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I’m writing to point out what I think is an error (or at least an omission) in the article titled “Payments to Attorneys Require Information Returns” [Practice Center, Feb. 18] by Randy Zamarra. I practice extensively in this area of the tax law, and I’m concerned Mr. Zamarra may have left your readers with only half the story. As Mr. Zamarra correctly notes, the Taxpayer Relief Act of 1997 added § 6045(f) to the Internal Revenue Code. This section generally requires those engaged in a trade or business to report payments to attorneys on Form 1099. As Mr. Zamarra aptly observes, in May 2002 the IRS issued regulations under I.R.C. § 6045(f), Proposed Treasury Regulation § 1.6045-5. Mr. Zamarra goes on to state, “It appears many attorneys and law firm administrators are not aware of the requirements and their complexities, or are otherwise not complying.” Mr. Zamarra devotes much of the remainder of his article to a lengthy discussion of these proposed regulations. I was troubled by the fact that Mr. Zamarra fails to mention that the effective date for Proposed Treasury Regulation § 1.6045-5 is not until two months after these regulations are issued as final regulations. See Prop. Treas. Reg. § 1.6045-5(h). The Internal Revenue Service feels so strongly about this matter that it has issued a notice to taxpayers informing them of the delay in the effective date of these proposed regulations. See IRS Notice 2001-7, 2001-1 C.B. 374. I think Mr. Zamarra’s article may perhaps leave readers with the impression that these regulations are currently in effect. I’m hoping I’ve been able to dispel this notion. Robert Wood San Francisco Robert Wood is a certified specialist in taxation at Robert W. Wood PC in San Francisco. Randy Zamarra responds: I would like to clarify the effective date of the rules. Generally, proposed IRS regulations do not carry the full force of law until such regulations are published as final regulations in the Federal Register (i.e., they are no longer “proposed”), as Mr. Wood points out above. The proposed regulations state that they will not be effective until the first calendar year that begins two months after the date of publication of these regulations as final regulations in the Federal Register. However, it is generally advantageous for taxpayers to begin the process of complying before there is the possibility of penalties being assessed.

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