New Guidance Issued For Disclosing Reportable Transactions

by Leroy Baker, Tax-News.com, New York

18 November 2004

The United States Treasury and the Internal Revenue Service have issued interim guidance relating to changes to disclosure requirements brought about by the passing of the American Jobs Creation Act last month.

The new rules will require material advisors to file returns disclosing reportable transactions and to maintain investor lists. The Act also imposes new monetary penalties on material advisors who fail to comply with these obligations.

Notice 2004-80 provides interim guidance to material advisors who are required to comply with the new reporting and list maintenance requirements and invites comments from the public regarding rules and standards implementing these new requirements.

In addition, the Treasury Department and the Internal Revenue Service today issued four revenue procedures that eliminate the reporting requirements for certain transactions for both taxpayers and material advisors.

These revenue procedures, which reduce taxpayer burden by providing that certain transactions are not reportable transactions under the disclosure regulations, apply to transactions with contractual protection (Revenue Procedure 2004-65), loss transactions (Revenue Procedure 2004-66), transactions that give rise to significant book-tax differences (Revenue Procedure 2004-67), and transactions involving brief asset holding periods (Revenue Procedure 2004-68).

IRS Commissioner Mark W. Everson, noted: "The new Jobs Act strengthens our hand in the fight against abusive shelters."

He added: "Under the new law, attorneys, accountants and other tax advisers who fail to comply with these disclosure requirements will face significant monetary penalties. At the same time, we will continue to balance taxpayer burden against the benefits to the IRS of additional disclosure requirements."

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