A “Reportable Transaction” is generally a transaction of a type that the IRS has determined as having a potential for tax avoidance or evasion. The IRS provides penalties of up to $250,000 per transaction for failure to report activity in any of these types of transactions. …
What is form 8918 Material Advisor Disclosure?
Material advisors to any reportable transaction file Form 8918 to disclose certain information about the reportable transaction.
What are examples of tax shelters?
A tax shelter is a tax minimization strategy, and should not be confused with the illegal practice of tax evasion. Qualified retirement accounts, certain insurance products, partnerships, municipal bonds, and real estate investments are all examples of potential tax shelters.
How to attach Form 8886 to tax return?
Form 8886 (Rev. December 2019) Form 8886 (Rev. December 2019) Department of the Treasury Internal Revenue Service Reportable Transaction Disclosure Statement Attach to your tax return. ▶See separate instructions. ▶Go to for instructions and the latest information. OMB No. 1545-1800 Attachment Sequence No. 137
Where do I Send my form 8886 disclosure statement?
The taxpayer must attach a Form 8886 disclosure statement to each tax return reflecting participation in the reportable transaction. The taxpayer must also send a copy of the Form 8886 to the Office of Tax Shelter Analysis (OTSA). See Treasury Regulation § 1.6011-4 (e) (1) and Form 8886 instructions.
Is there a penalty for not filing Form 8886?
Although there are no statutory provisions to forgive unintentional errors resulting in a failure to disclose, the Service has provided limited relief for certain passthrough-entity interest holders, permitting them additional time to file Form 8886 while still avoiding the Sec. 6707A penalty.
Do you get reportable transaction relief from Schedule K-1?
Some Schedule K-1 Recipients Get Reportable Transaction Disclosure Relief. Taxpayers that discover after filing their returns that they indirectly participated in a reportable transaction through a passthrough entity may be able to rely on Prop. Regs. Sec. 1.6011-4(e)(1) to avoid reportable transaction penalties.
