2. $10,000,000.
In cases where any part of the
tax treatment of the item, or a concise
understatement of the liability is due to a
description of the legal issues presented by
For purposes of the substantial
willful attempt by the return preparer to
these facts; and
understatement portion of the
understate the liability, or if the
2. A statement explaining why you
accuracy-related penalty, the amount of the
understatement is due to reckless or
believe this regulation to be invalid.
understatement will be reduced by the part
intentional disregard of rules or regulations
that is attributable to the following items.
by the preparer, the preparer is subject to a
Disclosure will not be considered
•
An item (other than a tax shelter item) for
!
$1,000 penalty.
adequate unless (1) and (2) above
which there was substantial authority for the
are provided using Form 8275-R. For
CAUTION
A preparer is not considered to have
treatment claimed at the time the return was
example, your disclosure will not be
recklessly or intentionally disregarded a
filed or on the last day of the tax year to
considered adequate if you attach a copy of
regulation if the position is adequately
which the return relates.
an acquisition agreement to your tax return
disclosed, is not frivolous, and the position
•
An item (other than a tax shelter item) that
to disclose the issues involved in
represents a good faith challenge to the
is adequately disclosed on this form if there
determining the basis of certain acquired
validity of the regulation.
is a reasonable basis for the tax treatment of
assets. If Form 8275-R is not completed and
Note. For more information about the
the item. (In no event will a corporation be
attached to the return, the disclosure will not
accuracy-related penalty and preparer
treated as having a reasonable basis for its
be considered valid even if the information
penalties, and the means of avoiding these
tax treatment of an item attributable to a
in (1) and (2) above is provided.
penalties, see Regulations sections 1.6662,
multi-party financing transaction entered into
1.6664, and 1.6694.
after August 5, 1997, if the treatment does
Part III
not clearly reflect the income of the
Line 4. Contact your pass-through entity if
corporation.)
•
you do not know where its return was filed.
A tax shelter item (other than a corporate
Specific Instructions
However, for partners and S corporation
tax shelter item), for tax years ending before
Be sure to supply all of the information
shareholders, information for line 4 can be
October 23, 2004, if (a) there was
requested in Parts I and II and, if applicable,
found on the Schedule K-1 that you received
substantial authority for the treatment at the
Part III. Your disclosure will be considered
from the partnership or S corporation.
time the return was filed or on the last day of
adequate if you file Form 8275-R and supply
the tax year to which the return relates, and
the information requested in detail.
(b) you reasonably believed that the tax
Paperwork Reduction Act Notice. We ask
treatment of the item was more likely than
Use Part IV on page 2 if you need more
for the information on this form to carry out
not the proper tax treatment.
space for Part I or II. Indicate the
the Internal Revenue laws of the United
corresponding part and line number from
For corporate tax shelter transactions
States. You are required to give us the
page 1. You can use a continuation sheet(s)
(and for tax shelter items of other taxpayers
information if you wish to use this form to
if you need additional space. Be sure to put
for tax years ending after October 22, 2004),
make adequate disclosure to avoid the
your name and identifying number on each
the only exception to the substantial
portion of the accuracy-related penalty due
sheet.
understatement portion of the
to a substantial understatement of income
accuracy-related penalty is the reasonable
tax or disregard of regulations, or to avoid
Part I
cause exception. For more details, see
certain preparer penalties. We need it to
section 1.6664-4(e).
ensure that you are complying with these
Column (a). Enter a detailed citation for
laws and to allow us to figure and collect the
Tax shelter items. A tax shelter, for
each regulation for which you have taken a
right amount of tax.
purposes of the substantial understatement
contrary position.
portion of the accuracy-related penalty, is a
You are not required to provide the
Column (b). Identify the item by name.
partnership or other entity, plan, or
information requested on a form that is
If any item you disclose is from a
arrangement, with a significant purpose to
subject to the Paperwork Reduction Act
pass-through entity, you must identify the
avoid or evade federal income tax. For
unless the form displays a valid OMB control
item as such. If you disclose items from
transactions on or before August 5, 1997, a
number. Books or records relating to a form
more than one pass-through entity, you
tax shelter is a partnership or other entity,
or its instructions must be retained as long
must complete a separate Form 8275-R for
plan, or arrangement, whose principal
as their contents may become material in
each entity. Also, see How To File on
purpose is to avoid or evade federal income
the administration of any Internal Revenue
page 1.
tax.
law. Generally, tax returns and return
Column (c). Enter a complete description
information are confidential, as required by
A tax shelter item is any item of income,
of the item(s) you are disclosing.
section 6103.
gain, loss, deduction, or credit that is directly
Example. If an entertainment expense
or indirectly attributable to the principal or
The time needed to complete and file this
was reported in column (b), then list in
significant purpose of the tax shelter to
form will vary depending on individual
column (c) “theater tickets, catering
avoid or evade federal income tax.
circumstances. The estimated average time
expenses, and banquet hall rentals.”
is:
Income Tax Return Preparer
If you claim the same tax treatment for a
Penalties
group of similar items in the same tax year,
Recordkeeping . . . . . . .
3 hr., 35 min.
enter a description identifying the group of
A preparer who files an income tax return or
Learning about the law
items you are disclosing rather than a
claim for refund is subject to a $250 penalty
or the form . . . . . . . .
53 min.
separate description of each item within the
for taking a position which understates any
group.
part of the liability if:
Preparing and sending
•
Columns (d) through (f). Enter the location
The position has no realistic possibility of
the form to the IRS . .
59 min.
being sustained on its merits, and
of the item(s) by identifying the form number
•
If you have comments concerning the
or schedule and the line number in columns
The preparer knew (or reasonably should
(d) and (e) and the amount of the item(s) in
accuracy of these time estimates or
have known) of the position, and
•
suggestions for making this form simpler, we
The position is frivolous or not adequately
column (f).
would be happy to hear from you. See the
disclosed on the return or on the appropriate
Part II
instructions for the tax return with which this
disclosure statement.
form is filed.
The penalty will not apply if it can be
Your disclosure must include:
shown that there was reasonable cause for
1. A description of the relevant facts and
the understatement and that the preparer
the nature of the controversy affecting the
acted in good faith.
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