., a license to operate and exploit an oil well) Sale of an interest in a Production Payment generally NOT a USRPI Production Payment = A right with respect to oil and gas in place that entitles the owner to a specified fraction, in kind or in value, of the total production from the property, free of development and operating expenses. The interest is for a limited period of time or until a specified sum of money or a specified amount of oil and gas has been received. Sale of an interest in a Production Payment if it conveys a right to share in the appreciation in value of the mineral property MAY be a USRPI Taxation of Income from the Sale of U.S. Real Property Interests Cont.
15 Sale of a Production Payment that is limited to a quantum of mineral (e.g., percentage of reserves) or a period of time MAY be a USRPI Sale of mining equipment used to extract natural resources from the ground MAY be “personal property” and, therefore, a USRPI Sale of “personal property” used to process or transport minerals after they are severed from the land generally NOT “personal property” or a USRPI Transferee is generally required to withhold 10% of the amount realized on the disposition of a USRPI by a foreign corporation. Treaties generally do not reduce withholding. Foreign corporation may also be required to file a U.S. income tax return. Foreign corporation may elect to treat income derived from a USRPI as ECI. Taxation of Income from the Sale of U.S. Real Property Interests Cont.
16 Example: Sale by Corp A (non-U.S.) to Corp B (non-U.S.) of Operating Interest in oil and gas on the OCS for $500. Corp A is required to pay taxes on $500 multiplied by 35%, or $175. Corp A may also be required to file a U.S. income tax return. Corp B is required to withhold and remit to the IRS 10% of the amount realized, or $50. Taxation of Income from the Sale of U.S. Real Property Interests Cont.
17 Generally excludes income related to the international operation of vessels from gross income. Jurisdiction in which foreign corporation is formed must provide (through domestic law or Treaty) an exemption from income for substantially similar types of income (e.g., bareboat charter income, time charter income, capital gains, etc.). Applies only with respect to the “international operation of ships” and is, therefore, NOT applicable to purely domestic transport: Transport on OCS NOT applicable Transport from OCS to U.S. port NOT applicable Transport from Mexico to OCS MAY be applicable One long voyage argument Consider the amount of time the vessel spends in each location. The Reciprocal Exemption
18 Generally imposes a 4% tax on a foreign corporation’s U.S. source gross income derived from or in connection with: the use, hiring or leasing of a vessel, or the performance of services directly related to the use of the vessel. 50% of all transportation income beginning or ending in the U.S. (but not both) is generally treated as U.S. source income for these purposes really a 2% tax This income is not subject to the 30% withholding tax or the tax on ECI. NOT applicable to purely domestic transport (see examples on prior slide regarding The Reciprocal Exemption). U.S. Source Gross Transportation Income
19 October 28, 2009 – IRS announces that it will target foreign vessels that are engaged in activities related to the exploration and exploitation of natural resources on the OCS that may not (in its view) be complying with U.S. tax filing requirements. OCS task force established “to determine the compliance impact of these activities, and help identify, develop, resolve, and improve Service coordination of issues related to these activities.” Technical advisors identified with respect to shipping, natural resources and section 638, withholding and employment tax issues. IRS Industry Director’s Directive #1
20 Identifies three categories of foreign taxpayers that engage in activities related to the exploration for, or exploitation of, natural resources in the OCS: Contractors that perform services on the OCS (e.g., seismographic testing, drilling, repair and salvage work); Vessel operators that transport supplies and personnel between U.S. ports and locations on the OCS; and Owners and/or operators of foreign-registered vessels that bareboat or time charter to persons that are engaged in activities related to the exploration for, or exploitation of, natural resources on the OCS. Intended to protect U.S.-owned vessels from being subject to a competitive disadvantage. IRS Industry Director’s Directive #1 Cont.
21 Increased Enforcement: Increased tax enforcement activities as a result of formation of OCS task forc e. U.S. Coast Guard and U.S. State Department records provide U.S. government with extensive information regarding foreign vessels and foreign employees working on the OCS. Withholding: The IRS will generally look to the U.S. person to withhold. Obtain the appropriate Form W-8 so that no withholding is required. U.S. Payors: U.S. has jurisdiction over, and will go after, U.S. payors Failure to file tax returns: Foreign entities that should have, but did not, file returns may be able to apply to the IRS for a late filing waiver and may still be eligible to take applicable deductions. Important Considerations and Traps Applicable to the Oil and Gas Industry
22 ECI v. Passive Income Ability to take depreciation and other applicable deductions Consider future years Dispute resolution mechanism Time and bareboat charter agreement considerations – Consider U.S. income taxes when negotiating terms of charters: Lessor: Negotiate indemnity and/or gross-up to cover the potential incidence of U.S tax to preserve anticipated after-tax economic return. Lessee: Responsibility for indemnifying taxes should be predicated on the timely filing of returns and the assertion that taxes are due within a specified time period (e.g., the statute of limitations). Mayo Foundation Case: Regulatory deference on IRS rules Important Considerations and Traps Applicable to the Oil and Gas Industry Cont.
23 Crewmember Taxation and Payroll Reporting – Nonresident Aliens
24 Crewmember Taxation and Reporting Overview Dilemma faced by Inconsistencies in law and policy Long held positions of: U.S. Citizenship & Immigration Service (USCIS) Social Security Administration (SSA) Internal Review Service (IRS) Issuance of B-1 (OCS) Nonimmigrant Process at Consulates in Obtaining OCS (B-1) Visa Federal Insurance Contributions Act (FICA) Federal Unemployment Tax Act (FUTA) Obtaining Social Security Number/ITIN Tax Withholding and Reporting Tax Treaties
25 Problems Faced By Employers and Crew Members in Payroll Reporting of Nonresident Aliens USCIS *Starts with issuance of visa SSA IRS
26 Overview of Nonimmigrant Visas Temporary (Limited in Time Period) Allows for specific activity consistent with the type of visa that is issued Consular Officers instructed to issue visa based on the “principal purpose” of the visit Employment vs. Non-Employment Allows for specific timeframe designated by Customs and Border Patrol (CBP) at the time of B-1 entry
Overview of Nonimmigrant Visas Employment Authorized with possible extensions 1) H-1B Visa, Specialty Occupations – 3 years 2) H-1B1 Visa, Free Trade Nonimmigrant (Chile and Singapore)- 3 years 3) L-1 Visa- Inter-Company Managers, Executives, or Individuals with Specialized Knowledge- 3 years 4) TN Visa- Nationals of Canada and Mexico- 3 years Employment Not Authorized 1) Waiver Project- 90 days (with no extensions) 2) B-1/B-2 Nonimmigrant Visa - 6 months (with possible extensions) 3) C-1/D Crewman (issued for transit to vessel)
28 B-1 Nonimmigrant -“Visitor” Defined Immigration and Nationality Act (INA) §101 (a)(15)(B) defines “visitor” as: An alien (other than one coming for the purpose of study or for [the purpose of] performing skilled or unskilled labor or as a representative of foreign press, radio, or other foreign information media coming to engage in such a vocation), having a residence in a foreign country which he has no intention of abandoning, and who is visiting the US temporarily for business or temporarily for pleasure.
29 Waiver Program and B-1/B-2 Nonimmigrant Visa Allows for Legitimate “Business Activity” Definition of “Business Activity”- FAM and INA “Business” is activity of a temporary nature Inconsistencies between DOS and USCIS
30 IRS U.S. wage reporting and withholding requirements apply to employers of foreign crewmembers working on the OCS as noted in General Counsel Memo CCA 201027046- Section 638- Continental Shelf Areas (position confirmed in Industry Director’s Directive #2- Employment Tax and the Employees on the Outer Continental Shelf, dated March 30, 2011 ) Additional Support: Revenue Ruling 86-108 General Counsel Memorandum 39552 Revenue Ruling 80-64 Private Ruling 7950039 Notice 2005-76
31 Federal Insurance Contributions Act (FICA) & Federal Unemployment Tax Act (FUTA) Are OCS Workers Subject to FICA and FUTA? Position of IRS: Under Code section 871(b), nonresident alien employees are subject to income tax on compensation connected with the trade or business within the United States. Nonresident alien employees that perform services on structures permanently or temporarily attached to the OCS, or on vessels or other devices engaged in activities related to the exploration for, or exploration of, natural resources on the OCS, are generally engaged in a U.S. trade or business (I.R.C. §§864(b), 638(1); Treas. Reg. §1.638-1(a), (c).
32 Treaties Exceptions (FICA- Social Security Tax): Is there a Totalization Agreement in force? U.S. has bilateral agreements with 24 Countri es Must be evidenced by a Certificate of Coverage to be exempt from FICA Tax Crewmember per Sec. 3121(b)(4) Foreign vessel, and Also employed on vessel while outside of U.S., and Either: Not a U.S. citizen, or Employed by non-U.S. employer
33 Treaties Exceptions (FUTA- U.S. Unemployment) Agreement with Canada Localized concept Crewmember per Sec. 3306(4) Foreign vessel, and Also employed on vessel while outside of U.S.
34 Social Security Administration Obtaining SSN Complete an Application For a Social Security Card (Form SS-5) and Provide original documents establishing Immigration status; Work eligibility (I-94; Form I-766; or Form I-688B); Age; and Identity Can employment commence before SSN is issued? Letter from SSA.
35 Social Security Administration Obtaining an Individual Taxpayer Identification Number (ITIN) Will not issue in middle of calendar year Employee must apply for ITIN on Form W-7 Attach to Form 1040NR (Nonresident Alien); Form 1040 (Resident Alien) Supporting documentation (copy of passport and visa page) must be: Notarized; Foreign notary under Hague Convention requires “Apostille ” Certified by a Certifying Acceptance Agent
36 Social Security Administration Reporting: If no SSN, Employers should report wages on Form W-2 (reporting all zeros as employee’s SSN, or the alien’s ITIN) Use of ITIN preferable because it allows SSA to credit payments Section 205(c)(5)(H) of Social Security Act
37 Tax Withholding and Reporting Withholding taxes reconciled quarterly on Form 941 FUTA reconciled annually on Form 940
Divergence in Treatment of OCS (B-1) Crew Members by USCIS, SSA and IRS USCIS Issuance of visa for primary purpose Employment (H-1B, L-1, TN, etc.) vs. non-employment visa categories (B-1, C-1/D, F-1 Definition of B-1 (“Business Visitors”) SSA If employee not work authorized, SSA will not issue SSN. Legal effect: Renders the wages paid to OCS workers as not “covered wages” for purposes of FICA taxes because wages paid to a person without a SSN. Will not issue ITIN in middle of calendar year Outer Continental Shelf of U.S. is considered an integral part of the U.S. for federal tax purposes. Outer Continental Shelf Lands Act of 1978 imposes rule that the OCS areas are to be treated for all federal purposes as part of U.S. OCS (B-1) liable for FICA and FUTA IRS
39 Looking Forward IRS Efforts to Reconcile Different Approaches of SSA and USCIS Update on Efforts
40 Citizenship of Crews Manning Vessels Engaged in OCS Activities OCS Notice of Arrival (NOA) Reports Lightering Operations Customs and Border Protection (CBP) Rulings and the Jones Act Proposed Legislation Affecting Foreign-Flag Vessels Non-Tax Legal Issues for Foreign Companies
41 General Rule U.S. Citizenship 50% Foreign Ownership Exception Demise Charter and 50% Foreign Ownership “Specialist” Operations and Normal Complement of the Crew Obtaining an OCS Manning Exemption Letter from the Coast Guard Application of U.S. Immigration Laws Geographically Limited Issues Related to Failure of Crew to Possess Valid Visas upon Entry to the U.S. Citizenship of Crews
42 Final Rule issued January 13, 2011 Implements Section 109 of the Security and Accountability for Every Port Act of 2006 (the “SAFE Port Act”) Extends and enhances the existing NOA regime to units engaged in OCS activities Previous requirements only applied to Mobile Offshore Drilling Units (MODUs) Applicability (1) U.S. flag floating facilities, (2) foreign-flag floating facilities, (3) U.S.- and foreign-flag MODUs, and (4) U.S.- and foreign-flag vessels Vessels include standby vessels, attending vessels, offshore supply vessels, pipelay vessels, derrick ships, dive support vessels, oceanographic research vessels, towing vessels, and accommodation vessels OCS Notice of Arrival
43 Content of Reports Name of vessel, voyage, cargo, and crew information (including certain passport information), project details, and the time and location the vessel will enter or move between any OCS block areas for the purpose of engaging in OCS activities Most of the same information contained in the current NOA requirements contained in 33 C.F.R. Table 160.206 U.S.-flag vessels - NOA reports do not have to be made when traveling directly from a U.S. port to the OCS, but must be made when traveling from a foreign port to the OCS to engage in OCS activities or when repositioning between OCS block areas Foreign-flag vessels - NOA reports are to be made in the same manner as U.S.- flag vessels and must also be made when traveling directly from a U.S. port to the OCS OCS Notice of Arrival Cont.
44 Timing of Reports If a vessel’s voyage time is more than 96 hours, at least 96 hours before the vessel’s intended arrival on the OCS or from a different OCS block area If a vessel’s voyage time is less than 96 hours and more than 24 hours before departure If a vessel’s voyage time is less than 24 hours, at least 24 hours in advance of the vessel’s arrival on the OCS or from a different OCS block area Report Updates Required Proposed Legislation Would Exempt U.S.-Flag Vessels OCS Notice of Arrival Cont.
45 On July 17, 2009, CBP proposed modifying or revoking 20 rulings issued over a span of more than 30 yea r s Related to determinations as to whether certain equipment would be considered vessel equipment or merchandise, and hence whether the item could be carried and used aboard non-coastwise-qualified vessels between coastwise points CBP reasoned that it had made errors in issuing the interpretive rulings and therefore needed to provide more consistency and clarity to the offshore industry On September 15, 2009, CBP withdrew its proposed modification and revocation notice through CBP’s expedited Bulletin procedure which would have become effective 60 days after issuance of the final decision CBP Rulings and the Jones Act
46 CBP initiated a rulemaking proposal utilizing the Notice and Comment procedures under the Administrative Procedure Act in March 2010 Rulemaking was withdrawn on November 15, 2010 Implications today CBP reluctant to issue rulings Offshore industry in a state of uncertainty with regard to operations offshore Precedent of OCS-related rulings issued over the last 30 years? CBP Rulings and the Jones Act Cont.
47 Deepwater Horizon Legislation In 2010 the House passed H.R. 3534, the Consolidated Land, Energy, and Aquatic Resources Act of 2009 (the “CLEAR Act”) Section 220: Manning and Buy-and Build-American Requirements - Would apply U.S. immigration laws offshore, and thus require foreign workers to obtain H2-B visas Section 709: Americanization of Offshore Operations in the Exclusive Economic Zone Would require that all vessels involved in oil and gas projects out to 200 miles to be U.S. flagged (and thus U.S. crewed) and 75 % U.S. owned Would also require that a vessel engaged in any “other activities” be U.S. flagged (and thus U.S. crewed) and 75% U.S. owned Investigations and Proposed Legislation Affecting Foreign-Flag Vessels
48 Scope would include alternative energy projects, lightering operations, freight carriage, or cruise lines Section 725: BuildAmerica Requirement for Offshore Facilities Would require, absent obtaining a waiver, any offshore facility (including a MODU) to be built in the United States, including construction of any major component of the hull or superstructure of the facility Few MODUs are built in the United States No Senate Bill Passed in 2010 Investigations and Proposed Legislation Affecting Foreign-Flag Vessels Cont.
49 Coast Guard Authorization Act of 2012 (H.R. 2838) 11/15/11: Passed the House Section 608 addressed “standby vessels” which would require OSVs to be positioned near offshore facilities to provide immediate response to offshore incident Deepwater Horizon Spill Legislation Congressman Markey (D-MA) introduced H.R. 501: Implementing the Recommendations of the BP Oil Spill Commission Act of 2011 – same provisions as under the Clear Act passed in 2010 Proposal to require all pipelay vessels to be U.S. flagged Investigations and Proposed Legislation Affecting Foreign-Flag Vessels Cont.
50 Coast Guard Authorization Act of 2012 (S. 1665 ) 01/06/12: Act introduced Reported by Senator Rockefeller with an amendment in the nature of a substitute and referred to the Committee on Commerce No Deepwater Horizon legislation per se but provisions on Oil Spill Liability Trust Fun and Stand-by Vessels Proposed Legislation Affecting Foreign Flag Vessels Cont.
51 2012 Forecast Congressional focus shifted to job creation, economic growth, and election issues Rumblings that the Senate will move S. 1665 Conference could result and spill related legislation could be included Implications of the Costa Concordia Implications of the Deepwater Horizon Multi-District litigation and the DOJ criminal investigation PROPOSED LEGISLATION AFFECTING FOREIGN- FLAG VESSELS (continued…)
52 Questions? Joseph T. Gulant +1.212.885-5304 JGulant@BlankRome.com Jennifer Lynn Bell +1.212.885-5402 JBell@BlankRome.com Manuela M. Morias +1.215.569.5357 Morias@BlankRome.com Tara L. Leiter +1.202.772.5849 Leiter@BlankRome.com
53 To ensure compliance with IRS Circular 230, you are hereby notified that any discussion of federal tax issues in this presentation is not intended or written to be used, and it cannot be used by any person for the purpose of: (A) avoiding penalties that may be imposed on them under the Code, and (B) promoting, marketing or recommending to another party any transaction or matter addressed herein. This disclosure is made in accordance with the rules of Treasury Department Circular 230 governing standards of practice before the Service. Circular 230 Notice