From: Ron Harvot [Ronald.Harvot@trin.net]
Sent: Friday, December 06, 2002 11:54 AM
To: rule-comments@sec.gov
Subject: Tax Services - Proposed Rule RIN 3235-AI73 (s7-49-02)

Item # 11 of the above proposed rule deals with Tax Services.

I believe it is very difficult to categorize tax services into allowed 
and disallowed activities. The example in the proposed rules concerning 
tax strategies is illustrative. "Another example would be the formulation 
of tax strategies (e.g. tax shelters) designed to minimize a company's 
tax obligations."  Earlier in the discussion it was stated that traditional 
tax services included "tax planning".

By its very nature "tax planning" is normally defined as an adoption of 
a tax strategy designed to minimize a companies tax obligations. A strict 
or narrow reading of your explanation could prohibit all tax planning 
activities since tax planning is for purposes of minimizing a companies 
tax obligations and in many cases cause the accountant to be an advocate 
for the client's tax position. 
For example as part of an overall tax planning strategy the accountant 
may suggest that the client change his tax method of accounting for some 
item . Such "methods changes" typically must be identified and disclosed 
on the corporate return and some may require pre-approval by the IRS. The 
change is typically recommended by the accountant as a way to accelerate 
tax timing deductions. The recommended position is often supported by the 
accountants interpretation of  certain previous decisions or positions taken 
by the IRS or courts but falls in a gray area. Many times the accountant 
will give the taxpayer a written opinion with supporting tax citations and 
rationale that the taxpayer will use to support the position upon audit by 
the IRS. The accounting firms often characterize their opinions with "Should" 
or "More Likely than not" type of terminology. A "Should" opinion is one in 
which the accountant feels strongly that the tax payer should pursue the 
change and would likely prevail in the event of any dispute with the IRS. 
Although it is up to the taxpayer to ultimately decide whether or not to 
move forward the accountant's written opinion is most likely the foundation 
for that decision. Furthermore, at least at the exam level the accountant 
will often be called on by the taxpayer to help explain the position and the 
accountant's written opinion will often be given to the examining agent. This 
is very typical tax planning. It is also advocating a tax position. Is this 
to be prohibited? Is sure hope not. The auditing firm is most familiar with 
the taxpayers accounting procedures and is best adapted to give that type of 
advice. Sound tax management would require that a Tax Director pursue these 
type of planning activities. This is not Tax avoidance or an illegal tax 
shelter but most of the time the law is gray and interpretation becomes 
necessary. Minimizing tax obligations is sound tax management. Tax minimization 
is not the same as tax avoidance just as a recommendation is not the same as 
advocacy. However, it is often impossible to draw a clear line. 


Ronald Harvot
Tax Director - Trinity Industries, Inc.