e-filing Form 8886, Reportable Transaction Disclosure Statement (03-24-2009)
For Tax Years 2007 and 2008, taxpayers required to file electronically must provide the Form 8886 as an XML document.
Field on Form 8886, line 7b, DescribeExpectedTaxBenefits, is limited to 1,000 characters. For 2007 returns, there is a workaround to use the General Dependency schema. For TY2008 returns, we added a new dependency (ExpectedTaxBenefitsExplanation which allows 1 million characters) to the schema. If the taxpayer needs more space than is allowed on line 7b, enter about 950 characters of the explanation and leave enough space to include a continuation statement. At the end of the explanation enter “continuation on Expected Tax Benefits Explanation”. Enter the remainder of the explanation in the XML file named ExpectedTaxBenefitsExplanation. Do not send the remainder of the explanation as a PDF file.
Taxpayers must use the most current version of Form 8886 as posted on IRS.gov, Forms and Pubs , and the file should be described as "Form 8886". Additionally, they are required to send copies of all of the initial year filings of Form 8886 to the Office of Tax Shelter Analysis (OTSA) at:
Internal Revenue Service
OTSA Mail Stop 4915
1973 North Rulon White Boulevard
Ogden, Utah 84404
The instructions to the Form 8886 indicate that “If you file your income tax return electronically, the copy sent to OTSA must show exactly the same information, word for word, provided with the electronically filed return and it must be provided with the official IRS Form 8886. If you use a computer-generated or substitute Form 8886, it must be an exact copy of the official IRS form.”
Additionally, the instructions tell taxpayers “Do not simply write ‘See Attached.’ If the information required exceeds the space provided, complete as much information as possible in the available space and attach the remaining information on additional sheets.” To comply with these instructions, follow the guidance listed above to enter about 950 characters of the explanation and then write “continuation on Expected Tax Benefits Explanation.
For Tax Year 2006, taxpayers required to file electronically must provide the Form 8886 as a PDF attachment.
Describe the PDF attachment as Form 8886 nnn (where nnn is the sequential number of the Form 8886 or some number to uniquely identify this form).