Instructions For Form 8918 - 2011 (Page 4 of 6) in pdf

Continue to monitor this website for future

or liquidation. See Regulations section

Penalties may also be imposed if you

updates. You may need to keep

301.6112-1(d) for more information.

knowingly aid and abet in the

additional records for accounting or state

understatement of the tax liability of

Penalties

income tax purposes.

another person. The penalty is $1,000

($10,000 for corporate tax returns and

Penalty For Failure To Furnish

Contents of the list. Each list must

documents).

contain the following.

Information Regarding Reportable

Criminal penalties for failure to file on

Transactions

1. An itemized statement containing:

time and for filing a false or fraudulent

a. The name of each reportable

A penalty may be imposed if you are

return are provided by sections 7203,

transaction, the citation to the notice

required to file Form 8918 and you fail to

7206, and 7207.

number or published guidance number

file the return on or before the due date,

identifying the transaction if the

Specific Instructions

or file false or incomplete information

transaction is a listed transaction or

about a reportable transaction.

transaction of interest, and the reportable

How To Complete Form 8918

The penalty is $50,000 for reportable

transaction number obtained under

In order to be considered complete, Form

transactions other than listed

section 6111;

8918 must be completed in its entirety

transactions. The penalty imposed for

b. The name, address, and identifying

with all required attachments. To be

listed transactions is the greater of:

number of each individual or entity

•

$200,000, or

considered complete, the information

required to be included on the list;

•

50 percent of the gross income from

provided on the form must describe the

c. The date on which each individual

providing aid, assistance, or advice about

expected tax treatment and all potential

or entity entered into the reportable

the listed transaction before the date the

tax benefits expected to result from the

transaction, if known;

return is filed. If the failure is intentional,

transaction, describe any tax result

d. The amount invested in the

protection with respect to the transaction,

the percentage is 75%.

reportable transaction by each individual

and identify and describe the transaction

or entity, if known;

For more information, see section

in sufficient detail for the IRS to be able to

e. A summary or schedule of the tax

6707. Form 8918 must be completed in

understand the tax structure of the

treatment that each individual or entity is

its entirety with all required attachments

reportable transaction. A Form 8918

intended or expected to derive from

to be considered complete. Stating that

containing a statement that information

participation in the reportable transaction;

“Information will be provided upon

will be provided upon request is not

and

request” or that “Details are available

considered a complete disclosure

f. The name of each other material

upon request,” or any similar statement in

statement.

advisor to the transaction, if known.

the space provided, is not considered a

If the information required exceeds the

description and may cause your

2. A detailed description of the

space provided, complete as much

disclosure statement to be treated as

reportable transaction that describes both

information as possible in the available

incomplete.

the tax structure and the purported tax

space and attach the remaining

treatment.

Note. Rev. Proc. 2007-21, 2007-9 I.R.B.

information on additional sheets. The

3. A copy of any designation

613 provides guidance for requesting

additional sheets must be in the same

agreement to which the material advisor

rescission of certain penalty assessments

order as the lines to which they

is a party. See Line 5 for more

under sections 6707 or 6707A with

correspond. You must also include your

information.

respect to a nonlisted reportable

name and identifying number at the top of

4. Copies of any additional written

transaction.

each additional sheet. Do not write “See

materials, including tax analyses or

Attached” on the form and provide all the

Penalty For Failure To Maintain

opinions, relating to each reportable

information on an attached statement.

Required Lists

transaction that are material to an

Material Advisor Identifying

understanding of the intended tax

A penalty may be imposed if you are

treatment or tax structure of that

Information

required to maintain a list under section

transaction that the material advisor or

6112(a) and you fail to make the list

Individuals. If the material advisor is an

any related party or agent of the material

available upon written request to the IRS.

individual, enter the first name, middle

advisor has shown or provided to any

The penalty is $10,000 for each day of

initial (if any), and last name; the social

individual or entity (or to their

the failure after the date the list is

security number; the phone number, and

representatives, tax advisors, or agents)

required to be made available. The

the complete address.

who acquired or may acquire an interest

penalty may be assessed for failure to

Entities. If the material advisor is an

in the transaction. However, you are not

maintain the list in a form that enables the

required to retain earlier drafts of a

entity, enter the full name of the entity as

IRS to determine without undue delay or

document if you retain a copy of the final

shown on its income tax return, the

difficulty the information required.

document (or, if there is no final

employer identification number, and the

document, the most recent draft of the

complete address. See Item A for contact

Other Penalties

document) and the final document (or

information.

An additional civil penalty under section

most recent draft) contains all the

Item A

6700 may be imposed if you directly or

information in the earlier drafts of such

indirectly organize, participate in the sale

document that is material to an

Contact information. If the material

of, or promote an abusive tax shelter and

understanding of the purported tax

advisor is an entity, list the name of a

you cause other parties to make or

contact person along with a contact

treatment or the tax structure of the

furnish either:

telephone number. If the material advisor

transaction.

•

False or fraudulent statements as to

is an individual, you may disregard this

any material matter, or

Dissolution or liquidation of material

line.

•

Gross valuation overstatements as to

advisor. Generally, if a material advisor

Item B

any material matter.

dissolves or liquidates before completion

of the 7 year list maintenance period, the

For false or fraudulent statement

Protective disclosure. Indicate if you

person responsible under state law for

violations, the penalty is 50 percent of the

are filing on a protective basis by

winding up the entity’s affairs must

gross income from the activity. For gross

checking the appropriate box. If you are

prepare, maintain, and furnish each

valuation overstatement violations, the

uncertain if a transaction must be

component of the list on behalf of the

penalty is the lesser of $1,000 or 100% of

disclosed, check the “Yes” box and

entity, unless the entity submits the list to

the gross income derived (or to be

disclose the transaction in accordance

OTSA within 60 days after the dissolution

derived) from the activity.

with these instructions.

-4-

Instructions for Form 8918 Rev. 12-2011

Instructions For Form 8918 - 2011 Page 4

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