Wegman, Hessler & Vanderburg has implemented new procedures to comply with Treasury Department rules relating to written tax advice, which became effective on June 21, 2005. Under these rules, if we provide you with tax advice on which you can rely for purposes of avoiding tax penalties, we are required to prepare a formal opinion that satisfies rigorous factual and legal diligence standards. Failure to satisfy those requirements will subject us to potential penalties. Any advice that fails to comply with the formal opinion requirements mentioned above must include a disclaimer along the following lines:

"IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, for the purpose of avoiding tax-related penalties under the Internal Revenue Code or promoting, marketing or recommending to another party any matters addressed herein."

Effective June 21, 2005, unless you specifically request an opinion that satisfies the requirements of Circular 230, you will see the above disclaimer in most of our tax-related communications to you.

In the past, we have provided you with tax advice in forms that were most appropriate for your inquiry and your needs. These have covered the entire range: a quick reaction, a cold review, an analysis limited to principal legal authorities, tax disclosure for your offerings, a memorandum of law based on your facts and formal opinions for your transactions or offerings. Through our course of dealings with you, we have earned your trust and you have been able to rely on our advice in whatever form delivered. We will continue to serve you to the best of our ability and provide advice that is cost-effective and consistent with your needs. The required disclaimer does not denigrate the logic of our legal analysis or the force of the relevant legal authorities. But the IRS will no longer permit you to rely on that less formal advice for purposes of avoiding tax penalties.

Generally, penalties only apply in circumstances where the position you took was successfully challenged. In many cases, the existence of "substantial authority" may eliminate any penalties. The legal precedents discussed in our communications may constitute "substantial authority." However, in some circumstances reliance on an opinion of counsel is an independent ground for elimination of penalties. Unless our written advice satisfies the new stringent requirements described above for a formal opinion, it will not constitute such an independent ground.

We encourage you to discuss with us the situations where you might need formal opinions and analyses for purposes of avoiding penalties. However, we believe in most transactions and day-to-day advice you will not need such formal opinions. Therefore, you can expect to see the above disclaimer in our written communications, unless you specifically ask us for a formal opinion that satisfies the requirements of Circular 230.