Department of the Treasury
Instructions for Form 8275 Internal Revenue Service
(Rev. February 2009)
(Use with the August 2008 revision of Form 8275.)
Disclosure Statement
8275-R, Regulation Disclosure which they originated. You do not
What’s New Statement, instead of Form 8275. have to file another Form 8275 for
Changes have been made to For items attributable to a those items for the tax years in which
penalties for tax return preparers as a pass-through entity, disclosure should the carryover is taken into account.
result of P.L. 110-343, section 506. be made on the tax return of the Carryback items must be disclosed
For more information, see Tax Return entity. If the entity does not make the for the tax year in which they
Preparer Penalties on page 2. disclosure, the partner (or originated. You do not have to file
shareholder, etc.) can make another Form 8275 for those items for
General Instructions adequate disclosure of these items. the tax years in which the carryback
Section references are to the Internal Exception to filing Form 8275. is taken into account.
Revenue Code unless otherwise Guidance is published annually in a However, if you disclose items of a
noted. revenue procedure in the Internal recurring nature (such as
Revenue Bulletin. This can be found depreciation expense), you must file
Purpose of Form on the Internet at www.irs.gov. The Form 8275 for each tax year in which
revenue procedure identifies the item occurs.
Form 8275 is used by taxpayers and
circumstances when an item reported
tax return preparers to disclose items If you are disclosing a position that
on a return is considered adequate
or positions, except those taken is contrary to a rule, and the position
disclosure for purposes of the
contrary to a regulation, that are not relates to a reportable transaction as
substantial understatement aspect of
otherwise adequately disclosed on a defined in Regulations section
the accuracy-related penalty and for
tax return to avoid certain penalties. 1.6011-4(b), you must also make the
avoiding the preparer’s penalty
The form is filed to avoid the portions disclosure required by Regulations
relating to understatements due to
of the accuracy-related penalty due to section 1.6011-4(b). See Form 8886,
unreasonable positions. See the
disregard of rules or to a substantial Reportable Transaction Disclosure
Example below. You do not have to
understatement of income tax for Statement, its instructions, and
file Form 8275 for items that meet the
non-tax shelter items if the return Rev. Proc. 2004-45, 2004-31 I.R.B.
requirements listed in this revenue
position has a reasonable basis. It 140, available at www.irs.gov/irb/
procedure.
can also be used for disclosures 2004-31_IRB/ar19.html.
relating to preparer penalties for Example. Generally, you will
understatements due to have met the requirements for
adequate disclosure of a charitable Accuracy-Related
unreasonable positions or disregard
of rules. contribution deduction if you complete Penalty
the contributions section of Schedule Generally, the accuracy-related
The portion of the A (Form 1040) and supply all the penalty is 20% of any portion of a tax
! accuracy-related penalty
CAUTION attributable to the following
required information. If you make a
contribution of property other than
underpayment attributable to:
cash that is over $500, the form 1. Negligence or disregard of rules
types of misconduct cannot be
required by the Schedule A or regulations,
avoided by disclosure on Form 8275.
instructions must be attached to your 2. Any substantial understatement
• Negligence. return. of income tax,
• Disregard of regulations. 3. Any substantial valuation
• Any substantial understatement of How To File misstatement under chapter 1 of the
income tax on a tax shelter item. Internal Revenue Code,
File Form 8275 with your original tax
• Any substantial valuation return. Keep a copy for your records.
4. Any substantial overstatement
misstatement under chapter 1. of pension liabilities, or
You may be able to file Form 8275
• Any substantial overstatement of with an amended return. See
5. Any substantial estate or gift tax
pension liabilities. valuation understatement.
Regulations sections 1.6662-4(f) and
• Any substantial estate or gift tax 1.6664-2(c)(3) for more information. However, the penalty is 40% of
valuation understatements. any portion of a tax underpayment
To make adequate disclosure for
items reported by a pass-through attributable to one or more gross
Who Should File entity, you must complete and file a valuation misstatements in (3), (4), or
Form 8275 is filed by individuals, separate Form 8275 for items (5) above if the applicable dollar
corporations, pass-through entities, reported by each entity. limitation under section 6662(h)(2) is
and income tax return preparers. If Carrybacks, carryovers, and met.
you are disclosing a position taken recurring items. Carryover items Reasonable basis. Generally, you
contrary to a regulation, use Form must be disclosed for the tax year in can avoid the disregard of rules and
Cat. No. 62063F
substantial understatement portions basis for the tax treatment of the item. The penalty will not apply if it can
of the accuracy-related penalty if the (In no event will a corporation be be shown that there was reasonable
position is adequately disclosed and treated as having a reasonable basis cause for the understatement and
the position has at least a reasonable for its tax treatment of an item that the preparer acted in good faith.
basis. Reasonable basis is a attributable to a multi-party financing In cases where any part of the
relatively high standard of tax transaction entered into after August understatement of the liability is due
reporting that is significantly higher 5, 1997, if the treatment does not to a willful attempt by the return
than not frivolous or not patently clearly reflect the income of the preparer to understate the liability, or
improper. The reasonable basis corporation.) if the understatement is due to
standard is not satisfied by a return reckless or intentional disregard of
position that is merely arguable. For corporate tax shelter
transactions (and for tax shelter items rules or regulations by the preparer,
The penalty will not be imposed on of other taxpayers for tax years the preparer is subject to a penalty
any part of an underpayment if there ending after October 22, 2004), the equal to the greater of $5,000 or 50
was reasonable cause for your only exception to the substantial percent of the income derived (or to
position and you acted in good faith understatement portion of the be derived) by the tax return preparer
in taking that position. accuracy-related penalty is the with respect to the return or claim.
If you failed to keep proper books reasonable cause exception. For This penalty shall be reduced by the
and records or failed to substantiate more details, see section 6662(d) and amount of the penalty paid by such
items properly, you cannot avoid the Regulations section 1.6664-4. person for taking an unreasonable
penalty by disclosure. position, or a position with no
Tax shelter items. A tax shelter, for reasonable basis, as described
Substantial Understatement purposes of the substantial immediately above.
understatement portion of the
An understatement is the excess of: accuracy-related penalty, is a A preparer is not considered to
1. The amount of tax required to partnership or other entity, plan, or have recklessly or intentionally
be shown on the return for the tax arrangement, with a significant disregarded a rule if a position is
year, over purpose to avoid or evade federal adequately disclosed and has a
2. The amount of tax shown on income tax. For transactions on or reasonable basis.
the return for the tax year, reduced by before August 5, 1997, a tax shelter Note. For more information about
any rebates. is a partnership or other entity, plan, the accuracy-related penalty and
or arrangement, whose principal preparer penalties, and the means of
There is a substantial purpose is to avoid or evade federal avoiding these penalties, see the
understatement of income tax if the income tax. regulations under section 6662, 6664,
amount of the understatement for any and 6694.
tax year exceeds the greater of: A tax shelter item is any item of
income, gain, loss, deduction, or
1. 10% of the tax required to be
credit that is directly or indirectly
shown on the return for the tax year,
or attributable to the principal or Specific Instructions
significant purpose of the tax shelter Be sure to supply all the information
2. $5,000 ($10,000 for a
to avoid or evade federal income tax. for Parts I, II, and, if applicable, Part
corporation other than an S
corporation or a personal holding III. Your disclosure will be considered
company as defined in section 542).
Tax Return Preparer adequate if you file Form 8275 and
Penalties supply the information requested in
An understatement of a A preparer who files a return or claim detail.
corporation (other than an S for refund is subject to a penalty in an Use Part IV on page 2 if you need
corporation or a personal holding amount equal to the greater of $1,000 more space for Part I or II. Indicate
company) is substantial if it exceeds or 50 percent of the income derived the corresponding part and line
the lesser of: (or to be derived) by the tax return number from page 1. You can use a
1. 10% of the tax required to be preparer, with respect to the return or continuation sheet(s) if you need
shown on the return for the tax year claim, for taking a position which the additional space. Be sure to put your
(or, if greater, $10,000), or preparer knew or reasonably should name and identifying number on each
2. $10,000,000. have known would understate any sheet.
part of the liability if:
For purposes of the substantial • There is or was no substantial Part I
understatement portion of the authority for the position.
Column (a). If you are disclosing a
accuracy-related penalty, the amount • The position is a tax shelter (as position contrary to a rule (such as a
of the understatement will be reduced defined in section 6662(d)(2)(C)(ii)) or
statutory position or IRS revenue
by the part that is attributable to the a reportable transaction to which
ruling), you must identify the rule in
following items. section 6662A applies and it was not
column (a).
• An item (other than a tax shelter reasonable to believe that the
item) for which there was substantial position would more likely than not be Column (b). Identify the item by
authority for the treatment claimed at sustained on its merits. name.
the time the return was filed or on the • The position was disclosed as If any item you disclose is from a
last day of the tax year to which the provided in section 6662(d)(2)(B)(ii), pass-through entity, you must identify
return relates. is not a tax shelter or a reportable the item as such. If you disclose
• An item (other than a tax shelter transaction to which section 6662A items from more than one
item) that is adequately disclosed on applies, and there was no reasonable pass-through entity, you must
this form if there is a reasonable basis for the position. complete a separate Form 8275 for
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each entity. Also, see How To File on For example, your disclosure will not You are not required to provide the
page 1. be considered adequate if you attach information requested on a form that
Column (c). Enter a complete a copy of an acquisition agreement to is subject to the Paperwork Reduction
description of the item(s) you are your tax return to disclose the issues Act unless the form displays a valid
disclosing. involved in determining the basis of OMB control number. Books or
Example. If entertainment certain acquired assets. If Form 8275 records relating to a form or its
expenses were reported in column is not completed and attached to the instructions must be retained as long
(b), then list in column (c) “theater return, the disclosure will not be as their contents may become
tickets, catering expenses, and considered valid even if the material in the administration of any
banquet hall rentals.” information described above is Internal Revenue law. Generally, tax
provided using another method, such returns and return information are
If you claim the same tax treatment as a different form or an attached confidential, as required by section
for a group of similar items in the letter. 6103.
same tax year, enter a description
identifying the group of items you are The time needed to complete and
disclosing rather than a separate
Part III file this form will vary depending on
description of each item within the Line 4. Contact your pass-through individual circumstances. The
group. entity if you do not know where its estimated burden for individual
return was filed. However, for taxpayers filing this form is approved
Columns (d) through (f). Enter the under OMB control number
location of the item(s) by identifying partners and S corporation
shareholders, information for line 4 1545-0074 and is included in the
the form number or schedule and the estimates shown in the instructions
line number in columns (d) and (e) can be found on the Schedule K-1
that you received from the for their individual income tax return.
and the amount of the item(s) in The estimated burden for all other
column (f). partnership or S corporation.
taxpayers who file this form is shown
If the pass-through entity filed its
below.
Part II return electronically using e-file, enter
Your disclosure statement must “e-file” on line 4. Recordkeeping . . . . . . . . 3 hr., 35 min.
include a description of the relevant Paperwork Reduction Act Notice. Learning about the law
facts affecting the tax treatment of the We ask for the information on this or the form . . . . . . . . . 1 hr.
item. To satisfy this requirement you form to carry out the Internal Preparing and sending
must include information that Revenue laws of the United States. the form to the IRS . . . 1 hr., 6 min.
reasonably can be expected to You are required to give us the
apprise the IRS of the identity of the information if you wish to use this If you have comments concerning
item, its amount, and the nature of form to make adequate disclosure to the accuracy of these time estimates
the controversy or potential avoid the portion of the or suggestions for making this form
controversy. Information concerning accuracy-related penalty due to a simpler, we would be happy to hear
the nature of the controversy can substantial understatement of income from you. See the instructions for the
include a description of the legal tax or disregard of rules, or to avoid tax return with which this form is filed.
issues presented by the facts. certain preparer penalties. We need it
Your disclosure will not be to ensure that you are complying with
! considered accurate unless
CAUTION the information described
these laws and to allow us to figure
and collect the right amount of tax.
above is provided using Form 8275.
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