Disclosure of reportable transactions.

• Author: Laffie, Lesli S.

According to IR 2006-167, on Nov. 1, 2006, Treasury and the IRS issued updated regulations reflecting changes to the requirements for (1) disclosure of reportable transactions by taxpayers and material advisors and (2) list maintenance by material advisors made by the American Jobs Creation Act of 2004 (AJCA); see TD 9295, REG-103038-05, KEG-103039-05 and REG-103043-05.

Background: The AJCA enacted updated rules requiring material advisors to file returns disclosing reportable transactions and to maintain investor lists. It also updated the penalties that can be imposed on material advisors who fail to comply with these obligations. The Service and Treasury previously issued interim guidance on these updated rules and on the parallel set of rules for taxpayer disclosure of reportable transactions. (For a discussion, see Auclair, Tax Clinic, "New Reportable Transaction Guidance," TTA, February 2005, p. 84; Tax Trends, "IRS Guidance on Reportable Transaction Disclosure Penalties," TTA, April 2005, p. 241; Tax Trends, "IRS Guidance on Reportable Transaction Understatement Penalties," TTA, April 2005, p. 242; and Schaefer, Tax Practice Management, "Reportable Transactions--What Tax Advisers Need to Know," TTA, September 2005, p. 563.)

In drafting the new regulations, consideration was given to comments received in response to the interim guidance.

With one limited exception, the new regulations have been issued as proposed to permit taxpayers and...