Avoid Tax Penalties with Form 8275-R: Regulation Disclosure Statement

Form 8275-R is a “Regulation Disclosure Statement” form that is used by tax return preparers to disclose positions taken on a tax return that are contrary to Treasury regulations. It is intended to protect taxpayers from accuracy-related penalties and prepare for potential controversies.

The form is used to disclose relevant facts affecting the tax treatment of items on a tax return, reportable transactions, and substantial understatement of income tax. It allows tax return preparers to adequately disclose positions that may be contrary to IRS regulations, as well as to provide legal arguments, case law, and any other relevant information.

Form 8275-R provides penalty protection to taxpayers, as it serves as evidence that the preparer adequately disclosed the position taken on the tax return. The form must be attached to the taxpayer’s position on the return, and the statement attached must include additional information necessary to fully disclose the position.

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The form must be completed if the taxpayer’s position on a return lacks substantial authority or reasonable basis, or if it is a reportable transaction. It is also required if the position is contrary to a regulation, revenue ruling, or other authority, or if it is a non-tax shelter item with a potential controversy.

It is also filed with the taxpayer’s return, and it is subject to public inspection. Taxpayers need to consult the Internal Revenue Manual and relevant regulations to determine how much detail should be included on the form. Furthermore, qualified amended returns may also be used to disclose positions that were not disclosed before.

This is also used by tax return preparers to disclose positions taken on a tax return that may be subject to accuracy-related penalties, and to provide information necessary to protect taxpayers from potential controversies in the future.

What is the difference between Form 8275 and 8275-R?

When it comes to disclosing positions that may be subject to accuracy-related penalties, tax return preparers have two options: Form 8275 and Form 8275-R.

Form 8275 is used to disclose positions taken on a tax return that lack substantial authority or a reasonable basis. It is also used to disclose reportable transactions, or positions that are contrary to IRS regulations, revenue rulings, or other authorities. This form can be used for tax shelters and non-tax shelter items alike.

On the other hand, Form 8275-R is specifically designed for disclosing positions that are contrary to Treasury regulations. As a Regulation Disclosure Statement form, it is used to disclose relevant facts affecting the tax treatment of items on a tax return that are contrary to a regulation. This form is only used for non-tax shelter items.

One key difference between the two forms is that Form 8275 provides no penalty protection for the taxpayer, while Form 8275-R does. This means that if a tax return preparer uses Form 8275-R to adequately disclose a position that may be subject to accuracy-related penalties, the taxpayer may be protected from those penalties. Another difference is that Form 8275-R requires the preparer to include legal arguments, case law, and any other relevant information in the statement attached to the form.

When it comes to how much detail should be included on the forms, both require a statement attached that includes additional information necessary to fully disclose the position. Taxpayers should consult the Internal Revenue Manual and relevant regulations to determine how much detail is necessary.

Completing the form

Completing Form 8275-R requires providing a Regulation Disclosure Statement to the IRS, disclosing positions taken on a tax return for which there is no substantial authority or adequate disclosure.

What to include

The statement must include relevant facts affecting the tax treatment of the item, the taxpayer’s position on the item, and any legal arguments supporting the position taken.

Additional information

If the position taken is contrary to a regulation, the form must disclose the specific regulation and provide any additional information required.

Accuracy

Completing Form 8275-R is crucial in avoiding accuracy-related penalties or preparer penalties, and the form must be attached to the tax return or qualified amended return filed with the IRS.

FAQ About Form 5329 Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts

What is a reasonable basis form 8275-R?

Reasonable basis is a standard of tax reporting that requires a taxpayer to have a justifiable basis for taking a position on their tax return. In the context of Form 8275-R, reasonable basis refers to the minimum level of support necessary to take a position on a tax return for which there is no substantial authority or adequate disclosure. If a taxpayer has a reasonable basis for their position, they can attach Form 8275-R to their tax return to provide the IRS with a disclosure statement outlining their position and supporting evidence. However, if the IRS determines that the position taken does not have a reasonable basis, accuracy-related penalties or other consequences may apply.

When should I file Form 8275-R?

A: You should file Form 8275-R when you take a position on a tax regulation that is not supported by clear statutory authority, judicial precedent, or administrative guidance.

What happens after I file Form 8275-R?

The IRS will review your disclosure and may contact you if they have questions or need additional information. If your position is deemed to be unreasonable or lacking in support, you may be subject to penalties.

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Form 8275R – Regulation Disclosure Statement 2013