§301.6707A-1T - how to make a disclosure

There is a lot of confusion on how to make disclosures, including those for 6694. This is the IRS position for 6707A.


Sec. 6707A: Chief Counsel Addresses Law (CCA 200920042)
Chief Counsel's office, in an e-mail, reiterated sections of Reg. §301.6707A-1T regarding participation in a non-listed transaction and rescission authority.

CCA Letter Ruling 200920042


Letter Ruling 200920042

LTR Report Number 1681, May 20, 2009 IRS REF: Symbol: CCA_2009040111483726 [Code Sec. 6707]

April 01, 2009

From: *****

Sent: Wednesday, April 01, 2009 11:48:40 AM

To: *****

Cc: *****

Subject: RE: 6707A question

***** asked that I address the question you posed below.

Example 4 of Treas. Reg. 301.6707A-1T(c)(2) addresses the situation described below where the taxpayer participates in a non-listed transaction. In the example, the taxpayer did not file a disclosure with his timely return, but filed a disclosure with an amended return. As stated in the example, our position is that the amended return with the attached disclosure statement does not cure an earlier failure satisfying the disclosure requirements of section 6011. The example goes on, however, to state that the filing of the disclosure statement with an amended return is a factor that will weigh heavily in favor of rescission of the penalty, should the taxpayer make a request for rescission under Rev. Proc. 2007-21. Note, however, if the transaction is a listed transaction rescission is not available. Treas. Reg. 301.6707A-1T(d)(1).

Section 301.6707A-1T(d) addresses the Secretary's rescission authority and sets out factors that will be considered. One of the factors, section 301.6707A-1T(d)(3)(i) is whether the taxpayer upon learning of the disclosure obligation filed Form 8886. This untimely disclosure will weigh heavily in favor of rescission provided that (1) the taxpayer disclosed the transaction before the date the IRS first contacts the taxpayer concerning an examination of the tax period to which the transaction relates, and (2) the taxpayer did not unnecessarily delay in reporting the transaction until the IRS had taken steps to identify the taxpayer's participation in the reportable transaction in question.

Please let me know if you have any further questions.

Penalty for failure to disclose tax shelters: Application

Interim guidance is provided regarding the application of the Code Sec. 6707A penalty to taxpayers who are required to disclose reportable transactions. These interim rules will apply until further guidance is issued. The IRS will impose the Code Sec. 6707A penalty for each failure to properly disclose a reportable transaction. Thus, a taxpayer will be subject to the penalty for: (1) failure to attach a reportable transaction disclosure statement to an original or amended return; or (2) failure to provide a required copy of such statement to Office of Tax Shelter Analysis. When determining whether to rescind the penalty, the IRS will take into account all relevant facts and circumstances, including: (1) whether the taxpayer has a history of complying with the tax laws; (2) whether the violation results from an unintentional mistake of fact; and (3) whether imposing the penalty would be against equity and good conscience. The IRS's decision is not subject to review.

Notice 2005-11, 2005-1 CB 493.

The IRS has provided guidance to public entities that are required, under Code Sec. 6707A(e), to disclose on reports to the Securities and Exchange Commission the payment of certain tax shelter disclosure penalties under Code Secs. 6662(h), 6662A or 6707A. The procedure describes the report on which the disclosures are required to be made, the information that must be disclosed and the deadlines by which the disclosures must be made.

Rev. Proc. 2005-51, 2005-2 CB 296.

The IRS has provided additional guidance to taxpayers that are required, under Code Sec. 6707A(e), to disclose the payment of certain tax shelter disclosure penalties (i.e., under Code Secs. 6662(h), 6662A or 6707A) on reports filed with the Securities and Exchange Commission (SEC). Rev. Proc. 2005-51 provided information as to how a taxpayer that files SEC Form 10-K, Annual Report, either separately or consolidated with another person, must make the required disclosure. The new guidance provides similar information for other periodic reports that are required to be filed under section 13 or 15(d) of the Securities and Exchange Act of 1934, specifically, Forms 10-KSB, 11-K, 20-F, 40-F, N-SAR, and N-CSR.

Rev. Proc. 2007-25, I.R.B. 2007-12, 761, amplifying Rev. Proc. 2005-51, 2005-2 CB 296.