- Threshold amounts:
- Listed Transactions: $10,000 for a natural person and $25,000 for all other entities.
- Non-Listed Transactions: $50,000 for a natural person and $250,000 for all other entities.
If you're a material advisor, you may be required to file the Form 8918, Material Advisor Disclosure Statement.
- Generally, a material advisor must maintain a list identifying each entity or individual with respect to whom the advisor acted as a material advisor with respect to a reportable transaction.
- A material advisor is not required to keep a list if the entity or individual entered into a listed transaction or transaction of interest more than 6 years before the transaction was identified in published guidance as a listed transaction or transaction of interest.
- A separate list must be prepared and maintained for each transaction or group of substantially similar transactions. This list must be maintained for 7 years following the earlier of the date on which the material advisor last made a tax statement relating to the transaction, or the date the transaction was last entered into.
- Form 13976, Itemized Statement Component of Advisee List PDF , may be used by material advisors for the purpose of preparing and maintaining lists with respect to reportable transactions under section 6112 of the Internal Revenue Code. This form isn't required to be used under section 301.6112-1 of the Procedure and Administration Regulations but is offered as an option for maintaining the transaction participants list.
- Revenue Procedure 2008-20 provides guidance relating to the obligation of material advisors to prepare and maintain lists with respect to reportable transactions under section 6112 and provides that material advisors may use the Form 13976, Itemized Statement Component of Advisee List (or successor form) to maintain the itemized statement component of the list.
- You are not required to submit this list with the filing of the Form 8918; however, the IRS may make a written request for this information. If you receive this request you are required to fulfill the request within 20 business days or be subject to a penalty of $10,000 for each day you are late in your response.
What's new
88 Fed. Reg. 21547 – Listed Transactions and Transactions of Interest - Section 831(b) Micro-Captive Transactions. The proposed regulations identify transactions that are the same as, or substantially similar to, certain micro-captive transaction as listed transaction, and certain other micro-captive transactions as transactions of interest. Tax law generally allows businesses to create "captive" insurance companies to protect against insurance risks and provides that certain small non-life insurance companies can choose to pay tax only on their investment income under Internal Revenue Code section 831(b) ("micro-captives"). In abusive micro-captive structures, promoters, accountants or wealth planners persuade owners of closely held entities to participate in schemes that lack many of the attributes of genuine insurance. The IRS previously identified certain micro-captive transactions as transactions of interest in Notice 2016-66. Recent court decisions in the Sixth Circuit and the U.S. Tax Court ruled that the IRS lacks authority to identify listed transactions and transactions of interest by notices, such as Notice 2016-66, and must instead identify such transactions by following the notice and public comment procedures that apply to regulations. Treasury and the IRS disagree with these decisions PDF that the IRS lacks authority to identify listed transactions by notice and continue to defend listing notices in litigation except in the Sixth Circuit. Treasury and the IRS will, however, no longer take the position that transactions of interest can be identified without complying with notice and public comment procedures. Treasury and the IRS issued the proposed regulations to ensure that these decisions do not disrupt the IRS' ongoing efforts to combat abusive tax shelters throughout the nation. This notice was published in the Internal Revenue Bulletin on April 24, 2023. Treasury and the IRS intend to finalize these proposed regulations after due consideration of public comments.
87 Fed. Reg. 75185 – Listed Transactions - Syndicated Conservation Easements. The proposed regulations identify certain syndicated conservation easement transactions and substantially similar transactions as listed transactions. In these transactions, investors typically acquire an interest in a partnership that owns land and then claim an inflated charitable contribution deduction based on a grossly overvalued appraisal when the partnership donates a conservation easement on the land. The IRS previously identified certain SCE transactions as listed transactions in Notice 2017-10. Recent court decisions in the Sixth Circuit and the U.S. Tax Court ruled that the IRS lacks the authority to identify listed transactions by notices, such as Notice 2017-10, and must instead identify such transactions by following the notice and public comment procedures that apply to regulations. Treasury and the IRS disagree with these decisions and continue to defend Notice 2017-10 and similar notices in litigation except in the Sixth Circuit. At the same time, however, Treasury and IRS issued the proposed regulations to eliminate any confusion regarding the need to report these transactions and to ensure that these decisions do not disrupt the IRS's ongoing efforts to combat abusive tax shelters throughout the nation. This notice was published in the Internal Revenue Bulletin on December 27, 2022. Treasury and the IRS intend to finalize these proposed regulations, after due consideration of public comments.
88 Fed. Reg. 37186 – Listed Transactions - Malta Personal Retirement Scheme. The proposed regulations identify transactions that involved a US citizen or US resident alien with no presence or connection with the country of Malta who participates in a Malta personal retirement scheme without taking into account the arrangement’s income on a current basis, that, in contrast to US tax-favored individual savings arrangements, contains no requirement that contributions be limited by reference to income earned from employment or self-employment activities, no limitation on contribution amounts, and no restriction on the types of assets (such as securities) that may be contributed. This notice was published in the Internal Revenue Bulletin on June 26, 2023. Treasury and the IRS intend to finalize these proposed regulations after due consideration of public comments.
Other abusive transactions
In addition to the reportable transactions covered above, IRS is combating other types of abusive tax schemes, such as offshore tax avoidance schemes. For information on steps IRS is taking to combat these other schemes see:
- Abusive tax avoidance schemes
- Employee plans abusive tax transactions
