[Federal Register Volume 72, Number 149 (Friday, August 3, 2007)]
[Rules and Regulations]
[Pages 43157-43161]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-3788]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[TD 9351]
RIN 1545-BE26


AJCA Modifications to the Section 6111 Regulations

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations under section 6111 of 
the Internal Revenue Code that provide the rules relating to the 
disclosure of reportable transactions by material advisors. These 
regulations affect material advisors responsible for disclosing 
reportable transactions under section 6111 and material advisors 
responsible for keeping lists under section 6112.

DATES: Effective Date: These regulations are effective August 3, 2007.

FOR FURTHER INFORMATION CONTACT: Charles D. Wien, Michael H. Beker, or 
Tolsun N. Waddle, 202-622-3070 (not a toll-free number).

SUPPLEMENTARY INFORMATION: 

Background

    This document contains final regulations that amend 26 CFR part 301 
by providing rules relating to the disclosure of reportable 
transactions by material advisors under section 6111.
    The American Jobs Creation Act of 2004, Public Law 108-357 (118 
Stat. 1418), (AJCA) was enacted on October 22, 2004. Section 815 of the 
AJCA amended section 6111 to require each material advisor with respect 
to any reportable transaction to make a return (in such form as the 
Secretary may prescribe) setting forth: (1) Information identifying and 
describing the transaction; (2) information describing any potential 
tax benefits expected to result from the transaction; and (3) such 
other information as the Secretary may prescribe. Section 6111(a), as 
amended, also provides that the return must be filed not later than the 
date specified by the Secretary. Section 6111(b)(1), as amended, 
provides a definition for the term material advisor and includes as 
part of that definition a requirement that the material advisor derive 
certain threshold amounts of gross income that the Secretary may 
prescribe. The AJCA amendments to section 6111 also authorize the 
Secretary to prescribe regulations that provide: (1) That only one 
person shall be required to meet the requirements of section 6111(a) in 
cases in which two or more persons would otherwise be required to meet 
such requirements; (2) exemptions from the requirements of section 
6111; and (3) rules as may be necessary or appropriate to carry out the 
purposes of section 6111. Section 815 of the AJCA is effective for 
transactions with respect to which material aid, assistance, or advice 
is provided after October 22, 2004.
    In response to the AJCA, the IRS and Treasury Department issued 
interim guidance on section 6111 in Notice 2004-80 (2004-2 CB 963); 
Notice 2005-17 (2005-1 CB 606); Notice 2005-22 (2005-1 CB 756); and 
Notice 2006-6 (2006-5 IRB 385) (see Sec.  601.601(d)(2)). On November 
1, 2006, the IRS and Treasury Department issued a notice of proposed 
rulemaking and temporary and final regulations under sections 6011, 
6111, and 6112 (REG-103038-05, REG-103039-05, REG-103043-05, TD 9295) 
(the November 2006 regulations). The November 2006 regulations were 
published in the Federal Register (71 FR 64488, 71 FR 64496, 71 FR 
64501, 71 FR 64458) on November 2, 2006.
    The IRS and Treasury Department received written public comments 
responding to the proposed regulations and held a public hearing 
regarding the proposed rules on March 20, 2007. After consideration of 
the comments received and comments made at the hearing, the proposed 
regulations are adopted as revised by this Treasury decision. These 
final regulations generally retain the provisions of the proposed 
regulations but include some modifications based on recommendations in 
the public comments.

Summary of Comments and Explanation of Provisions

    Nine written comments were received in response to the NPRM. All 
comments were considered and are available for public inspection upon 
request.

Reportable Transaction Number

    The proposed regulations provide that a material advisor must 
provide a reportable transaction number to all

[[Page 43158]]

taxpayers and material advisors to whom the material advisor makes or 
provides tax statements. Many commentators commented that the 
requirement to provide the reportable transaction number to all 
taxpayers and material advisors to whom the material advisor makes or 
provides tax statements is overly broad and suggested, instead, that 
the reportable transaction number only be required to be furnished to 
those for whom the taxpayer acted as a material advisor. One 
commentator recommended that the regulation be amended to remove the 
obligation to provide a reportable transaction number. Another 
commentator recommended that a material advisor should be required to 
provide the reportable transaction number to taxpayers only in the case 
of marketed transactions. The commentator also commented that in a 
purely one-on-one, non-abusive transaction, the use of the reportable 
transaction number may infringe upon the attorney-client relationship.
    The IRS and Treasury Department attempted to balance the need for 
disclosure of reportable transactions with the resulting burden imposed 
upon taxpayers. The IRS and Treasury Department do not believe that 
requiring a material advisor to provide a reportable transaction number 
to certain taxpayers and material advisors imposes an undue burden upon 
taxpayers in light of the benefit to tax administration. However, the 
IRS and Treasury Department recognize that requiring the reportable 
transaction number to be provided to all persons for whom the material 
advisor made a tax statement may be unnecessary. Therefore, these final 
regulations state that a material advisor is required to provide a 
reportable transaction number to all taxpayers and material advisors 
for whom the material advisor acts as a material advisor.

Material Advisor Fee Threshold Language

    The proposed regulations provide, in general, that a lower 
threshold amount of gross income applies in the case of a reportable 
transaction when substantially all of the tax benefits are provided to 
natural persons (looking through any partnerships, S corporations, or 
trusts). The IRS and Treasury Department received comments asking for 
clarification of the term ``substantially all of the tax benefits.''
    The final regulations provide that the determination of whether the 
lower threshold amount applies is based on the facts and circumstances. 
Generally, unless the facts and circumstances prove otherwise, if 70 
percent or more of the tax benefits from a reportable transaction are 
provided to natural persons (looking through any partnerships, S 
corporations, or trusts) then substantially all of the tax benefits 
will be considered to be provided to natural persons.

Material Advisor Disclosure of the Identity of Other Material Advisors

    The proposed regulations provide that a material advisor who is 
required to file a disclosure statement must also disclose the identity 
of other material advisors. Two commentators recommended that these 
final regulations be amended to provide that a material advisor must 
provide the identity of other material advisors only if the material 
advisor has actual knowledge of such other material advisors.
    After carefully considering the recommendation by the commentators, 
these final regulations provide that a material advisor must provide 
the identities of any material advisor(s) who the material advisor 
knows or has reason to know acted as a material advisor with respect to 
the transaction.

Designation Agreements

    The proposed regulations provide that if more than one material 
advisor is required to disclose a reportable transaction under section 
6111, the material advisors may designate by written agreement a single 
material advisor to disclose the transaction. The designation of one 
material advisor to disclose the transaction does not relieve the other 
material advisors of their obligation to disclose the transaction to 
the IRS in accordance with section 6111, if the designated material 
advisor fails to disclose the transaction to the IRS in a timely 
manner. One commentator recommended that a good faith participation in 
a designation agreement be treated as if the non-designated material 
advisor has satisfied the advisor's obligations under section 6111 and/
or section 6112. The commentator also suggested that if the previous 
recommendation is not adopted, that these final regulations prohibit 
designation agreements entirely.
    These final regulations do not adopt the recommendation of the 
commentator. The purpose of the designation agreement language is to 
reduce the burden on material advisors in complying with the disclosure 
and list maintenance regulations while balancing the need of the IRS 
and Treasury Department to receive the necessary information described 
in sections 6111 and 6112. The designation agreement allows material 
advisors, if they choose, to have one material advisor comply with the 
disclosure and list maintenance obligations rather than multiple 
advisors maintaining duplicative lists. Inherent in the language is the 
assumption that the designated material advisor will comply with the 
requirements. Absolving the non-designated material advisors from the 
obligations listed in sections 6111 and 6112 for good faith designation 
agreements would require the IRS to determine whether the designation 
agreement was entered into in good faith and would increase the burdens 
on tax administration.

Form 8271

    Before the enactment of the AJCA, section 6111 provided that tax 
shelter organizers were required to provide investors in tax shelters 
the registration number for the tax shelter. Section 301.6111-1T, Q&A 
55, requires investors to report the registration number of the tax 
shelter to the IRS on Form 8271, ``Investor Reporting of Tax Shelter 
Registration Number'', and attach the Form 8271 to any return on which 
any deduction, loss, credit, or other tax benefit attributable to the 
tax shelter is claimed. Because only a few investors must still file 
Form 8271 for pre-AJCA section 6111 tax shelters and because the IRS 
already is aware of these transactions, the IRS and Treasury Department 
have decided that investors are no longer required to file Forms 8271 
otherwise due on or after August 3, 2007. The Form 8271 will be 
obsoleted. However, these final regulations continue to require that 
material advisors must provide the reportable transaction number to all 
taxpayers and material advisors for whom the material advisor acts as a 
material advisor.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in Executive Order 12866. 
Therefore, a regulatory assessment is not required. It also has been 
determined that section 553(b) of the Administrative Procedure Act (5 
U.S.C. chapter 5) does not apply to these regulations, and because 
these regulations do not impose a collection of information on small 
entities, the provisions of the Regulatory Flexibility Act (5 U.S.C. 
chapter 35) do not apply. The return referenced in these regulations 
will be made available for public comment in accordance with the 
Paperwork Reduction Act of 1995 (44

[[Page 43159]]

U.S.C. chapter 35). Pursuant to section 7805(f) of the Internal Revenue 
Code, the notice of proposed rulemaking preceding these regulations was 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on its impact on small business.

Drafting Information

    The principal authors of these regulations are Charles D. Wien, 
Michael H. Beker, and Tolsun N. Waddle, Office of the Associate Chief 
Counsel (Passthroughs and Special Industries). However, other personnel 
from the IRS and Treasury Department participated in their development.

List of Subjects in 26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

0
Accordingly, 26 CFR part 301 is amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

0
Paragraph 1. The authority citation for part 301 is amended by adding 
entries in numerical order to read, in part, as follows:

    Authority: 26 U.S.C. 7805 * * *
    Section 301.6111-3 also issued under 26 U.S.C. 6111.


0
Par. 2. Section 301.6111-3 is added to read as follows:


Sec.  301.6111-3  Disclosure of reportable transactions.

    (a) In general. Each material advisor, as defined in paragraph (b) 
of this section, with respect to any reportable transaction, as defined 
in Sec.  1.6011-4(b) of this chapter, must file a return as described 
in paragraph (d) of this section by the date described in paragraph (e) 
of this section.
    (b) Material advisor--(1) In general. A person is a material 
advisor with respect to a transaction if the person provides any 
material aid, assistance, or advice with respect to organizing, 
managing, promoting, selling, implementing, insuring, or carrying out 
any reportable transaction, and directly or indirectly derives gross 
income in excess of the threshold amount as defined in paragraph (b)(3) 
of this section for the material aid, assistance, or advice. The term 
transaction includes all of the factual elements relevant to the 
expected tax treatment of any investment, entity, plan or arrangement, 
and includes any series of steps carried out as part of a plan.
    (2) Material aid, assistance, or advice--(i) In general. Except as 
provided in paragraph (b)(5) of this section, a person provides 
material aid, assistance, or advice with respect to organizing, 
managing, promoting, selling, implementing, insuring, or carrying out 
any transaction if the person makes or provides a tax statement to or 
for the benefit of--
    (A) A taxpayer who either is required to disclose the transaction 
under Sec. Sec.  1.6011-4, 20.6011-4, 25.6011-4, 31.6011-4, 53.6011-4, 
54.6011-4, or 56.6011-4 of this chapter because the transaction is a 
listed transaction or a transaction of interest, or would have been 
required to disclose the transaction under Sec. Sec.  1.6011-4, 
20.6011-4, 25.6011-4, 31.6011-4, 53.6011-4, 54.6011-4, or 56.6011-4 of 
this chapter if the transaction had become a listed transaction or a 
transaction of interest within the period of limitations in Sec.  
1.6011-4(e) of this chapter;
    (B) A taxpayer who the potential material advisor knows is or 
reasonably expects to be required to disclose the transaction under 
Sec.  1.6011-4 of this chapter because the transaction is or is 
reasonably expected to become a transaction described in Sec.  1.6011-
4(b)(3) through (5) or (7) of this chapter;
    (C) A material advisor who is required to disclose the transaction 
under this section because it is a listed transaction or a transaction 
of interest; or
    (D) A material advisor who the potential material advisor knows is 
or reasonably expects to be required to disclose the transaction under 
this section because the transaction is or is reasonably expected to 
become a transaction described in Sec.  1.6011-4(b)(3) through (5) or 
(7) of this chapter.
    (ii) Tax statement--(A) In general. A tax statement is any 
statement (including another person's statement), oral or written, that 
relates to a tax aspect of a transaction that causes the transaction to 
be a reportable transaction as defined in Sec.  1.6011-4(b)(2) through 
(7) of this chapter. A tax statement under this section includes tax 
result protection that insures some or all of the tax benefits of a 
reportable transaction.
    (B) Confidential transactions. A statement relates to a tax aspect 
of a transaction that causes it to be a confidential transaction if the 
statement concerns a tax benefit related to the transaction and either 
the taxpayer's disclosure of the tax treatment or tax structure of the 
transaction is limited in the manner described in Sec.  1.6011-4(b)(3) 
of this chapter by or for the benefit of the person making the 
statement, or the person making the statement knows the taxpayer's 
disclosure of the tax structure or tax aspects of the transaction is 
limited in the manner described in Sec.  1.6011-4(b)(3) of this 
chapter.
    (C) Transactions with contractual protection. A statement relates 
to a tax aspect of a transaction that causes it to be a transaction 
with contractual protection if the statement concerns a tax benefit 
related to the transaction and either--
    (1) The taxpayer has the right to a full or partial refund of fees 
paid to the person making the statement or the fees are contingent in 
the manner described in Sec.  1.6011-4(b)(4) of this chapter; or
    (2) The person making the statement knows or has reason to know 
that the taxpayer has the right to a full or partial refund of fees 
(described in Sec.  1.6011-4(b)(4)(ii) of this chapter) paid to another 
if all or part of the intended tax consequences from the transaction 
are not sustained or that fees (as described in Sec.  1.6011-
4(b)(4)(ii) of this chapter) paid by the taxpayer to another are 
contingent on the taxpayer's realization of tax benefits from the 
transaction in the manner described in Sec.  1.6011-4(b)(4) of this 
chapter.
    (D) Loss transactions. A statement relates to a tax aspect of a 
transaction that causes it to be a loss transaction if the statement 
concerns an item that gives rise to a loss described in Sec.  1.6011-
4(b)(5) of this chapter.
    (E) [Reserved].
    (iii) Special rules--(A) Capacity as an employee. A material 
advisor generally does not include a person who makes a tax statement 
solely in the person's capacity as an employee, shareholder, partner or 
agent of another person. Any tax statement made by that person will be 
attributed to that person's employer, corporation, partnership or 
principal. However, a person shall be treated as a material advisor if 
that person forms or avails of an entity with the purpose of avoiding 
the rules of section 6111 or 6112 or the penalties under section 6707 
or 6708.
    (B) Post-filing advice. A person will not be considered to be a 
material advisor with respect to a transaction if that person does not 
make or provide a tax statement regarding the transaction until after 
the first tax return reflecting tax benefit(s) of the transaction is 
filed with the IRS. However, this exception does not apply to a person 
who makes a tax statement with respect to the transaction if it is 
expected that the taxpayer will file a supplemental or amended return 
reflecting additional tax benefits from the transaction.

[[Page 43160]]

    (C) Publicly filed statements. A tax statement with respect to a 
transaction that includes only information about the transaction 
contained in publicly available documents filed with the Securities and 
Exchange Commission no later than the close of the transaction will not 
be considered a tax statement to or for the benefit of a person 
described in paragraph (b)(2) of this section.
    (3) Gross income derived for material aid, assistance, or advice--
(i) Threshold amount--(A) In general. The threshold amount of gross 
income is $50,000 in the case of a reportable transaction substantially 
all of the tax benefits from which are provided to natural persons 
(looking through any partnerships, S corporations, or trusts). For all 
other transactions, the threshold amount is $250,000.
    (B) Listed transactions and transactions of interest. For listed 
transactions described in Sec. Sec.  1.6011-4, 20.6011-4, 25.6011-4, 
31.6011-4, 53.6011-4, 54.6011-4, or 56.6011-4 of this chapter, the 
threshold amounts in paragraph (b)(3)(i)(A) of this section are reduced 
from $50,000 to $10,000 and from $250,000 to $25,000. For transactions 
of interest described in Sec. Sec.  1.6011-4, 20.6011-4, 25.6011-4, 
31.6011-4, 53.6011-4, 54.6011-4, or 56.6011-4 of this chapter, the 
threshold amounts in paragraph (b)(3)(i)(A) of this section may be 
reduced as identified in the published guidance describing the 
transaction.
    (C) [Reserved].
    (D) Substantially all of the tax benefits. For purposes of this 
section, the determination of whether substantially all of the tax 
benefits from a reportable transaction are provided to natural persons 
is made based on all the facts and circumstances. Generally, unless the 
facts and circumstances prove otherwise, if 70 percent or more of the 
tax benefits from a reportable transaction are provided to natural 
persons (looking through any partnerships, S corporations, or trusts) 
then substantially all of the tax benefits will be considered to be 
provided to natural persons.
    (ii) Gross income derived directly or indirectly for the material 
aid, assistance, or advice. In determining the amount of gross income a 
person derives directly or indirectly for material aid, assistance, or 
advice, all fees for a tax strategy or for services for advice (whether 
or not tax advice) or for the implementation of a reportable 
transaction are taken into account. Fees include consideration in 
whatever form paid, whether in cash or in kind, for services to analyze 
the transaction (whether or not related to the tax consequences of the 
transaction), for services to implement the transaction, for services 
to document the transaction, and for services to prepare tax returns to 
the extent return preparation fees are unreasonable in light of all of 
the facts and circumstances. A fee does not include amounts paid to a 
person, including an advisor, in that person's capacity as a party to 
the transaction. For example, a fee does not include reasonable charges 
for the use of capital or the sale or use of property. The IRS will 
scrutinize carefully all of the facts and circumstances in determining 
whether consideration received in connection with a reportable 
transaction constitutes gross income derived directly or indirectly for 
aid, assistance, or advice. For purposes of this section, the threshold 
amount must be met independently for each transaction that is a 
reportable transaction and aggregation of fees among transactions is 
not required.
    (4) Date a person becomes a material advisor--(i) In general. A 
person will be treated as becoming a material advisor when all of the 
following events have occurred (in no particular order)--
    (A) The person provides material aid, assistance or advice as 
described in paragraph (b)(2) of this section;
    (B) The person directly or indirectly derives gross income in 
excess of the threshold amount as described in paragraph (b)(3) of this 
section; and
    (C) The transaction is entered into by the taxpayer to whom or for 
whose benefit the person provided the tax statement, or in the case of 
a tax statement provided to another material advisor, when the 
transaction is entered into by a taxpayer to whom or for whose benefit 
that material advisor provided a tax statement.
    (ii) Determining if the taxpayer entered into the transaction. 
Material advisors, including those who cease providing services before 
the time the transaction is entered into, must make reasonable and good 
faith efforts to determine whether the event described in paragraph 
(b)(4)(i)(C) of this section has occurred.
    (iii) Listed transactions and transactions of interest. If a 
transaction that was not a reportable transaction is identified as a 
listed transaction or a transaction of interest in published guidance 
after the occurrence of the events described in paragraph (b)(4)(i) of 
this section, the person will be treated as becoming a material advisor 
on the date the transaction is identified as a listed transaction or a 
transaction of interest.
    (5) Other persons designated as material advisors. Published 
guidance may identify other types or classes of persons as material 
advisors.
    (c) Definitions. For purposes of this section, the following 
definitions apply:
    (1) Reportable transaction. The term reportable transaction is 
defined in Sec.  1.6011-4(b)(1) of this chapter.
    (2) Listed transaction. The term listed transaction is defined in 
Sec.  1.6011-4(b)(2) of this chapter. See also Sec. Sec.  20.6011-4(a), 
25.6011-4(a), 31.6011-4(a), 53.6011-4(a), 54.6011-4(a), or 56.6011-4(a) 
of this chapter.
    (3) Derive. The term derive means receive or expect to receive.
    (4) Person. The term person means any person described in section 
7701(a)(1), including an affiliated group of corporations that join in 
the filing of a consolidated return under section 1501.
    (5) Substantially similar. The term substantially similar is 
defined in Sec.  1.6011-4(c)(4) of this chapter.
    (6) Tax. The term tax means Federal tax.
    (7) Tax benefit. A tax benefit includes deductions, exclusions from 
gross income, nonrecognition of gain, tax credits, adjustments (or the 
absence of adjustments) to the basis of property, status as an entity 
exempt from Federal income taxation, and any other tax consequences 
that may reduce a taxpayer's Federal tax liability by affecting the 
amount, timing, character, or source of any item of income, gain, 
expense, loss, or credit.
    (8) Tax return. The term tax return means a Federal tax return and 
a Federal information return.
    (9) Tax structure. The tax structure of a transaction is any fact 
that may be relevant to understanding the purported or claimed Federal 
tax treatment of the transaction.
    (10) Tax treatment. The tax treatment of a transaction is the 
purported or claimed Federal tax treatment of the transaction.
    (11) Taxpayer. The term taxpayer is defined in Sec.  1.6011-4(c)(1) 
of this chapter.
    (12) Tax result protection. The term tax result protection includes 
insurance company and other third party products commonly described as 
tax result insurance.
    (13) Transaction of interest. The term transaction of interest is 
defined in Sec.  1.6011-4(b)(6) of this chapter. See also Sec. Sec.  
20.6011-4(a), 25.6011-4(a), 31.6011-4(a), 53.6011-4(a), 54.6011-4(a), 
or 56.6011-4(a) of this chapter.
    (d) Form and content of material advisor's disclosure statement--
(1) In general. A material advisor required to

[[Page 43161]]

file a disclosure statement under this section must file a completed 
Form 8918, ``Material Advisor Disclosure Statement'' (or successor 
form) in accordance with this paragraph (d) and the instructions to the 
form. To be considered complete, the information provided on the form 
must describe the expected tax treatment and all potential tax benefits 
expected to result from the transaction, describe any tax result 
protection with respect to the transaction, and identify and describe 
the transaction in sufficient detail for the IRS to be able to 
understand the tax structure of the reportable transaction and the 
identity of any material advisor(s) whom the material advisor knows or 
has reason to know acted as a material advisor as defined in paragraph 
(b) of this section with respect to the transaction. An incomplete form 
containing a statement that information will be provided upon request 
is not considered a complete disclosure statement. A material advisor 
may file a single form for substantially similar transactions. An 
amended form must be filed if information previously provided is no 
longer accurate, if additional information that was not disclosed 
becomes available, or if there are material changes to the transaction. 
A material advisor is not required to file an additional form for each 
additional taxpayer that enters into the same or substantially similar 
transaction. If the form is not completed in accordance with the 
provisions in this paragraph (d) and the instructions to the form, the 
material advisor will not be considered to have complied with the 
disclosure requirements of this section.
    (2) Reportable transaction number. The IRS will issue to a material 
advisor a reportable transaction number with respect to the disclosed 
reportable transaction. Receipt of a reportable transaction number does 
not indicate that the disclosure statement is complete, nor does it 
indicate that the transaction has been reviewed, examined, or approved 
by the IRS. Material advisors must provide the reportable transaction 
number to all taxpayers and material advisors for whom the material 
advisor acts as a material advisor as defined in paragraph (b) of this 
section. The reportable transaction number must be provided at the time 
the transaction is entered into, or, if the transaction is entered into 
prior to the material advisor receiving the reportable transaction 
number, within 60 calendar days from the date the reportable 
transaction number is mailed to the material advisor.
    (e) Time of providing disclosure. The material advisor's disclosure 
statement for a reportable transaction must be filed with the Office of 
Tax Shelter Analysis (OTSA) by the last day of the month that follows 
the end of the calendar quarter in which the advisor became a material 
advisor with respect to the reportable transaction or in which the 
circumstances necessitating an amended disclosure statement occur. The 
disclosure statement must be sent to OTSA at the address provided in 
the instructions for Form 8918 (or a successor form).
    (f) Designation agreements. If more than one material advisor is 
required to disclose a reportable transaction under this section, the 
material advisors may designate by written agreement a single material 
advisor to disclose the transaction. The transaction must be disclosed 
by the last day of the month following the end of the calendar quarter 
that includes the earliest date on which a material advisor who is a 
party to the agreement became a material advisor with respect to the 
transaction as described in paragraph (b)(4) of this section. The 
designation of one material advisor to disclose the transaction does 
not relieve the other material advisors of their obligation to disclose 
the transaction to the IRS in accordance with this section, if the 
designated material advisor fails to disclose the transaction to the 
IRS in a timely manner.
    (g) Protective disclosures. If a potential material advisor is 
uncertain whether a transaction must be disclosed under this section, 
the advisor may disclose the transaction in accordance with the 
requirements of this section and comply with all the provisions of this 
section, and indicate on the disclosure statement that the disclosure 
statement is being filed on a protective basis. The IRS will not treat 
disclosure statements filed on a protective basis any differently than 
other disclosure statements filed under this section. For a protective 
disclosure to be effective, the advisor must comply with the 
regulations under this section and Sec.  301.6112-1 by providing to the 
IRS all information requested by the IRS under these sections.
    (h) Rulings. If a potential material advisor requests a ruling as 
to whether a specific transaction is a reportable transaction on or 
before the date that disclosure would otherwise be required under this 
section, the Commissioner in his discretion may determine that the 
submission satisfies the disclosure rules under this section for that 
transaction if the request fully discloses all relevant facts relating 
to the transaction which would otherwise be required to be disclosed 
under this section. The potential obligation of the person to disclose 
the transaction under this section (or to maintain or furnish the list 
under Sec.  301.6112-1) will not be suspended during the period that 
the ruling request is pending.
    (i) Effective/applicability date--(1) In general. This section 
applies to transactions with respect to which a material advisor makes 
a tax statement on or after August 3, 2007. However, this section 
applies to transactions of interest entered into on or after November 
2, 2006 with respect to which a material advisor makes a tax statement 
under Sec.  301.6111-3 on or after November 2, 2006. Paragraph (h) of 
this section applies to ruling requests received on or after November 
1, 2006. Otherwise, the rules that apply with respect to transactions 
entered into before August 3, 2007 are contained in Notice 2004-80 
(2004-50 IRB 963); Notice 2005-17 (2005-8 IRB 606); and Notice 2005-22 
(2005-12 IRB 756) (see Sec.  601.601(d)(2)(ii)(b) in effect prior to 
August 3, 2007.
    (2) [Reserved].


Sec.  301.6111-3T  [Removed]

0
Par. 3. Section 301.6111-3T is removed.

Kevin M. Brown,
Deputy Commissioner for Services and Enforcement.
    Approved: July 25, 2007.
Eric Solomon,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 07-3788 Filed 7-31-07; 11:22 am]
BILLING CODE 4830-01-P