[Federal Register Volume 80, Number 61 (Tuesday, March 31, 2015)]
[Rules and Regulations]
[Pages 16973-16979]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-07378]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[TD-9718]
RIN 1545-BH37


Period of Limitations on Assessment for Listed Transactions Not 
Disclosed Under Section 6011

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations relating to the 
exception to the general three-year period of limitations on assessment 
under section 6501(c)(10) of the Internal Revenue Code (Code) for 
listed transactions that a taxpayer failed to disclose as required 
under section 6011. These final regulations affect taxpayers who fail 
to disclose listed transactions in accordance with section 6011.

DATES: 
    Effective date: These regulations are effective March 31, 2015.
    Applicability date: For dates of applicability, see Sec.  
301.6501(c)-1(g)(9).

FOR FURTHER INFORMATION CONTACT: Danielle Pierce of the Office of Chief 
Counsel (Procedure and

[[Page 16974]]

Administration), at (202) 317-6845 (not a toll-free number).

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act

    The collection of information contained in these regulations has 
been reviewed and approved by the Office of Management and Budget in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) 
under control number 1545-1940. The collection of information in these 
final regulations is in Sec.  301.6501(c)-1(g)(5). This information is 
required to provide the IRS, under penalties of perjury, with the 
information necessary to properly determine the taxpayer's applicable 
period of limitations. The collection of information in these final 
regulations is the same as the collection of information in Revenue 
Procedure 2005-26 (2005-1 CB 965), which was previously reviewed and 
approved by the Office of Management and Budget under control number 
1545-1940. The collection of information in Sec.  301.6501(c)-1(g)(6) 
is the same as the collection of information required under section 
6112. See Sec.  601.601(d)(2)(ii)(b).
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
tax return information are confidential, as required by 26 U.S.C. 6103.

Background

    This document contains amendments to the Procedure and 
Administration Regulations (26 CFR part 301) under section 6501(c) 
relating to exceptions to the period of limitations on assessment. 
Section 6501(a) provides that, except as otherwise provided, if a 
return is filed, tax with respect to that return must be assessed 
within 3 years from the later of the date the return was filed or the 
original due date of the return. Section 6501(c) contains several 
exceptions to the general three-year period of limitations on 
assessment.
    Section 6501(c)(10) was added to the Code by section 814 of the 
American Jobs Creation Act of 2004, Public Law 108-357 (118 Stat. 1418, 
1581 (2004)) (AJCA), enacted on October 22, 2004. Section 6501(c)(10) 
provides that, if a taxpayer fails to disclose a listed transaction as 
required under section 6011, the time to assess tax against the 
taxpayer with respect to that transaction will end no earlier than one 
year after the earlier of (A) the date on which the taxpayer furnishes 
the information required under section 6011, or (B) the date that the 
material advisor furnishes to the Secretary, upon written request, the 
information required under section 6112 with respect to the taxpayer 
related to the listed transaction. Section 6112 requires material 
advisors to maintain lists of advisees and other information with 
respect to reportable transactions, including listed transactions, and 
to furnish that information to the IRS upon request. The term 
``material advisor'' is defined in Sec.  301.6111-3(b). Section 6112 
and Sec.  301.6112-1 provide guidance relating to the preparation, 
content, maintenance, retention, and furnishing of lists by material 
advisors. Under this provision, if neither the taxpayer nor a material 
advisor furnishes the requisite information, the period of limitations 
on assessment will remain open, and the tax with respect to the listed 
transaction may be assessed at any time. Section 6501(c)(10) is 
effective for taxable years with respect to which the period of 
limitations on assessment did not expire prior to October 22, 2004.
    Section 6501(c)(10) applies when a taxpayer does not properly 
disclose a listed transaction (as defined in section 6707A(c)(2)) as 
required under section 6011. Taxpayers are required under section 6011 
and the regulations thereunder (collectively referred to as the 
``section 6011 disclosure rules'') to disclose certain information 
regarding each reportable transaction in which the taxpayer 
participated. See Treas. Reg. Sec. Sec.  1.6011-4; 20.6011-4; 25.6011-
4; 31.6011-4; 53.6011-4; 54.6011-4; and 56.6011-4. Among the 
transactions that are reportable are ``listed transactions.'' See 
Treas. Reg. Sec.  1.6011-4(b)(2). Under the section 6011 disclosure 
rules, a listed transaction is a transaction that is the same as, or 
substantially similar to, a transaction that the IRS has determined to 
be a tax avoidance transaction and identified by notice, regulation, or 
other form of published guidance. Treas. Reg. Sec.  1.6011-4(b)(2). For 
a list of transactions the IRS has identified as listed transactions, 
see Notice 2009-59, 2009-31 IRB 1. See Sec.  601.601(d)(2).
    If the section 6011 disclosure rules require a taxpayer to disclose 
a listed transaction, the taxpayer must complete and file a disclosure 
statement in accordance with the section 6011 disclosure rules. The 
section 6011 disclosure rules currently require that Form 8886, 
``Reportable Transaction Disclosure Statement'' (or successor form), be 
used as the disclosure statement and be completed in accordance with 
the instructions to the form. The Form 8886 (or successor form) 
generally must be attached to the taxpayer's original or amended tax 
return for each taxable year for which a taxpayer participates in a 
listed transaction. Treas. Reg. Sec.  1.6011-4(e)(1). If a listed 
transaction results in a loss that is carried back to a prior year, 
Form 8886 (or successor form) must be attached to the taxpayer's 
application for tentative refund or amended tax return for that prior 
year. The taxpayer also must send a copy of Form 8886 (or successor 
form) to the IRS Office of Tax Shelter Analysis (OTSA), generally at 
the same time that a disclosure statement pertaining to a particular 
listed transaction is first filed. Under the current rules, when a 
transaction is identified as a listed transaction after the date on 
which the taxpayer files a tax return (including an amended return) for 
a taxable year reflecting the taxpayer's participation in the listed 
transaction and before the end of the period of limitations for 
assessment of tax for any taxable year in which the taxpayer 
participated in the listed transaction, then the taxpayer must file 
Form 8886 (or successor form) with OTSA within 90 calendar days after 
the date the transaction became a listed transaction.
    If a taxpayer does not disclose its participation in a listed 
transaction in accordance with all of the requirements of the section 
6011 disclosure rules and section 6501(c)(10) applies, then the time to 
assess tax related to the listed transaction will expire no earlier 
than the earlier of (1) one year after the date on which the 
information described in section 6501(c)(10)(A) is provided, or (2) one 
year after the date on which the information described in section 
6501(c)(10)(B) is provided.
    The IRS and Treasury Department issued Rev. Proc. 2005-26 (2005-1 
CB 965) on April 25, 2005, to provide interim guidance on section 
6501(c)(10). The revenue procedure prescribes how taxpayers and 
material advisors should disclose listed transactions that were not 
properly disclosed under section 6011 in order to start the one-year 
period under section 6501(c)(10).
    On October 7, 2009, a notice of proposed rulemaking (REG-160871-04) 
relating to the section 6501(c)(10) exception to the general three-year 
period of limitations on assessment that applies if a taxpayer fails to 
disclose a listed transaction as required under section 6011 was 
published in the Federal Register (74 FR 51527). The preamble of the 
notice of proposed

[[Page 16975]]

rulemaking provided that taxpayers may continue to rely on the rules in 
Rev. Proc. 2005-26 until temporary or final regulations are issued 
under section 6501(c)(10). No comments were received from the public in 
response to the notice of proposed rulemaking. No public hearing was 
requested or held. The proposed regulations are adopted as revised by 
this Treasury decision.

Explanation of Revisions

    These final regulations adopt the proposed regulations with four 
substantive clarifications. First, Sec.  301.6501(c)-1(g)(1) is 
clarified with respect to the interaction of the one-year period of 
limitations on assessment after disclosure of a listed transaction 
under section 6501(c)(10) and the general three-year period of 
limitations on assessment under section 6501(a) (or other applicable 
limitations period under section 6501). The one-year period in section 
6501(c)(10) serves only to extend the existing limitations period. For 
example, if the general section 6501(a) three-year period of 
limitations on assessment applies and the one-year period under section 
6501(c)(10) ends prior to the expiration of the section 6501(a) three-
year period, the assessment period for the tax year remains open until 
the expiration of the general three-year period. Proposed section 
301.6501(c)-1(g)(8), Example 5 (renumbered as Example 6 in the final 
regulations) and Example 9, illustrated this point. However, the text 
of the proposed regulations did not specifically provide that in no 
case will the period of limitations be shorter than the period of 
limitations that would apply without regard to application of section 
301.6501(c)-1(g). A sentence was added to the end of Sec.  301.6501(c)-
1(g)(1) to clarify this point.
    Second, the final regulations revise Sec.  301.6501(c)-1(g)(6) to 
clarify when a disclosure will be considered a disclosure by a material 
advisor for purposes of section 6501(c)(10)(B) so that the one-year 
period of limitations on assessment will begin. Under section 
6501(c)(10)(B), if a taxpayer fails to disclose information related to 
a listed transaction, the time to assess tax will end no earlier than 
one year after the date that ``a material advisor meets the 
requirements of section 6112 with respect to a request by the Secretary 
under section 6112(b) relating to such transaction with respect to such 
taxpayer.'' This means that unless a material advisor furnishes the 
information with respect to the taxpayer in response to an IRS written 
request for the list under section 6112(b) and in accordance with 
section 6112, the one-year period under section 6501(c)(10)(B) will not 
begin. Accordingly, receipt of information from a person other than the 
material advisor with respect to the taxpayer will not satisfy the 
requirements of a disclosure for purposes of section 6501(c)(10)(B). 
The final regulations add Sec.  301.6501(c)-1(g)(6)(ii)(A) to clarify 
that, consistent with the statutory language, except in limited 
circumstances related to dissolution or liquidation of an entity that 
is a material advisor or in the case of a designation agreement, only 
receipt of information furnished by the material advisor will satisfy 
the requirements for disclosure under Sec.  301.6501(c)-1(g)(6).
    Third, the final regulations clarify that information received by 
the IRS in circumstances other than in response to a section 6112 
request, such as in response to an Information Document Request in a 
section 6700 investigation or as a result of a summons enforcement 
proceeding, will not begin the one-year period under Sec.  301.6501(c)-
1(g)(6). Proposed section 301.6501(c)-1(g)(8), Example 10, illustrated 
this point. However, the text of the proposed regulations did not 
specifically address this point. The final regulations have been 
revised to add Sec.  301.6501(c)-1(g)(6)(ii)(B) to provide that 
information not furnished in response to a section 6112 request will 
not satisfy the requirements under Sec.  301.6501(c)-1(g)(6) even if 
provided by the material advisor, unless furnished to OTSA in 
accordance with Sec.  301.6112-1(d) in the case of material advisors 
that are liquidated or dissolved.
    Fourth, the final regulations clarify that if a material advisor 
furnishes information described in Sec.  301.6112-1(e), but does not 
furnish information identifying the taxpayer as a person who entered 
into the listed transaction, the requirements of section 6501(c)(10)(B) 
will not have been satisfied for that taxpayer. Proposed section 
301.6501(c)-1(g)(8), Example 11, illustrated this point. However, the 
text of the proposed regulations did not specifically address this 
point. The final regulations have been revised to add Sec.  
301.6501(c)-1(g)(6)(ii)(C) for clarification.
    In addition to the revisions described above, other minor 
clarifying changes have been made that are not intended to be 
substantive.
    These final regulations apply to taxable years for which the period 
of limitation on assessment under section 6501, including the period of 
limitation set forth in section 6501(c)(10) and Sec.  301.6510(c)-1(g), 
did not expire before March 31, 2015, the date these final regulations 
are published in the Federal Register.

Effect on Other Documents

    Upon the publication of these final regulations under section 
6501(c)(10) in the Federal Register, Rev. Proc. 2005-26 (2005-1 CB 
965), is superseded for taxable years with respect to which the period 
of limitations on assessment under section 6501 (including section 
6501(c)(10)) did not expire before March 31, 2015. Rev. Proc. 2005-26 
(2005-1 CB 965) will continue to apply to taxable years with respect to 
which the period of limitations on assessment expired on or after April 
8, 2005, and before March 31, 2015, although as provided in the 
proposed regulations, taxpayers could rely on the rules in the notice 
of proposed rulemaking (REG-160871-04) under section 6501(c)(10) 
published in the Federal Register (74 FR 51527) on October 7, 2009, 
until these final rules are published in this Treasury decision.

Special Analyses

    It has been determined that these final regulations are not a 
significant regulatory action as defined in Executive Order 12866, as 
supplemented by Executive Order 13653. 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.
    It is hereby certified that the collection of information contained 
in these regulations will not have a significant economic impact on a 
substantial number of small entities. Accordingly, a regulatory 
flexibility analysis is not required under the Regulatory Flexibility 
Act (5 U.S.C. chapter 6). Section 6501(c)(10) applies when taxpayers 
fail to comply with the reporting requirements set forth under section 
6011 with respect to listed transactions. The Treasury Department and 
the IRS do not know the exact number and types of taxpayers that fail 
to comply with those requirements. However, although the Treasury 
Department and the IRS are aware that many tax avoidance transactions 
involve pass-through entities, when pass-through entities are utilized, 
the entities are not ultimately liable for the tax; rather, the 
taxpayers subject to section 6501(c)(10) will be the individuals and 
corporations owning, directly or indirectly, the interests in the pass-
through entities. Therefore, the Treasury Department and the IRS have 
determined that these final regulations will not affect a substantial 
number of small entities.

[[Page 16976]]

    In addition, the Treasury Department and the IRS have determined 
that any impact on small entities resulting from these final 
regulations will not be significant. Most of the information required 
under these final regulations is already required by other regulations 
or forms, namely, Sec.  1.6011-4, Sec.  301.6112-1, and Form 8886, 
``Reportable Transaction Disclosure Statement.'' The only new 
information required to be submitted to the IRS is a cover letter, 
which must contain a reference to the tax returns and taxable year(s) 
at issue and a statement signed under penalty of perjury. The cover 
letter should take minimal time and expense to prepare. Therefore, the 
additional requirement of the cover letter should not significantly 
increase the burden on taxpayers. Based on these facts, the Treasury 
Department and the IRS have determined that these final regulations 
will not have a significant economic impact on a substantial number of 
small entities. Pursuant to section 7805(f) of the Internal Revenue 
Code, the notice of proposed rulemaking preceding this regulation 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 author of these regulations is Danielle Pierce of the 
Office of the Associate Chief Counsel (Procedure and Administration).

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

    Accordingly, 26 CFR part 301 is amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

0
Paragraph 1. The authority citation for part 301 continues to read in 
part as follows:

    Authority:  26 U.S.C. 7805 * * *

0
Par. 2. Section 301.6501(c)-1 is amended by adding paragraph (g) to 
read as follows:


Sec.  301.6501(c)-1  Exceptions to general period of limitations on 
assessment and collection.

* * * * *
    (g) Listed transactions--(1) In general. If a taxpayer is required 
to disclose a listed transaction under section 6011 and the regulations 
thereunder and does not do so in the time and manner required, then the 
time to assess any tax attributable to that listed transaction for the 
taxable year(s) to which the failure to disclose relates (as defined in 
paragraph (g)(3)(iii) of this section) will not expire before the 
earlier of one year after the date on which the taxpayer makes the 
disclosure described in paragraph (g)(5) of this section or one year 
after the date on which a material advisor makes a disclosure described 
in paragraph (g)(6) of this section. In no case will the operation of 
this paragraph (g) cause the period of limitations on assessment to 
expire any earlier than the period that would have otherwise applied 
under this section determined without regard to this paragraph (g)(1).
    (2) Limitations period if paragraph (g)(5) or (g)(6) is satisfied. 
If one of the disclosure provisions described in paragraphs (g)(5) or 
(6) of this section is satisfied, then the tax attributable to the 
listed transaction may be assessed at any time before the expiration of 
the limitations period that would have otherwise applied under this 
section (determined without regard to paragraph (g)(1) of this section) 
or the period ending one year after the date that one of the disclosure 
provisions described in paragraphs (g)(5) or (6) of this section was 
satisfied, whichever is later. If both disclosure provisions are 
satisfied, the one-year period will begin on the earlier of the dates 
on which the provisions were satisfied. Paragraph (g)(1) of this 
section does not apply to any period of limitations on assessment that 
expired before the date on which the failure to disclose the listed 
transaction under section 6011 occurred.
    (3) Definitions--(i) Listed transaction. The term listed 
transaction means a transaction described in section 6707A(c)(2) of the 
Code and Sec.  1.6011-4(b)(2) of this chapter.
    (ii) Material advisor. The term material advisor means a person 
described in section 6111(b)(1) of the Code and Sec.  301.6111-3(b) of 
this chapter.
    (iii) Taxable year(s) to which the failure to disclose relates. The 
taxable year(s) to which the failure to disclose relates are each 
taxable year that the taxpayer participated (as defined under section 
6011 and the regulations thereunder) in a transaction that was 
identified as a listed transaction and the taxpayer failed to disclose 
the listed transaction as required under section 6011. If the taxable 
year in which the taxpayer participated in the listed transaction is 
different from the taxable year in which the taxpayer is required to 
disclose the listed transaction under section 6011, the taxable year(s) 
to which the failure to disclose relates are each taxable year that the 
taxpayer participated in the transaction.
    (4) Application of paragraph with respect to pass-through entities. 
In the case of taxpayers who are partners in partnerships, shareholders 
in S corporations, or beneficiaries of trusts and are required to 
disclose a listed transaction under section 6011 and the regulations 
thereunder, paragraph (g)(1) of this section will apply to a particular 
partner, shareholder, or beneficiary if that particular partner, 
shareholder, or beneficiary does not disclose within the time and in 
the form and manner provided by section 6011 and Sec.  1.6011-4(d) and 
(e), regardless of whether the partnership, S corporation, or trust or 
another partner, shareholder, or beneficiary discloses in accordance 
with section 6011 and the regulations thereunder. Similarly, because 
paragraph (g)(1) of this section applies on a taxpayer-by-taxpayer 
basis, the failure of a partnership, S corporation, or trust that has a 
disclosure obligation under section 6011 and that does not disclose 
within the time or in the form and manner provided by Sec.  1.6011-4(d) 
and (e) will not cause paragraph (g)(1) of this section to apply to a 
partner, shareholder or beneficiary of the entity. Instead, the 
application of paragraph (g)(1) of this section to a partner, 
shareholder, or beneficiary will be determined based on whether the 
particular partner, shareholder, or beneficiary satisfied their 
disclosure obligation under section 6011 and the regulations 
thereunder.
    (5) Taxpayer's disclosure of a listed transaction that the taxpayer 
did not properly disclose under section 6011--(i) In general--(A) 
Method of disclosure. The taxpayer must complete the most current 
version of Form 8886, ``Reportable Transaction Disclosure Statement'' 
(or successor form), available on the date the taxpayer attempts to 
satisfy this paragraph (g)(5) in accordance with Sec.  1.6011-4(d) and 
the instructions to the Form in effect on that date. The taxpayer must 
indicate on the Form 8886 that the form is being submitted for purposes 
of section 6501(c)(10) and the tax return(s) and taxable year(s) for 
which the taxpayer is making a section 6501(c)(10) disclosure. 
Disclosure under this paragraph (g)(5) will only be effective for the 
tax return(s) and taxable year(s) that the taxpayer specifies on the 
Form 8886 that he or she is attempting to disclose for purposes of 
section 6501(c)(10). If the Form 8886 contains a line for this purpose, 
then the taxpayer must complete the line in accordance with

[[Page 16977]]

the instructions to that form. Otherwise, the taxpayer must include on 
the top of Page 1 of the Form 8886, and each copy of the form, the 
following statement: ``Section 6501(c)(10) Disclosure'' followed by the 
tax return(s) and taxable year(s) for which the taxpayer is making a 
section 6501(c)(10) disclosure. For example, if the taxpayer did not 
properly disclose its participation in a listed transaction the tax 
consequences of which were reflected on the taxpayer's Form 1040 for 
the 2005 taxable year, the taxpayer must include the following 
statement: ``Section 6501(c)(10) Disclosure; 2005 Form 1040'' on the 
form. The taxpayer must submit the properly completed Form 8886 and a 
cover letter, which must be completed in accordance with the 
requirements set forth in paragraph (g)(5)(i)(B) of this section, to 
the Office of Tax Shelter Analysis (OTSA). The taxpayer is permitted, 
but not required, to file an amended return with the Form 8886 and 
cover letter. Separate Forms 8886 and separate cover letters must be 
submitted for each listed transaction the taxpayer did not properly 
disclose under section 6011. If the taxpayer participated in one listed 
transaction over multiple years, the taxpayer may submit one Form 8886 
(or successor form) and cover letter and indicate on that form all of 
the tax returns and taxable years for which the taxpayer is making a 
section 6501(c)(10) disclosure. If a taxpayer participated in more than 
one listed transaction, then the taxpayer must submit separate Forms 
8886 (or successor form) for each listed transaction, unless the listed 
transactions are the same or substantially similar, in which case all 
the listed transactions may be reported on one Form 8886.
    (B) Cover letter. (1) A cover letter to which a Form 8886 is to be 
attached must identify the tax return(s) and taxable year(s) for which 
the taxpayer is making a section 6501(c)(10) disclosure and include the 
following statement signed under penalties of perjury by the taxpayer:

Under penalties of perjury, I declare that I have examined this 
reportable transaction disclosure statement and, to the best of my 
knowledge and belief, this reportable transaction disclosure 
statement is true, correct, and complete.

    (2) If the Form 8886 is prepared by a paid preparer, in addition to 
the statement under penalties of perjury signed by the taxpayer, the 
Form 8886 must also include the following statement signed under 
penalties of perjury by the paid preparer.

Under penalties of perjury, I declare that I have examined this 
reportable transaction disclosure statement and, to the best of my 
knowledge and belief, this reportable transaction disclosure 
statement is true, correct, and complete. This declaration is based 
on all information of which I, as paid preparer, have any knowledge.

    (C) Taxpayer under examination or Appeals consideration. A taxpayer 
making a disclosure under paragraph (g)(5) of this section with respect 
to a taxable year under examination or Appeals consideration by the IRS 
must satisfy the requirements of paragraphs (g)(5)(i)(A) and (B) of 
this section and also submit a copy of the submission to the IRS 
examiner or Appeals officer examining or considering the taxable 
year(s) to which the disclosure under this paragraph (g) relates.
    (D) Date the one-year period will begin to run if paragraph (g)(5) 
satisfied. Unless an earlier expiration is provided for in paragraph 
(g)(6) of this section, the time to assess tax under paragraph this (g) 
will not expire before one year after the date on which the Secretary 
is furnished the information from the taxpayer that satisfies all the 
requirements of paragraphs (g)(5)(i)(A) and (B) of this section and, if 
applicable, paragraph (g)(5)(i)(C) of this section. If the taxpayer 
does not satisfy all of the requirements on the same date, the one-year 
period will begin on the date that the IRS is furnished the information 
that, together with prior disclosures of information, satisfies the 
requirements of this paragraph (g)(5). For purposes of this paragraph 
(g)(5), the information is deemed furnished on the date the IRS 
receives the information.
    (ii) Exception for returns other than annual returns. The IRS may 
prescribe alternative procedures to satisfy the requirements of this 
paragraph (g)(5) in a revenue procedure, notice, or other guidance 
published in the Internal Revenue Bulletin for circumstances involving 
returns other than annual returns.
    (6) Material advisor's disclosure of a listed transaction not 
properly disclosed by a taxpayer under section 6011--(i) In general. In 
response to a written request of the IRS under section 6112, a material 
advisor with respect to a listed transaction must furnish to the IRS 
the information described in section 6112 and Sec.  301.6112-1(b) in 
the form and manner prescribed by section 6112 and Sec.  301.6112-1(e). 
If the information the material advisor furnishes identifies the 
taxpayer as a person who entered into the listed transaction, 
regardless of whether the material advisor provides the information 
before or after the taxpayer's failure to disclose the listed 
transaction under section 6011, then the requirements of this paragraph 
(g)(6) will be satisfied for that taxpayer. The requirements of this 
paragraph (g)(6) will be considered satisfied even if the material 
advisor furnishes the information required under section 6112 to the 
IRS after the date prescribed in section 6708 or published guidance 
relating to section 6708.
    (ii) Paragraph (g)(6) not satisfied--(A) Information not furnished 
by a material advisor or a person permitted to act on behalf of the 
material advisor. The requirements of this paragraph (g)(6) are not 
satisfied for a taxpayer unless the information is furnished by--
    (1) A person who is a material advisor (as defined in paragraph 
(g)(3)(ii) of this section) with respect to the taxpayer,
    (2) A person who is providing the information pursuant to Sec.  
301.6112-1(d) on behalf of a dissolved or liquidated material advisor 
with respect to the taxpayer, or
    (3) a person who is providing the information on behalf of a 
material advisor with respect to the taxpayer under a designation 
agreement in accordance with Sec.  301.6112-1(f).
    (B) No written request by IRS. The requirements of this paragraph 
(g)(6) are not satisfied unless the information is furnished in 
response to a written request made by the IRS to the material advisor 
under section 6112 (except as provided in Sec.  301.6112-1(d) with 
respect to a list furnished to OTSA within 60 days after dissolution or 
liquidation of a material advisor).
    (C) Information furnished does not identify the taxpayer. The 
requirements of this paragraph (g)(6) are not satisfied for a taxpayer 
unless the information furnished identifies the taxpayer as a person 
who entered into the listed transaction.
    (iii) Date the one-year period will begin if paragraph (g)(6) is 
satisfied. Unless an earlier expiration is provided for in paragraph 
(g)(5) of this section, the time to assess tax under this paragraph (g) 
will expire one year after the date on which the material advisor 
satisfies the requirements of paragraph (g)(6)(i) of this section with 
respect to the taxpayer. For purposes of this paragraph (g)(6), 
information is deemed to be furnished on the date that, in response to 
a request under section 6112, the IRS receives the information from a 
material advisor that satisfies the requirements of paragraph (g)(6)(i) 
of this section with respect to the taxpayer.
    (7) Tax assessable under this section. If the period of limitations 
on assessment for a taxable year remains open under this section, the 
Secretary has authority to assess any tax with

[[Page 16978]]

respect to the listed transaction in that year. This includes, but is 
not limited to, adjustments made to the tax consequences claimed on the 
return plus interest, additions to tax, additional amounts, and 
penalties that are related to the listed transaction or adjustments 
made to the tax consequences. This also includes any item to the extent 
the item is affected by the listed transaction even if it is unrelated 
to the listed transaction. An example of an item affected by, but 
unrelated to, a listed transaction is the threshold for the medical 
expense deduction under section 213 that varies if there is a change in 
an individual's adjusted gross income. An example of a penalty related 
to the listed transaction is the penalty under section 6707A for 
failure to file the disclosure statement reporting the taxpayer's 
participation in the listed transaction. Examples of penalties related 
to the adjustments made to the tax consequences are the accuracy-
related penalties under sections 6662 and 6662A.
    (8) Examples. The rules of this paragraph (g) are illustrated by 
the following examples:

    Example 1. No requirement to disclose under section 6011. P, an 
individual, is a partner in a partnership that entered into a 
transaction in 2001 that was the same as or substantially similar to 
the transaction identified as a listed transaction in Notice 2000-44 
(2000-2 CB 255). P claimed a loss from the transaction on his Form 
1040 for the tax year 2001. P filed the Form 1040 prior to June 14, 
2002. P did not disclose his participation in the listed transaction 
because P was not required to disclose the transaction under the 
applicable section 6011 regulations (TD 8961), which were effective 
for any transaction entered into before January 1, 2001 and any 
transaction entered into on or after January 1, 2001 that was 
reported on a return of the taxpayer filed on or before June 14, 
2002. Although the transaction was a listed transaction and P did 
not disclose the transaction, P had no obligation to include on any 
return or statement any information with respect to a listed 
transaction within the meaning of section 6501(c)(10) because TD 
8961 only applied to corporations, not individuals. Accordingly, 
section 6501(c)(10) does not apply.
    Example 2. Taxable year to which the failure to disclose relates 
when transaction is identified as a listed transaction after first 
year of participation and the transaction must be disclosed with the 
return next filed. (i) On December 30, 2003, Y, a corporation, 
enters into a transaction that at the time is not a reportable 
transaction. On March 15, 2004, Y timely files its 2003 Form 1120, 
reporting the tax consequences from the transaction. On April 1, 
2004, the IRS issues Notice 2004-31 that identifies the transaction 
as a listed transaction. Y also reports tax consequences from the 
transaction on its 2004 Form 1120, which it timely filed on March 
15, 2005. Y did not attach a completed Form 8886 to its 2004 Form 
1120 and did not send a copy of the form to OTSA. The general three-
year period of limitations on assessment for Y's 2003 and 2004 
taxable years would expire on March 15, 2007, and March 17, 2008, 
respectively.
    (ii) The period of limitations on assessment for Y's 2003 
taxable year was open on the date the transaction was identified as 
a listed transaction. Under the applicable section 6011 regulations 
(TD 9108), which were effective for transactions entered into before 
August 3, 2007, Y should have disclosed its participation in the 
transaction with its next filed return, which was its 2004 Form 
1120, but Y did not disclose its participation. Y's failure to 
disclose with the 2004 Form 1120 relates to taxable years 2003 and 
2004. Section 6501(c)(10) operates to keep the period of limitations 
on assessment open for the 2003 and 2004 taxable years with respect 
to the listed transaction until at least one year after the date Y 
satisfies the requirements of paragraph (g)(5) of this section or a 
material advisor satisfies the requirements of paragraph (g)(6) of 
this section with respect to Y.
    Example 3. Taxable year to which the failure to disclose relates 
when transaction is identified as a listed transaction after the 
first year of participation and the transaction must be disclosed 90 
days after the transaction became a listed transaction. (i) In 
January 2015, A, a calendar year taxpayer, enters into a transaction 
that at the time is not a listed transaction. A reports the tax 
consequences from the transaction on its individual income tax 
return for 2015 timely filed on April 15, 2016. The time for the IRS 
to assess tax against A under the general three-year period of 
limitations for A's 2015 taxable year would expire on April 15, 
2019. A only participated in the transaction in 2015. On March 7, 
2017, the IRS identifies the transaction as a listed transaction. A 
does not file the Form 8886 with OTSA by June 5, 2017.
    (ii) The period of limitations on assessment for A's 2015 
taxable year was open on the date the transaction was identified as 
a listed transaction. Under the current section 6011 regulations (TD 
9350) which are effective for transactions entered into on or after 
August 3, 2007, A must disclose its participation in the transaction 
by filing a completed Form 8886 with OTSA on or before June 5, 2017, 
which is 90 days after the date the transaction became a listed 
transaction. A did not disclose the transaction as required. A's 
failure to disclose relates to taxable year 2015 even though the 
obligation to disclose did not arise until 2017. Section 6501(c)(10) 
operates to keep the period of limitations on assessment open for 
the 2015 taxable year with respect to the listed transaction until 
at least one year after the date A satisfies the requirements of 
paragraph (g)(5) of this section or a material advisor satisfies the 
requirements of paragraph (g)(6) of this section with respect to A.
    Example 4. Requirements of paragraph (g)(6) satisfied. Same 
facts as Example 3, except that on April 5, 2019, the IRS hand 
delivers to Advisor J, who is a material advisor, a section 6112 
request related to the listed transaction. Advisor J furnishes the 
required list with all the information required by section 6112 and 
Sec.  301.6112-1, including all the information required with 
respect to A, to the IRS on May 8, 2019. The submission satisfies 
the requirements of paragraph (g)(6) even though Advisor J furnishes 
the information outside of the 20-business-day period provided in 
section 6708. Accordingly, under section 6501(c)(10), the period of 
limitations with respect to A's taxable year 2015 will end on May 8, 
2020, one year after the IRS received the required information, 
unless the period of limitations remains open under another 
exception. Any tax for the 2015 taxable year not attributable to the 
listed transaction must be assessed by April 15, 2019.
    Example 5. Requirements of paragraph (g)(5) also satisfied. Same 
facts as Examples 3 and 4, except that on May 23, 2019, A files a 
properly completed Form 8886 and signed cover letter with OTSA both 
identifying that the section 6501(c)(10) disclosure relates to A's 
Form 1040 for 2015. A satisfied the requirements of paragraph (g)(5) 
of this section as of May 23, 2019. Because the requirements of 
paragraph (g)(6) were satisfied first as described in Example 4, 
under section 6501(c)(10) the period of limitations will end on May 
8, 2020 (one year after the requirements of paragraph (g)(6) were 
satisfied) instead of May 23, 2020 (one year after the requirements 
of paragraph (g)(5) were satisfied). Any tax for the 2015 taxable 
year not attributable to the listed transaction must be assessed by 
April 15, 2019.
    Example 6. Period to assess tax remains open under another 
exception. Same facts as Examples 3, 4, and 5, except that on April 
1, 2019, A signed Form 872, consenting to extend, without 
restriction, its period of limitations on assessment for taxable 
year 2015 under section 6501(c)(4) until July 15, 2020. In that 
case, although under section 6501(c)(10) the period of limitations 
would otherwise expire on May 8, 2020, the IRS may assess tax with 
respect to the listed transaction (as well as any other item on the 
return covered by the Form 872 extension) at any time up to and 
including July 15, 2020, pursuant to section 6501(c)(4). Section 
6501(c)(10) operates to extend the assessment period but not to 
shorten any other applicable assessment period.
    Example 7. Requirements of (g)(5) not satisfied. In 2015, X, a 
corporation, enters into a listed transaction. On March 15, 2016, X 
timely files its 2015 Form 1120, reporting the tax consequences from 
the transaction. X does not disclose the transaction as required 
under section 6011 when it files its 2015 return. The failure to 
disclose relates to taxable year 2015. On February 13, 2017, X 
completes and files a Form 8886 with respect to the listed 
transaction with OTSA but does not submit a cover letter, as 
required. The requirements of paragraph (g)(5) of this section have 
not been satisfied. Therefore, the time to assess tax against X with 
respect to the transaction for taxable year 2015 remains open under 
section 6501(c)(10).
    Example 8. Section 6501(c)(10) applies to keep one partner's 
period of limitations on assessment open. T and S are partners in a

[[Page 16979]]

partnership, TS, that enters into a listed transaction in 2015. T 
and S each receive a Schedule K-1 from TS on April 11, 2016. On 
April 15, 2016, TS, T and S each file their 2015 returns. Under the 
applicable section 6011 regulations, TS, T, and S each are required 
to disclose the transaction. TS attaches a completed Form 8886 to 
its 2015 Form 1065 and sends a copy of Form 8886 to OTSA. Neither T 
nor S files a disclosure statement with their respective returns nor 
sends a copy to OTSA on April 15, 2016. On May 17, 2016, T timely 
files a completed Form 8886 with OTSA pursuant to Sec.  1.6011-
4(e)(1). T's disclosure is timely because T received the Schedule K-
1 within 10 calendar days before the due date of the return and, 
thus, T had 60 calendar days to file Form 8886 with OTSA. TS and T 
properly disclosed the transaction in accordance with the applicable 
regulations under section 6011, but S did not. S's failure to 
disclose relates to taxable year 2015. The time to assess tax with 
respect to the transaction against S for 2015 remains open under 
section 6501(c)(10) even though TS and T disclosed the transaction.
    Example 9. Section 6501(c)(10) satisfied before expiration of 
three-year period of limitations under section 6501(a). Same facts 
as Example 8, except that on August 26, 2016, S satisfies the 
requirements of paragraph (g)(5) of this section. No material 
advisor satisfied the requirements of paragraph (g)(6) of this 
section with respect to S on a date earlier than August 26, 2016. 
Under section 6501(c)(10), the period of time in which the IRS may 
assess tax against S with respect to the listed transaction would 
expire no earlier than August 26, 2017, one year after the date S 
satisfied the requirements of paragraph (g)(5). As the general 
three-year period of limitations on assessment under section 6501(a) 
does not expire until April 15, 2019, the IRS will have until that 
date to assess any tax with respect to the listed transaction.
    Example 10. No section 6112 request. B, a calendar year 
taxpayer, entered into a listed transaction in 2015. B did not 
comply with the applicable disclosure requirements under section 
6011 for taxable year 2015; therefore, section 6501(c)(10) applies 
to keep the period of limitations on assessment open with respect to 
the tax related to the transaction until at least one year after B 
satisfies the requirements of paragraph (g)(5) of this section or a 
material advisor satisfies the requirements of paragraph (g)(6) of 
this section with respect to B. In June 2016, the IRS conducts a 
section 6700 investigation of Advisor K, who is a material advisor 
to B with respect to the listed transaction. During the course of 
the investigation, the IRS obtains the name, address, and TIN of all 
of Advisor K's clients who engaged in the transaction, including B. 
The information provided does not satisfy the requirements of 
paragraph (g)(6) with respect to B because the information was not 
provided pursuant to a section 6112 request. Therefore, the time to 
assess tax against B with respect to the transaction for taxable 
year 2015 remains open under section 6501(c)(10).
    Example 11. Section 6112 request but the requirements of 
paragraph (g)(6) are not satisfied with respect to B. Same facts as 
Example 10, except that on January 9, 2017, the IRS sends by 
certified mail a section 6112 request to Advisor L, who is another 
material advisor to B with respect to the listed transaction. 
Advisor L furnishes some of the information required under section 
6112 and Sec.  301.6112-1 to the IRS for inspection on January 17, 
2017. The list includes information with respect to many clients of 
Advisor L, but it does not include any information with respect to 
B. The submission does not satisfy the requirements of paragraph 
(g)(6) of this section with respect to B. Therefore, the time to 
assess tax against B with respect to the transaction for taxable 
year 2015 remains open under section 6501(c)(10).
    Example 12. Section 6112 submission made before taxpayer failed 
to disclose a listed transaction. Advisor M, who is a material 
advisor, advises C, an individual, in 2015 with respect to a 
transaction that is not a reportable transaction at that time. C 
files its return claiming the tax consequences of the transaction on 
April 15, 2016. The time for the IRS to assess tax against C under 
the general three-year period of limitations for C's 2015 taxable 
year would expire on April 15, 2019. The IRS identifies the 
transaction as a listed transaction on November 3, 2017. On December 
7, 2017, the IRS hand delivers to Advisor M a section 6112 request 
related to the transaction. Advisor M furnishes the information to 
the IRS on December 29, 2017. The information contains all the 
required information with respect to Advisor M's clients, including 
C. C does not disclose the transaction on or before February 1, 
2018, as required under section 6011 and the regulations under 
section 6011. Advisor M's submission under section 6112 satisfies 
the requirements of paragraph (g)(6) of this section even though it 
occurred prior to C's failure to disclose the listed transaction. 
Thus, under section 6501(c)(10), the period of limitations to assess 
tax against C with respect to the listed transaction will end on 
December 29, 2018 (one year after the requirements of paragraph 
(g)(6) of this section were satisfied), unless the period of 
limitations remains open under another exception.
    Example 13. Transaction removed from the category of listed 
transactions after taxpayer failed to disclose. D, a calendar year 
taxpayer, entered into a listed transaction in 2015. D did not 
comply with the applicable disclosure requirements under section 
6011 for taxable year 2015; therefore, section 6501(c)(10) applies 
to keep the period of limitations on assessment open with respect to 
the tax related to the transaction until at least one year after D 
satisfies the requirements of paragraph (g)(5) of this section or a 
material advisor satisfies the requirements of paragraph (g)(6) of 
this section with respect to D. In 2017, the IRS removes the 
transaction from the category of listed transactions because of a 
change in law. Section 6501(c)(10) continues to apply to keep the 
period of limitations on assessment open for D's taxable year 2015.
    Example 14. Taxes assessed with respect to the listed 
transaction. (i) F, an individual, enters into a listed transaction 
in 2015. F files its 2015 Form 1040 on April 15, 2016, but does not 
disclose his participation in the listed transaction in accordance 
with section 6011 and the regulations under section 6011. F's 
failure to disclose relates to taxable year 2015. Thus, section 
6501(c)(10) applies to keep the period of limitations on assessment 
open with respect to the tax related to the listed transaction for 
taxable year 2015 until at least one year after the date F satisfies 
the requirements of paragraph (g)(5) of this section or a material 
advisor satisfies the requirements of paragraph (g)(6) of this 
section with respect to F.
    (ii) On July 2, 2020, the IRS completes an examination of F's 
2015 taxable year and disallows the tax consequences claimed as a 
result of the listed transaction. The disallowance of a loss 
increased F's adjusted gross income. Due to the increase of F's 
adjusted gross income, certain credits, such as the child tax 
credit, and exemption deductions were disallowed or reduced because 
of limitations based on adjusted gross income. In addition, F now is 
liable for the alternative minimum tax. The examination also 
uncovered that F claimed two deductions on Schedule C to which F was 
not entitled. Under section 6501(c)(10), the IRS can timely issue a 
statutory notice of deficiency (and assess in due course) against F 
for the deficiency resulting from (1) disallowing the loss, (2) 
disallowing the credits and exemptions to which F was not entitled 
based on F's increased adjusted gross income, and (3) being liable 
for the alternative minimum tax. In addition, the IRS can assess any 
interest and applicable penalties related to those adjustments, such 
as the accuracy-related penalty under sections 6662 and 6662A and 
the penalty under section 6707A for F's failure to disclose the 
transaction as required under section 6011 and the regulations under 
section 6011. The IRS cannot, however, pursuant to section 
6501(c)(10), assess the increase in tax that would result from 
disallowing the two deductions on F's Schedule C because those 
deductions are not related to, or affected by, the adjustments 
concerning the listed transaction.

    (9) Effective/applicability date. The rules of this paragraph (g) 
apply to taxable years with respect to which the period of limitations 
on assessment under section 6501 (including subsection (c)(10)) did not 
expire before March 31, 2015.

John Dalrymple,
Deputy Commissioner for Services and Enforcement.
    Approved: March 10, 2015.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2015-07378 Filed 3-30-15; 8:45 am]
 BILLING CODE 4830-01-P