What to request when buying written tax advice

A written tax assignment needs a defined question: the treatment of a proposed transaction, the consequences of alternative structures or the response to a particular uncertainty. Name the taxpayer, relevant jurisdictions, timing and decision-maker. A broad request for tax optimization can invite a large research exercise without resolving the choice management faces.

Explain whether the transaction is proposed, committed or already completed. The available options differ. Give the adviser the actual documents and identify drafts, side agreements and facts still under negotiation. The memorandum should be based on the transaction management is considering, not a simplified version that no longer matches it.

Identify who verifies factual inputs and which specialists must interpret legal, valuation or operational questions. Ask the adviser to list material assumptions in the deliverable, even where the applicable professional rules do not prescribe a particular document format. Management needs to know which change in facts could alter the answer.

The IRS's written-advice regulations require reasonable factual and legal assumptions and reasonable efforts to identify relevant facts for covered federal tax advice. They do not prescribe one universal memorandum format. The detailed deliverable proposed here is a purchasing specification to agree with the adviser, not a claim that every written response must follow this outline.

Ask the memorandum to explain the issue, relevant authority, application to the facts, conclusion and material limitations. Where more than one treatment is plausible, request an explanation of the alternatives and the conditions that favor each. A page of citations without an application to the company's facts does not finish the management decision.

Agree the depth before work begins. A short response to a narrow question can be appropriate; a consequential transaction may need a more developed analysis and separate implementation advice. Have the adviser explain the work required rather than equating length with quality or asking for a predetermined conclusion.

Specify jurisdictions and tax types covered. Federal income tax analysis should not silently stand in for state, employment, indirect or foreign tax advice. If another specialist must address an excluded question, name who will coordinate the work and reconcile conflicting factual assumptions.

Tell the adviser who will use the memorandum, including investors, lenders or other professionals. Ask what reliance and sharing the engagement permits. If the advice will support a third party's decision, resolve that use before commissioning the work. Removing a limitation from the final document does not create broader professional responsibility.

Set the factual and research cutoff, and ask which developments would require an update. A delayed transaction, revised agreement or changed law can affect advice that was sound when delivered. Define whether monitoring and updates are included, and who must tell the adviser that the underlying facts changed.

Have the adviser explain the conclusion to the person authorizing the transaction and the person preparing the return. Identify implementation steps, evidence to retain and questions requiring another professional. Keep responsibility for filing or executing the transaction explicit; a written opinion does not automatically include those services.

Record management's decision and any accepted uncertainty with the final memorandum. If the company chooses a different course, obtain advice on the changed facts before reusing the original conclusion. Retain the source documents and approved version so future advisers can understand exactly what was analyzed.