Instructions For Form 8275-R - Regulation Disclosure Statement

Instructions for

Department of the Treasury

Internal Revenue Service

Form 8275-R

(Rev. August 2007)

(Use with the February 2002 revision of Form 8275-R.)

Regulation Disclosure Statement

•

The disclosure is adequate only if it

Carryback items must be disclosed

What’s New

is made separately on a Form

for the tax year in which they

8275-R.

originated. You do not have to file

Changes have been made to the

•

The penalty for reckless or

another Form 8275-R for those items

penalties for tax return preparers as a

intentional disregard of a regulation

for the tax years in which the

result of P.L. 110-28, section 8246.

may be avoided by disclosure only if

carryback is taken into account.

For more information, see Tax Return

the position represents a good faith

Preparer Penalties on page 2.

However, if you disclose items that

challenge to the validity of the

are of a recurring nature (such as

regulation and has a reasonable

General Instructions

depreciation expense), you must file

basis.

Form 8275-R for each tax year in

Section references are to the Internal

which the item occurs.

Instead of Form 8275-R, use Form

Revenue Code unless otherwise

8275, Disclosure Statement, for the

If you are disclosing a position that

noted.

disclosure of items or positions which

is contrary to a regulation, and the

are not contrary to regulations but

position relates to a reportable

Purpose of Form

which are not otherwise adequately

transaction as defined in Regulations

Form 8275-R is used by taxpayers

disclosed.

section 1.6011-4(b), you must also

and income tax preparers to disclose

make the disclosure required by

positions taken on a tax return that

Who Should File

Regulations section 1.6011-4(b). See

are contrary to Treasury regulations.

Form 8886, Reportable Transaction

Form 8275-R is filed by individuals,

The form is filed to avoid the portions

Disclosure Statement, its instructions,

corporations, pass-through entities,

of the accuracy-related penalty due to

and Rev. Proc. 2004-45, which is on

and income tax return preparers.

disregard of regulations or to a

page 140 of Internal Revenue Bulletin

substantial understatement of income

For items attributable to a

2004-31 at

tax for non-tax shelter items if the

pass-through entity, disclosure should

irb04-31.pdf.

return position has a reasonable

be made on the tax return of the

basis. It can also be used for

entity. If the entity does not make the

Accuracy-Related

disclosures relating to the preparer

disclosure, the partner (or

Penalty

penalties for income tax

shareholder, etc.) may make

understatements due to positions

adequate disclosure of these items.

Generally, the accuracy-related

taken contrary to regulations.

penalty is 20% of any portion of a tax

How To File

underpayment attributable to:

The portion of the

1. Negligence or disregard of rules

When a return position is contrary to

accuracy-related penalty

or regulations,

regulations, you must file Form

attributable to the following

CAUTION

2. Any substantial understatement

8275-R. File all Forms 8275-R with

types of misconduct cannot be

of income tax,

your original tax return. Keep a copy

avoided by disclosure on Form

3. Any substantial valuation

for your records. You also may be

8275-R.

misstatement under chapter 1 of the

able to file Forms 8275-R with an

•

Negligence.

Internal Revenue Code,

amended return. See Regulations

•

4. Any substantial overstatement

Disregard of rules.

sections 1.6662-4(f) and

•

of pension liabilities, or

Any substantial understatement of

1.6664-2(c)(3) for more information.

5. Any substantial estate or gift tax

income tax.

To make adequate disclosure for

•

valuation understatement.

Any substantial valuation

items reported by a pass-through

misstatement under chapter 1.

entity, you must complete and file a

However, the penalty is 40% of

•

Any substantial overstatement of

separate Form 8275-R for items

any portion of a tax underpayment

pension liabilities.

reported by each entity.

attributable to one or more gross

•

Any substantial estate or gift tax

valuation misstatements in (3), (4), or

Carrybacks, carryovers, and

valuation understatements.

(5) above if the applicable dollar

recurring items. Carryover items

limitation under section 6662(h)(2) is

Because of the importance to the

must be disclosed in the tax year in

met.

self-assessment system of disclosing

which they originated. You do not

positions contrary to regulations, the

have to file another Form 8275-R for

Reasonable basis. Generally, you

requirements for making such

those items for the tax years in which

can avoid the disregard of regulations

disclosures are stringent.

the carryover is taken into account.

and substantial understatement

Cat. No. 14317I

Instructions For Form 8275-R - Regulation Disclosure Statement - 2007

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