EP Abusive Tax Transactions
NOTE: General Questions About Retirement Plans
Technical and procedural questions about your retirement plans are answered by EP Customer Account Services. Questions should be directed to (877) 829-5500 (toll-free number).
The IRS is engaged in extensive efforts to curb abusive tax shelter schemes and transactions. The Tax Exempt and Government Entities Division of the IRS, including the office of Employee Plans, participates in this IRS-wide effort by devoting substantial resources to the identification, analysis, and examination of abusive tax shelter schemes and promotions.
The IRS finalized regulations on abusive tax shelters. The regulations provide that a taxpayer must disclose certain transactions, known as "listed transactions," by filing a disclosure statement (Form 8886 and instructions) with its tax return. Form 8886-T and instructions should be used by tax-exempt entities in disclosing this information. The instructions include an explanation of the penalties if there is a failure to disclose a reportable transaction.
A "listed transaction" is a transaction that is the same as, or substantially similar to, one that the IRS has determined to be a tax avoidance transaction and identified by IRS notice or other form of published guidance. The parties who participate in listed transactions may be required to disclose the transaction as required by the regulations, register the transaction with the IRS, or maintain lists of investors in the transactions and provide the list to the IRS on request.
The IRS had identified the following transactions involving employee benefit plans as listed transactions:
Abusive Transactions That Affect Availability of Programs under EPCRS
A detailed explanation on how abusive transactions are affected by the new Employee Plans Compliance Resolution System eligibility requirements.
(Excise Taxes With Respect To Prohibited Tax Shelter Transactions to Which Tax-Exempt Entities Are Parties and Related Disclosure Requirements)
The Tax Increase Prevention and Reconciliation Act of 2005 ("TIPRA"), enacted on May 17, 2006, includes new excise taxes and disclosure rules that target certain potentially abusive tax shelter transactions to which a tax-exempt entity is a party. Entities that may be affected by the new provisions include, but are not limited to, charities, churches, state and local governments, Indian tribal governments, qualified pension plans, individual retirement accounts, and similar tax-favored savings arrangements. The managers of these entities, and in some cases the entities themselves, can be subject to excise taxes if the entity is a party to a prohibited tax shelter transaction.
IRS Corporate Abusive Tax Transactions Home Page
Listed transactions, with citations of published guidance, regulations or court cases and other useful resources.
"Abusive Tax Avoidance Transactions (ATAT) and Emerging Issues" audio
ATAT and Emerging Issues EP Phone Forum audio and transcript.
Treasury, IRS Issue Section 409(p) Final Regulations
The Treasury Department and IRS issued final regulations under Section 409(p). That section of the tax law generally prohibits accruals or allocations under an employee stock ownership plan (ESOP) that holds stock of an S corporation where the ownership interest in the ESOP or in rights to acquire the corporation are so concentrated among 10 percent owners that they hold 50 percent or more of the interests in the corporation. The final regulations are available for review. (12/16/2006)
Abusive Transaction Settlement Initiative
Internal Revenue Service officials announced a broad-based, limited-in-time opportunity for taxpayers to come forward and settle an array of transactions the IRS considers abusive. (10/27/2005)
Report an Abusive Transaction Involving a Retirement Plan
Employee Plans maintains the Abusive Transaction Hotline that people can use to share information (anonymously, if preferred) about abusive tax shelters and emerging issues that may be abusive in retirement plans:
- Telephone: (410) 962-9547 (not toll-free)
- Fax: (410) 962-0132
- Email: email@example.com
Internal Revenue Service
EP Tax Shelter Coordinator
31 Hopkins Plaza, Room 1542
Baltimore, Maryland 21201