The IRS has issued final regulations on the disclosure of reportable shelter transactions. These regulations affect shelter participants and material advisors. The new regulations are T.D. 9350, T.D. 9351, and T.D. 9352.
T.D. 9350 adds a new transactions of interest reporting category for the purpose of assessing potential tax avoidance or evasion. The IRS will publish descriptive guidance regarding possible transactions of interest candidates, and it will be up to accountants to compare taxpayer transactions to the published descriptions and report on these transactions if they are similar to the IRS descriptions. This regulation is effective retroactively to November 2, 2006.
T.D. 9351 and 9352 cover responsibilities of material advisors who are required to disclose certain transactions and keep lists of investors in the transactions. The code defines a material advisor as "any person (i) who provides any material aid, assistance, or advice with respect to organizing, managing, promoting, selling, implementing,
insuring, or carrying out any reportable transaction, and (ii) who directly or indirectly derives gross income in excess of the threshold amount (or such other amount as may be prescribed by the Secretary) for such advice or assistance."
Material advisors are required to file Form 8918, Material Advisor Disclosure Statement, which supersedes Form 8264. The IRS will issue a reportable transaction number to material advisors who file the Form 8918. Material advisors must provide the reportable transaction number issued by the IRS to persons to whom the material advisor makes or provides tax statements with respect to the transaction.
Material advisors are required to compile and maintain a list of all reportable transactions, including an itemized statement of information, a description of the transaction, and copies of certain documents. Said list must be made available to the IRS on request.
These final regulations are a result of changes in Code Sections 6111 and 6112 made by the American Jobs Creation Act of 2004.