Failure to Maintain Lists of Investors In Potentially Abusive Tax Shelters

ID: CCA_2008112107450664 Number: 200950040 Release Date: 12/11/2009 Office: ---UILC: 6707.00-00, 6708.00-00 From: ---Sent: Friday, November 21, 2008 7:45:10 AM To: ---Cc: ---Subject: RE: Penalties These are slides particular to promoter penalties. Probably too narrow for your purposes.
Promoter Penalties
Promoter Penalties
TAX SHELTER REGISTRATION
TAX SHELTER REGISTRATION
REQUIREMENT
REQUIREMENT- SECTION 6111
SECTION 6111
1.
1. Registration
Registration-
With IRS no later than first day offered With IRS no later than first day offered for sale. for sale.
Include Information identifying and Include Information identifying and describing the tax shelter. describing the tax shelter.
Include information describing the tax Include information describing the tax benefits represented or to be benefits represented or to be represented. represented.
TAX SHELTER REGISTRATION
TAX SHELTER REGISTRATION
REQUIREMENT
REQUIREMENT- SECTION 6111
SECTION 6111 continued continued 2.
2. IRS assigns an identification number .
IRS assigns an identification number .
3.
3. Organizer must provide identification Organizer must provide identification number to investors. number to investors.
4.
4. Investors must include identification Investors must include identification number on their returns. number on their returns.
TAX SHELTER REGISTRATION
TAX SHELTER REGISTRATION
REQUIREMENT
REQUIREMENT- SECTION 6111
SECTION 6111 continued continued 5.
5. Tax Shelter Definition
Tax Shelter Definition

And
And
Meets technical registration Meets technical registration requirements under securities laws or requirements under securities laws or have > 5 investors with a total have > 5 investors with a total investment > $250,000. investment > $250,000.
Includes confidential corporate tax Includes confidential corporate tax shelters. shelters.
PENALTY FOR FAILURE TO
PENALTY FOR FAILURE TO
REGISTER SHELTER
REGISTER SHELTER-SECTION 6707 SECTION 6707 1.
1. > $500 or 1% of amount invested in
> $500 or 1% of amount invested in shelter. shelter.
2.
2. Confidential Corporate Shelters Confidential Corporate Shelters penalty > of $10,000 or 50% of fees penalty > of $10,000 or 50% of fees paid to promoters (75% in the paid to promoters (75% in the case of intentional acts). case of intentional acts).
PENALTY FOR FAILURE TO
PENALTY FOR FAILURE TO
FURNISH IDENTIFICATION NUMBER FURNISH IDENTIFICATION NUMBER TO INVESTORS TO INVESTORS - SECTION 6707 SECTION 6707 $100 for each failure $100 for each failure PENALTY IMPOSED ON PENALTY IMPOSED ON TAXPAYER FOR FAILURE TO TAXPAYER FOR FAILURE TO INCLUDE REGISTRATION INCLUDE REGISTRATION NUMBER ON RETURN NUMBER ON RETURN-SECTION 6707 SECTION 6707 $250 per failure $250 per failure Reasonable cause exception Reasonable cause exception REQUIREMENT TO MAINTAIN LISTS REQUIREMENT TO MAINTAIN LISTS OF INVESTORS OF INVESTORS---Section 6112 Section 6112 1.
1. Lists identifying investors in Lists identifying investors in “potentially abusive tax potentially abusive tax shelters shelters” must be maintained must be maintained by by “material advisors material advisors” 2.
2. Lists must be made available to Lists must be made available to Secretary upon request Secretary upon request DEFINITIONS DEFINITIONS --- Section 6112 Section 6112 “Potentially abusive tax shelters Potentially abusive tax shelters” Transactions required to be registered under Transactions required to be registered under section 6111 section 6111 Listed transactions ( Listed transactions (§1.6011 1.6011-4(b)(2)) required 4(b)(2)) required to be disclosed by the taxpayer to be disclosed by the taxpayer Other transactions that are, or are expected to Other transactions that are, or are expected to be, reportable transactions ( be, reportable transactions (§1.6011 1.6011-4(b)(3) 4(b)(3) through (7)) through (7)) Interests in transactions that are transferred if Interests in transactions that are transferred if the type of transaction would be reportable the type of transaction would be reportable under under §1.6011 1.6011-4(b) 4(b) DEFINITIONS DEFINITIONS --- Section 6112 Section 6112 (cont (cont’d) d) “Transaction Transaction” – Not specifically defined, but . . .
Not specifically defined, but . . .
– Includes
Includes
All of the factual elements relevant to the expected All of the factual elements relevant to the expected tax treatment of an investment, entity, plan, or tax treatment of an investment, entity, plan, or arrangement arrangement Any series of steps carried out as part of a plan Any series of steps carried out as part of a plan DEFINITIONS DEFINITIONS --- Section 6112 Section 6112 (cont (cont’d) d) “Material advisor Material advisor” – Person required to register a transaction under Person required to register a transaction under section 6111 section 6111 – Person who meets a minimum fee requirement + Person who meets a minimum fee requirement + provides a provides a “tax statement tax statement” To or for the benefit of a person required to disclose the To or for the benefit of a person required to disclose the transaction under transaction under §1.6011 1.6011-4 To or for the benefit of a person required to register under To or for the benefit of a person required to register under section 6111 section 6111 To or for the benefit of a person who acquires an interest in a To or for the benefit of a person who acquires an interest in a section 6111 tax shelter section 6111 tax shelter To or for the benefit of certain transferees of interests in To or for the benefit of certain transferees of interests in reportable transactions reportable transactions DEFINITIONS DEFINITIONS --- Section 6112 Section 6112 (cont (cont’d) d) “Tax statement Tax statement” – – Oral or written statement Oral or written statement – that relates to a tax aspect of a transaction that relates to a tax aspect of a transaction and and – that causes the transaction to be a reportable that causes the transaction to be a reportable transaction or a section 6111 tax shelter transaction or a section 6111 tax shelter DEFINITIONS DEFINITIONS --- Section 6112 Section 6112 (cont (cont’d) d) “Minimum fee Minimum fee” (fee is per transaction) (fee is per transaction) – Listed transactions Listed transactions $25,000 if persons for whose benefit the tax $25,000 if persons for whose benefit the tax statement is made are corporations statement is made are corporations $10,000 for all others $10,000 for all others – Other transactions Other transactions $250,000 if persons for whose benefit the tax $250,000 if persons for whose benefit the tax statement is made are corporations statement is made are corporations $50,000 for all others $50,000 for all others PENALTY FOR FAILURE TO PENALTY FOR FAILURE TO MAINTAIN LIST MAINTAIN LIST-SECTION 6708 SECTION 6708 1.
1. Penalty of $50 for each person that Penalty of $50 for each person that fails to disclose. fails to disclose.
2.
2. The maximum penalty for each year is The maximum penalty for each year is $100,000.
$100,000.
3.
3. Reasonable cause exception.
Reasonable cause exception.