Federal Register / Vol. 74, No. 193 / Wednesday, October 7, 2009 / Proposed Rules 51527 

governmental jurisdictions as 

governments of cities, counties, towns, 

townships, villages, school districts, or 

special districts with a population of 

less than 50,000. Under this definition, 

the Census Bureau estimates that there 

are 37,204 general purpose 

governmental units impacted by this 

rule that would be considered small 

entities based upon the 2008 population 

estimates. Although a substantial 

number of small entities would be 

impacted by this rule, the proposed rule 

is not expected to result in significant 

economic impact. The suspension of the 

Population Estimates Challenge Program 

does not directly impose economic costs 

to the impacted entities, as the program 

is a mechanism to allow affected entities 

to seek corrections to their population 

estimates. The indirect impacts of this 

rulemaking are unknown as it is 

infeasible to identify the programs that 

rely on the population estimates and to 

determine which of those programs 

would avail themselves of the challenge 

program results. However, it is noted 

that the 2010 Census population counts 

will be available shortly thereafter for 

comprehensive use in various programs 

in lieu of the population estimates. 

List of Subjects in 15 CFR Part 90 

Administrative practice and 

procedure; Census data; State and local 

governments. 

For reasons discussed in the 

preamble, the Census Bureau proposed 

to amend 15 CFR Part 90 as follows: 

PART 90—PROCEDURE FOR 

CHALLENGING CERTAIN 

POPULATION AND INCOME 

ESTIMATES [AMENDED] 

1. The authority citation for Part 90 

continues to read as follows: 

Authority: 13 U.S.C. 4. 

2. Effective January 1, 2010, PART 

90—PROCEDURE FOR CHALLENGING 

CERTAIN POPULATION AND INCOME 

ESTIMATES is stayed. 

Dated: September 30, 2009. 

Robert M. Groves, 

Director, Bureau of the Census. 

[FR Doc. E9–24164 Filed 10–6–09; 8:45 am] 

BILLING CODE 3510–07–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 301 

[REG–160871–04] 

RIN 1545–BH37 

Period of Limitations on Assessment 

for Listed Transactions Not Disclosed 

Under Section 6011 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This document contains 

proposed regulations relating to the 

exception to the general three-year 

period of limitations on assessment 

under section 6501(c)(10) of the Internal 

Revenue Code (Code) for listed 

transactions that a taxpayer failed to 

disclose as required under section 6011. 

These regulations will affect taxpayers 

who fail to disclose listed transactions 

in accordance with section 6011. 

DATES: Written or electronic comments 

and requests for a public hearing must 

be received by January 5, 2010. 

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–160871–04), room 

5203, Internal Revenue Service, P.O. 

Box 7604, Ben Franklin Station, 

Washington, DC 20044. Submissions 

may be hand-delivered Monday through 

Friday between the hours of 8 a.m. and 

4 p.m. to: CC:PA:LPD:PR (REG–160871– 

04), Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue, 

NW., Washington, DC, or sent 

electronically via the Federal 

eRulemaking Portal at http:// 

www.regulations.gov (IRS REG–160871– 

04). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulations, 

Audra M. Dineen at (202) 622–4910; 

concerning submissions of comments 

and requests for a public hearing, 

Oluwafunmilayo Taylor of the 

Publications and Regulations Branch at 

(202) 622–7180 (not toll-free numbers). 

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act 

The collection of information 

contained in this notice of proposed 

rulemaking has been reviewed and 

approved by the Office of Management 

and Budget in accordance with the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3507(d)) under control number 

1545–1940. The collection of 

information in these proposed 

regulations is in § 301.6501(c)–1(g)(5). 

This information is required to provide 

the IRS, under penalties of perjury, with 

the information necessary to properly 

determine the taxpayer’s applicable 

period of limitations. The collection of 

information in these proposed 

regulations is the same as the collection 

of information in Revenue Procedure 

2005–26 (2005–1 CB 965), which was 

previously reviewed and approved by 

the Office of Management and Budget 

under control number 1545–1940. The 

collection of information in 

§ 301.6501(c)–1(g)(6) is the same as the 

collection of information required under 

section 6112. See § 601.601(d)(2)(ii)(b). 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a valid control 

number assigned by the Office of 

Management and Budget. 

Books or records relating to a 

collection of information must be 

retained as long as their contents may 

become material in the administration 

of any internal revenue law. Generally, 

tax returns and tax return information 

are confidential, as required by 26 

U.S.C. 6103. 

Background 

This document contains proposed 

amendments to the Procedure and 

Administration Regulations (26 CFR 

Part 301) under section 6501(c) relating 

to exceptions to the period of 

limitations on assessment. Section 

6501(a) provides that, except as 

otherwise provided, if a return is filed, 

tax with respect to that return must be 

assessed within 3 years from the later of 

the date the return was filed or the 

original due date of the return. Section 

6501(c) contains several exceptions to 

the general three-year period of 

limitations on assessment. 

Section 6501(c)(10) was added to the 

Code by section 814 of the American 

Jobs Creation Act of 2004, Public Law 

108–357 (118 Stat. 1418, 1581 (2004)) 

(AJCA), enacted on October 22, 2004. 

Section 6501(c)(10) provides that, if a 

taxpayer fails to disclose a listed 

transaction as required under section 

6011, the time to assess tax against the 

taxpayer with respect to that transaction 

will end no earlier than one year after 

the earlier of (1) the date on which the 

taxpayer furnishes the information 

required under section 6011, or (2) the 

date that a material advisor furnishes to 

the Secretary, upon written request, the 

information required under section 6112 

with respect to the taxpayer related to 

the listed transaction. Accordingly, if 

neither the taxpayer nor a material 

advisor furnishes the requisite 

information, the period of limitations on 

assessment will remain open, and thus, 

the tax with respect to the listed 


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51528 Federal Register / Vol. 74, No. 193 / Wednesday, October 7, 2009 / Proposed Rules 

transaction may be assessed at any time. 

Section 6501(c)(10) is effective for 

taxable years with respect to which the 

period of limitations on assessment did 

not expire prior to October 22, 2004. 

As noted, section 6501(c)(10) applies 

when a taxpayer does not properly 

disclose a listed transaction (as defined 

in section 6707A(c)(2)) as required 

under section 6011. Taxpayers are 

required under section 6011 and the 

regulations under section 6011 

(collectively referred to as the ‘‘section 

6011 disclosure rules’’) to disclose 

certain information regarding each 

reportable transaction in which the 

taxpayer participated. See Treas. Reg. 

§§ 1.6011–4; 20.6011–4; 25.6011–4; 

31.6011–4; 53.6011–4; 54.6011–4; and 

56.6011–4. Among the transactions that 

are reportable are ‘‘listed transactions.’’ 

See Treas. Reg. § 1.6011–4(b)(2). Under 

the section 6011 disclosure rules, a 

listed transaction is a transaction that is 

the same as, or substantially similar to, 

a transaction that the IRS has 

determined to be a tax avoidance 

transaction and identified by notice, 

regulation, or other form of published 

guidance. Treas. Reg. § 1.6011–4(b)(2). 

Section 6707A(c)(2) incorporates the 

same definition of listed transaction. For 

a list of transactions the IRS has 

identified as listed transactions, see 

Notice 2009–59, 2009–31 IRB 1. See 

§ 601.601(d)(2). 

If the section 6011 disclosure rules 

require a taxpayer to disclose a listed 

transaction, the taxpayer must complete 

and file a disclosure statement in 

accordance with the section 6011 

disclosure rules. The section 6011 

disclosure rules currently require that 

Form 8886, ‘‘Reportable Transaction 

Disclosure Statement’’ (or successor 

form), be used as the disclosure 

statement and be completed in 

accordance with the instructions to the 

form. The Form 8886 (or successor 

form) generally must be attached to the 

taxpayer’s original or amended tax 

return for each taxable year for which a 

taxpayer participates in a listed 

transaction. Treas. Reg. § 1.6011–4(e)(1). 

If a listed transaction results in a loss 

that is carried back to a prior year, Form 

8886 (or successor form) must be 

attached to the taxpayer’s application 

for tentative refund or amended tax 

return for that prior year. The taxpayer 

also must send a copy of Form 8886 (or 

successor form) to the IRS Office of Tax 

Shelter Analysis (OTSA), generally at 

the same time that a disclosure 

statement pertaining to a particular 

listed transaction is first filed. Under the 

current rules, when a transaction is 

identified as a listed transaction after 

the date on which the taxpayer files a 

tax return (including an amended 

return) for a taxable year reflecting the 

taxpayer’s participation in the listed 

transaction and before the end of the 

period of limitations for assessment of 

tax for any taxable year in which the 

taxpayer participated in the listed 

transaction, then the taxpayer must file 

Form 8886 (or successor form) with 

OTSA within 90 calendar days after the 

date the transaction became a listed 

transaction. 

If a taxpayer does not disclose its 

participation in a listed transaction in 

accordance with all of the requirements 

of the section 6011 disclosure rules and 

section 6501(c)(10) applies, then the 

time to assess tax related to the listed 

transaction will expire no earlier than 

the earlier of (1) one year after the date 

on which the information described in 

section 6501(c)(10)(A) is provided, or (2) 

one year after the date on which the 

information described in section 

6501(c)(10)(B) is provided. 

The IRS and Treasury Department 

issued Rev. Proc. 2005–26 (2005–1 CB 

965) on April 25, 2005, to provide 

interim guidance on section 6501(c)(10). 

The revenue procedure prescribes how 

taxpayers and material advisors should 

disclose listed transactions that were 

not properly disclosed under section 

6011 in order to start the one-year 

period under section 6501(c)(10). 

Taxpayers may continue to rely on Rev. 

Proc. 2005–26 until temporary or final 

regulations are issued under section 

6501(c)(10). See § 601.601(d)(2). In that 

revenue procedure, the IRS and 

Treasury Department also requested 

comments concerning the procedures 

set forth in the revenue procedure, 

especially their application to partners 

and partnerships. One comment was 

received but it did not address the 

limitations period. 

Explanation of Provisions 

These proposed regulations provide 

rules reflecting the enactment of section 

6501(c)(10) by the AJCA. They explain 

how to determine whether section 

6501(c)(10) applies and, if so, the 

applicable period of limitations on 

assessment. As a preliminary matter, the 

effective date of section 6501(c)(10) 

limits its application to taxable years 

with respect to which the period of 

limitations on assessment was open on 

or after October 22, 2004 (the date the 

AJCA was enacted). Thus, for taxable 

years for which a return was due prior 

to October 22, 2004, an analysis under 

section 6501 must be conducted to 

determine if the period of limitations on 

assessment was open under the general 

three-year period or an exception other 

than section 6501(c)(10). 

1. Application of Section 6501(c)(10) 

The general rule for applying section 

6501(c)(10) is set forth in § 301.6501(c)– 

1(g)(1) of these proposed regulations. 

The first step in analyzing whether 

section 6501(c)(10) applies is to 

determine whether the taxpayer failed 

to comply with any disclosure 

obligation under the section 6011 

disclosure rules with respect to a listed 

transaction (as defined in section 

6707A(c)(2)) for any taxable year. The 

IRS and Treasury Department have 

issued several regulations under section 

6011, some of which apply only to 

certain types of taxpayers. The 

disclosure requirements also vary 

among the regulations. Therefore, 

particular attention must be paid to the 

effective dates of the various section 

6011 disclosure rules in order to 

determine whether there was a 

disclosure obligation. 

If there was no obligation to disclose 

the listed transaction, or if the taxpayer 

complied with its disclosure 

obligations, then section 6501(c)(10) 

does not apply. If there was a disclosure 

obligation and a failure to disclose as 

required, then section 6501(c)(10) 

applies. Section 6501(c)(10) applies to 

all open years for which the taxpayer 

failed to disclose its participation in the 

transaction as required under the 

section 6011 disclosure rules, even if 

the disclosures required under section 

6011 were not due in, or with a return 

for, the year of participation but were 

due in a later year when the transaction 

was subsequently identified as a listed 

transaction. If section 6501(c)(10) 

applies because a taxpayer failed to 

disclose a listed transaction and the 

transaction is later removed from the 

category of listed transactions, section 

6501(c)(10) will continue to apply with 

respect to the tax years for which 

disclosure was required. If section 

6501(c)(10) applies, then the period of 

limitations with respect to the listed 

transaction will remain open until at 

least the earlier of (1) one year after the 

date on which the taxpayer provides a 

disclosure to satisfy section 

6501(c)(10)(A) (as provided in 

§ 301.6501(c)–1(g)(5) described 

elsewhere in this preamble), or (2) one 

year after the date on which a material 

advisor provides the IRS with 

information concerning the taxpayer’s 

participation in the transaction 

sufficient to satisfy section 

6501(c)(10)(B) (as provided in 

§ 301.6501(c)–1(g)(6) described 

elsewhere in this preamble). If either 

paragraph (g)(5) or (g)(6) is satisfied, the 

period of limitations on assessment will 

end under the circumstances described 


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Federal Register / Vol. 74, No. 193 / Wednesday, October 7, 2009 / Proposed Rules 51529 

in § 301.6501(c)–1(g)(2) of these 

proposed regulations. 

Section 301.6501(c)–1(g)(2) of these 

proposed regulations also provides 

guidance on how section 6501(c)(10) 

interacts with the otherwise applicable 

period of limitations provided in the 

Internal Revenue Code. The proposed 

regulations confirm that section 

6501(c)(10) does not operate to extend a 

limitations period that expired before 

the effective date of section 6501(c)(10) 

or before the date on which the failure 

to disclose occurs. In addition, a 

taxpayer or material advisor cannot 

shorten any other applicable period of 

limitations on assessment by following 

the procedures to begin the one-year 

period provided under section 

6501(c)(10), including, but not limited 

to, a limitations period that has been 

extended by agreement under section 

6501(c)(4), or the limitations period 

described in section 6501(c)(1) relating 

to a false or fraudulent return. 

The terms ‘‘listed transaction,’’ 

‘‘material advisor,’’ and ‘‘taxable year(s) 

to which the failure to disclose relates’’ 

are defined in § 301.6501(c)–1(g)(3) of 

these proposed regulations by crossreference to section 6707A and the 

relevant regulations under sections 6011 

and 6111. 

Under section 6501(c)(10), the term 

‘‘listed transaction’’ is defined by 

reference to section 6707A(c)(2), which 

defines a listed transaction as ‘‘a 

reportable transaction that is the same 

as, or substantially similar to, a 

transaction specifically identified by the 

Secretary as a tax avoidance transaction 

for purposes of section 6011.’’ Although 

section 6707A was enacted by section 

811 of the AJCA and is effective for 

returns and statements due after October 

22, 2004, and which were not filed 

before that date, its definition of ‘‘listed 

transactions’’ incorporates transactions 

identified as listed transactions in the 

section 6011 disclosure rules before 

section 6707A was enacted. 

Accordingly, any transactions that were 

listed transactions as of October 22, 

2004, under the section 6011 disclosure 

rules are listed transactions under 

section 6707A and, thus, for purposes of 

section 6501(c)(10). Therefore, section 

6501(c)(10) applies to transactions that 

were identified as listed transactions 

prior to October 22, 2004. 

The term ‘‘taxable year(s) to which the 

failure to disclose relates’’ identifies the 

years to which section 6501(c)(10) 

applies. Clarification is necessary 

because a taxpayer may participate in a 

listed transaction over multiple years, 

because a transaction may be identified 

as a listed transaction after the taxpayer 

enters into the transaction, and because 

the section 6011 disclosure rules may 

require disclosure in a year in which the 

taxpayer did not participate in the listed 

transaction. The term ‘‘taxable year(s) to 

which the failure to disclose relates’’ 

means each taxable year that the 

taxpayer participated (as defined by the 

regulations under section 6011) in a 

transaction that was identified as a 

listed transaction and for which there 

was no proper disclosure when required 

under the section 6011 disclosure rules. 

For these purposes, it does not matter 

whether the transaction was identified 

as a listed transaction before or after the 

taxpayer filed a tax return for any 

taxable year in which the taxpayer 

participated in the transaction. On 

occasion, the section 6011 disclosure 

rule may require that a disclosure be 

filed in a taxable year or with a tax 

return for a taxable year other than the 

taxable year in which the taxpayer 

participated in the listed transaction. In 

those circumstances, the taxable year(s) 

to which the failure to disclose relates 

is not the taxable year in which the 

disclosure is required to be filed, but 

each taxable year that the taxpayer 

participated in the listed transaction. 

Section 301.6501(c)–1(g)(4) of these 

proposed regulations provides the rule 

for application of section 6501(c)(10) in 

the case of taxpayers who are partners 

in partnerships, shareholders in S 

corporations, or beneficiaries of trusts. If 

these taxpayers were required to 

disclose their participation in a listed 

transaction under the section 6011 

disclosure rules, and failed to disclose, 

then the period of limitations on 

assessment with respect to each partner, 

shareholder, or beneficiary that failed to 

disclose will remain open under section 

6501(c)(10) even if the partnership, S 

corporation, or trust disclosed in 

accordance with the section 6011 

disclosure rules and even if another 

partner, shareholder, or beneficiary 

disclosed in accordance with the section 

6011 disclosure rules. This rule is as 

adopted because the period of 

limitations on assessment is specific to 

each taxpayer. Consistent with the 

above rule, a failure to disclose by an 

entity will not cause section 6501(c)(10) 

to apply to all of the taxpayers who are 

partners, shareholders or beneficiaries 

of the entity. 

2. One-Year Period Under Section 

6501(c)(10) 

Guidance on the events that will start 

the one-year period under section 

6501(c)(10) is provided in 

§ 301.6501(c)–1(g)(5) and (6) of these 

proposed regulations. 

a. Disclosures by Taxpayers of Required 

Information 

Under section 6501(c)(10)(A), if there 

is a failure to disclose information 

related to a listed transaction as 

required under the section 6011 

disclosure rules, the time to assess tax 

will end no earlier than one year after 

the date ‘‘the Secretary is furnished the 

information so required.’’ Section 

301.6501(c)–1(g)(5)(i)(A)–(C) of these 

proposed regulations sets forth the 

general procedures for how to furnish 

the information to the IRS. These 

procedures are similar to the ones 

required under the section 6011 

disclosure rules because failure to 

comply with those rules triggers the 

application of section 6501(c)(10). 

Because the rules set forth in 

§ 301.6501(c)–1(g)(5)(i) generally 

concern annual returns, § 301.6501(c)– 

1(g)(5)(ii) provides that the IRS may 

issue published guidance that prescribes 

alternative procedures to address 

particular listed transactions, if 

necessary, in the case of returns other 

than annual returns. 

Section 301.6501(c)–1(g)(5)(i)(A) of 

these proposed regulations provides that 

to begin the one-year period under 

section 6501(c)(10)(A) taxpayers must 

complete Form 8886 (or successor form) 

in accordance with the instructions to 

the form and these proposed regulations 

and submit the completed form with a 

cover letter (as described in 

§ 301.6501(c)–1(g)(5)(i)(B)) to OTSA. 

Under the procedures set forth in 

Revenue Procedure 2005–26, taxpayers 

were required to submit the completed 

form and cover letter both to OTSA and 

the Internal Revenue Service Center 

where the taxpayer filed its original 

return in all cases and, if applicable, to 

an IRS examiner or Appeals officer. 

These proposed regulations simplify the 

procedures taxpayers need to follow by 

only requiring them to submit the 

information to one IRS office instead of 

two, unless the taxpayer also needs to 

submit a copy to an IRS examiner or 

Appeals officer, as discussed later in 

this Preamble. 

Taxpayers must complete the most 

current version of the form available at 

the time the taxpayer attempts to satisfy 

section 6501(c)(10). In other words, if 

the Form 8886 (or successor form) 

changes between the date that the 

taxpayer was required to disclose the 

listed transaction under the section 

6011 disclosure rules and the date that 

the taxpayer discloses the listed 

transaction for purposes of section 

6501(c)(10), then the taxpayer must 

follow the rules in effect on the date of 

the section 6501(c)(10) disclosure. 


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The taxpayer also must indicate on 

the form that the disclosure is for 

purposes of section 6501(c)(10) and the 

tax return(s) and taxable year(s) for 

which the taxpayer is making a section 

6501(c)(10) disclosure. The section 

6501(c)(10) disclosure will only be 

effective for the tax return(s) and taxable 

year(s) that the taxpayer specifies he or 

she is attempting to disclose for 

purposes of section 6501(c)(10). Thus, 

for example, if a taxpayer failed to 

disclose the taxpayer’s participation in 

a listed transaction in three taxable 

years but the taxpayer’s section 

6501(c)(10) disclosure only specifies 

one taxable year, then the period of 

limitations on assessment for the other 

two taxable years will remain open 

under section 6501(c)(10). If the Form 

8886 (or successor form) contains a line 

for that purpose, then taxpayers may use 

that line, so long as the line is 

completed in accordance with the 

instructions to the form. If no line is 

provided on the form, then the taxpayer 

must include on the top of Page 1 of the 

Form 8886, and each copy of the form, 

the following statement: ‘‘Section 

6501(c)(10) Disclosure’’ followed by the 

tax return(s) and taxable year(s) for 

which the taxpayer is making a section 

6501(c)(10) disclosure. This information 

is necessary to place the IRS on notice 

that the taxpayer is attempting to 

remedy its failure to properly disclose 

the listed transaction and, thus, the oneyear period will start to run with respect 

to the tax years identified. Because the 

IRS may have as little as one year to 

determine whether to conduct an 

examination and, if it does conduct an 

examination, to determine whether any 

additional tax is due with respect to the 

listed transaction, it is important that 

the IRS receives proper notice that the 

one-year period has started. 

Taxpayers must submit a separate 

Form 8886 (or successor form) and 

cover letter (discussed elsewhere in this 

Preamble) for each listed transaction 

that the taxpayer did not properly 

disclose under the section 6011 

disclosure rules. If the taxpayer 

participated in one listed transaction 

over multiple years, then the taxpayer 

may submit one Form 8886 (or 

successor form), so long as the taxpayer 

indicates on the Form 8886 all of the tax 

returns and taxable years for which the 

taxpayer is making a section 6501(c)(10) 

disclosure. If a taxpayer participated in 

more than one listed transaction, then 

the taxpayer must submit separate 

Forms 8886 (or successor form) for each 

listed transaction, unless the listed 

transactions are the same or 

substantially similar, in which case all 

the listed transactions may be reported 

on one Form 8886. 

Section 301.6501(c)–1(g)(5)(i)(B) of 

these proposed regulations provides the 

requirements for the cover letter. The 

cover letter must identify the tax 

return(s) and taxable year(s) for which 

the taxpayer is making a section 

6501(c)(10) disclosure. In addition, the 

cover letter must include the statement 

provided in § 301.6501(c)–1(g)(5)(i)(B) 

signed under penalties of perjury by the 

taxpayer and, if applicable, by the paid 

preparer preparing the Form 8886. The 

cover letter is necessary because the 

Form 8886 does not currently contain a 

penalties-of-perjury statement or place 

for signature. 

A special rule for taxpayers under 

examination or Appeals consideration 

by the IRS is provided in § 301.6501(c)– 

1(g)(5)(i)(C) of these proposed 

regulations. If the taxpayer wants to 

make a section 6501(c)(10) disclosure 

for a taxable year or a listed transaction 

under examination or Appeals 

consideration, then, in addition to the 

otherwise applicable filing obligations 

set forth in § 301.6501(c)–1(g)(5)(i)(A), 

the taxpayer must submit a copy of the 

submission made under paragraph 

(g)(5)(i)(A) to the IRS examiner or 

Appeals officer examining or 

considering the taxable year to which 

the section 6501(c)(10) disclosure 

relates. This rule is adopted to ensure 

that the IRS personnel who are 

considering the taxpayer’s tax year(s) at 

issue are made aware as soon as 

possible that the one-year period under 

section 6501(c)(10) may have started to 

run, so that whatever action is necessary 

can be taken within the one-year period. 

Section 301.6501(c)–1(g)(5)(i)(D) 

provides guidance concerning the date 

on which the taxpayer is considered to 

have furnished the information to the 

IRS to satisfy section 6501(c)(10)(A) and 

start the running of the one-year period. 

The one-year period under section 

6501(c)(10)(A) will begin on the date 

that the taxpayer satisfies all the 

requirements set forth in § 301.6501(c)– 

1(g)(5)(i)(A) through (C). If the required 

procedures are not completed on the 

same date, the one-year period will 

begin on the date that the last procedure 

is satisfied. For example, if a taxpayer 

mails a completed Form 8886 to OTSA 

but not to the IRS examiner or Appeals 

officer who is examining or considering 

the taxable year to which the section 

6501(c)(10) disclosure relates, the oneyear period under section 6501(c)(10)(A) 

will not begin until both events occur. 

Information provided under 

§ 301.6501(c)–1(g)(5) is deemed 

furnished on the date the IRS receives 

the information. Section 7502 does not 

apply to the mailing of the information 

detailed in § 301.6501(c)–1(g)(5), 

because the information is not required 

to be filed within a prescribed period or 

on or before a prescribed date. 

Taxpayers can determine the date the 

IRS receives the information by using a 

delivery service that provides a way to 

track delivery, such as U.S. registered or 

certified mail, express or priority mail, 

or delivery confirmation from the U.S. 

post office or a private delivery service 

that provides tracking. Moreover, 

documentation from the post office or 

private delivery service showing the 

date the information was delivered to 

the IRS, together with evidence that the 

envelope was properly addressed to the 

office to which the information was 

required to be sent, generally will be 

sufficient proof that the IRS received the 

information, unless the IRS can 

establish that it did not in fact receive 

the information. Separate delivery 

confirmation documentation should be 

obtained to establish receipt by OTSA 

and the appropriate IRS revenue agent 

or Appeals officer, if applicable. 

b. Disclosures by Material Advisors 

Under section 6501(c)(10)(B), if a 

taxpayer fails to disclose information 

related to a listed transaction as 

required under the section 6011 

disclosure rules, the time to assess tax 

will end no earlier than one year after 

the date ‘‘a material advisor meets the 

requirements of section 6112 with 

respect to a request by the Secretary 

under section 6112(b) relating to such 

transaction with respect to such 

taxpayer.’’ Section 6112 requires 

material advisors to maintain lists of 

advisees and other information with 

respect to reportable transactions, 

including listed transactions, and to 

furnish that information to the IRS upon 

request. The term ‘‘material advisor’’ is 

defined in § 301.6111–3(b). The IRS and 

Treasury Department finalized 

regulations under section 6112 in TD 

9352 (72 FR 43154) published on 

August 3, 2007. Section 6112 and 

§ 301.6112–1 provide guidance relating 

to the preparation, content, 

maintenance, retention, and furnishing 

of lists by material advisors. 

Section 6501(c)(10)(B) provides that a 

material advisor must satisfy the 

requirements of section 6112 to begin 

the one-year period. Information 

provided in response to another method 

of inquiry, such as an Information 

Document Request in a section 6700 

investigation, will not begin the oneyear period. In addition, § 301.6501(c)– 

1(g)(6)(i) provides that the material 

advisor must furnish the information 

described in § 301.6112–1(e) with 


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respect to the taxpayer that failed to 

properly disclose the listed transaction. 

Thus, if the material advisor furnishes 

the information described in 

§ 301.6112–1(e) for some, or even most, 

of its clients but not for a particular 

taxpayer that failed to properly disclose 

the listed transaction, then the 

assessment period for that taxpayer will 

remain open under section 6501(c)(10). 

Section 301.6501(c)–1(g)(6)(ii) of 

these proposed regulations clarifies that 

the one-year period will begin once the 

material advisor furnishes the 

information in response to an IRS 

request under section 6112, regardless 

of whether the material advisor provides 

the information within 20 business days 

of the IRS’s request as required by 

section 6708. If the material advisor 

furnishes the required information over 

the course of multiple days, the 

requirements of paragraph (g)(6) of this 

section will be deemed satisfied and the 

one-year period will begin on the date 

that the IRS is furnished the information 

that, together with prior information, 

satisfies the requirements of section 

6112 and § 301.6112–1 with respect to 

the taxpayer. The information is deemed 

furnished for purposes of section 

6501(c)(10) on the date the material 

advisor is treated as satisfying the 

requirements of section 6112 under the 

rules applicable to that section. 

3. Taxes That Can Be Assessed Under 

Section 6501(c)(10) 

Section 6501(c)(10) allows the IRS to 

assess any tax with respect to a listed 

transaction for the taxable year(s) to 

which the failure to disclose relates. 

Section 301.6501(c)–1(g)(7) of these 

proposed regulations provides that taxes 

with respect to the listed transaction 

include, but are not limited to, (1) 

adjustments made to the tax 

consequences claimed on the return, (2) 

adjustments to any item to the extent 

the item is affected by the listed 

transaction even if it is unrelated to the 

listed transaction, and (3) interest and 

penalties that are related to the listed 

transaction or the adjustments made to 

the tax consequences (see I.R.C. 

§§ 6601(e)(1) and 6665(a)(2)). An 

example of an item affected by the listed 

transaction but not related to the listed 

transaction is the threshold for the 

medical expense deduction under 

section 213 that varies if there is a 

change in an individual’s adjusted gross 

income. Examples of a penalty related to 

the adjustments made to the tax 

consequences are the accuracy-related 

penalties under sections 6662 and 

6662A. An example of a penalty related 

to the listed transaction is the penalty 

under section 6707A for failure to file 

the disclosure statement reporting the 

taxpayer’s participation in the listed 

transaction. 

4. Examples 

Section 301.6501(c)–1(g)(8) of these 

proposed regulations contains examples 

of the application of section 6501(c)(10) 

to various types of taxpayers 

participating in listed transactions. 

Additional examples illustrate the 

application of the one-year period under 

section 6501(c)(10), the coordination of 

section 6501(c)(10) with other 

limitations periods provided by the 

Internal Revenue Code, and tax that can 

be assessed with respect to a listed 

transaction. 

Proposed Effective/Applicability Date 

When adopted as final regulations, 

these rules will apply to taxable years 

with respect to which the period of 

limitations on assessment did not expire 

before the date of publication of a 

Treasury decision adopting these rules 

as final regulations in the Federal 

Register. However, taxpayers may rely 

on these proposed regulations for 

taxable years with respect to which the 

period of limitations on assessment 

expired before the publication of the 

Treasury decision. Otherwise, Rev. Proc. 

2005–26 continues to apply for taxable 

years to which these regulations do not 

apply and for which the period of 

limitations on assessment did not expire 

before April 8, 2005—the effective date 

of Rev. Proc. 2005–26. 

Effect on Other Documents 

Upon the publication of final 

regulations under section 6501(c)(10) in 

the Federal Register, Rev. Proc. 2005–26 

(2005–1 CB 965) will be superseded for 

taxable years with respect to which the 

period of limitations on assessment did 

not expire before the date of publication 

of a Treasury decision adopting these 

rules as final regulations in the Federal 

Register. 

Special Analyses 

It has been determined that this notice 

of proposed rulemaking is not a 

significant regulatory action as defined 

in Executive Order 12866. Therefore, a 

regulatory assessment is not required. It 

also has been determined that section 

553(b) of the Administrative Procedure 

Act (5 U.S.C. chapter 5) does not apply 

to these regulations. 

It is hereby certified that these 

regulations will not have a significant 

economic impact on a substantial 

number of small entities pursuant to the 

Regulatory Flexibility Act (5 U.S.C. 

chapter 6). Section 6501(c)(10) applies 

when taxpayers fail to comply with the 

reporting requirements set forth in 

section 6011. The Treasury Department 

and the IRS do not know the exact 

number and types of taxpayers that fail 

to comply with those requirements. 

However, although the Treasury 

Department and the IRS are aware that 

many tax avoidance transactions 

involve pass-through entities, when 

pass-through entities are utilized, the 

entities are not ultimately liable for the 

tax; rather, the taxpayers subject to 

section 6501(c)(10) will be the 

individuals and corporations owning, 

directly or indirectly, the interests in the 

pass-though entities. Therefore, the 

Treasury Department and the IRS have 

determined that these proposed 

regulations will not affect a substantial 

number of small entities. 

In addition, the Treasury Department 

and the IRS have determined that any 

impact on small entities resulting from 

these proposed regulations will not be 

significant. Most of the information 

required under these proposed 

regulations is already required by other 

regulations or forms, namely § 1.6011–4, 

§ 301.6112–1, and Form 8886, 

‘‘Reportable Transaction Disclosure 

Statement.’’ The only new information 

required to be submitted to the IRS is a 

cover letter, which must contain a 

reference to the tax returns and taxable 

year(s) at issue and a statement signed 

under penalty of perjury. The cover 

letter should take minimal time and 

expense to prepare. Therefore, the 

additional requirement of the cover 

letter should not significantly increase 

the burden on taxpayers. Based on these 

facts, the Treasury Department and the 

IRS have determined that these 

proposed regulations will not have a 

significant economic impact on a 

substantial number of small entities. 

Pursuant to section 7805(f) of the 

Internal Revenue Code, this notice of 

proposed rulemaking will be submitted 

to the Chief Counsel for Advocacy of the 

Small Business Administration for 

comment on their impact on small 

business. 

Comments and Requests for a Public 

Hearing 

Before these proposed regulations are 

adopted as final regulations, 

consideration will be given to any 

written (a signed original and eight (8) 

copies) or electronic comments that are 

submitted timely to the IRS. The IRS 

and Treasury Department request 

comments on the substance of the 

proposed regulations, as well as on the 

clarity of the proposed rules and how 

they can be made easier to understand. 

All comments submitted by the public 

will be made available for public 


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51532 Federal Register / Vol. 74, No. 193 / Wednesday, October 7, 2009 / Proposed Rules 

inspection and copying. A public 

hearing will be scheduled if requested 

in writing by any person that timely 

submits written comments. If a public 

hearing is scheduled, notice of the date, 

time, and place for the public hearing 

will be published in the Federal 

Register. 

Drafting Information 

The principal author of these 

regulations is Audra M. Dineen of the 

Office of the Associate Chief Counsel 

(Procedure and Administration). 

List of Subjects in 26 CFR Part 301 

Employment taxes, Estate taxes, 

Excise taxes, Gift taxes, Income taxes, 

Penalties, Reporting and recordkeeping 

requirements. 

Proposed Amendments to the 

Regulations 

Accordingly, 26 CFR Part 301 is 

proposed to be amended as follows: 

PART 301—PROCEDURE AND 

ADMINISTRATION 

Paragraph 1. The authority citation 

for part 301 continues to read in part as 

follows: 

Authority: 26 U.S.C. 7805 * * * 

Par. 2. Section 301.6501(c)–1 is 

amended by adding paragraph (g) to 

read as follows: 

§ 301.6501(c)–1 Exceptions to general 

period of limitations on assessment and 

collection. 

(g) Listed transactions—(1) In general. 

If a taxpayer is required to disclose a 

listed transaction under section 6011 

and the regulations under section 6011 

and does not do so in the time and 

manner required, then the time to assess 

any tax attributable to that listed 

transaction for the taxable year(s) to 

which the failure to disclose relates (as 

defined in paragraph (g)(3)(iii) of this 

section) will not expire before the 

earlier of one year after the date on 

which the taxpayer makes the 

disclosure described in paragraph (g)(5) 

of this section or one year after the date 

on which a material advisor makes a 

disclosure described in paragraph (g)(6) 

of this section. 

(2) Limitations period if paragraph 

(g)(5) or (g)(6) is satisfied. If one of the 

disclosure provisions described in 

paragraphs (g)(5) or (g)(6) of this section 

is satisfied, then the tax attributable to 

the listed transaction may be assessed at 

any time before the expiration of the 

limitations period that would have 

otherwise applied under this section 

(determined without regard to 

paragraph (g)(1) of this section) or the 

period ending one year after the date 

that one of the disclosure provisions 

described in paragraphs (g)(5) or (g)(6) 

of this section was satisfied, whichever 

is later. If both disclosure provisions are 

satisfied, the one-year period will begin 

on the earlier of the dates on which the 

provisions were satisfied. Paragraph 

(g)(1) of this section does not apply to 

any period of limitations on assessment 

that expired before the date on which 

the failure to disclose the listed 

transaction under section 6011 

occurred. 

(3) Definitions—(i) Listed transaction. 

The term listed transaction means a 

transaction described in section 

6707A(c)(2) of the Code and § 1.6011– 

4(b)(2) of this chapter. 

(ii) Material advisor. The term 

material advisor means a person 

described in section 6111(b)(1) of the 

Code and § 301.6111–3(b) of this 

chapter. 

(iii) Taxable year(s) to which the 

failure to disclose relates. The taxable 

year(s) to which the failure to disclose 

relates are each taxable year that the 

taxpayer participated (as defined under 

section 6011 and the regulations under 

section 6011) in a transaction that was 

identified as a listed transaction and the 

taxpayer failed to disclose the listed 

transaction as required under section 

6011. If the taxable year in which the 

taxpayer participated in the listed 

transaction is different from the taxable 

year in which the taxpayer is required 

to disclose the listed transaction under 

section 6011, the taxable year(s) to 

which the failure to disclose relates are 

each taxable year that the taxpayer 

participated in the transaction. 

(4) Application of paragraph with 

respect to pass-through entities. In the 

case of taxpayers who are partners in 

partnerships, shareholders in S 

corporations, or beneficiaries of trusts 

and are required to disclose a listed 

transaction under section 6011 and the 

regulations under section 6011, 

paragraph (g)(1) of this section will 

apply to a particular partner, 

shareholder, or beneficiary if that 

particular taxpayer does not disclose 

within the time and in the form and 

manner provided by section 6011 and 

§ 1.6011–4(d) and (e), regardless of 

whether the partnership, S corporation, 

or trust or another partner, shareholder, 

or beneficiary discloses in accordance 

with section 6011 and the regulations 

under section 6011. Similarly, because 

paragraph (g)(1) of this section applies 

on a taxpayer-by-taxpayer basis, the 

failure of a partnership, S corporation, 

or trust that has a disclosure obligation 

under section 6011 and does not 

disclose within the time or in the form 

and manner provided by § 1.6011–4(d) 

and (e) will not cause paragraph (g)(1) 

of this section to apply automatically to 

all the partners, shareholders or 

beneficiaries of the entity. Instead, the 

application of paragraph (g)(1) of this 

section will be determined based on 

whether the particular taxpayer satisfied 

their disclosure obligation under section 

6011 and the regulations under section 

6011. 

(5) Taxpayer’s disclosure of a listed 

transaction that taxpayer did not 

properly disclose under section 6011— 

(i) In general—(A) Method of disclosure. 

The taxpayer must complete the most 

current version of Form 8886, 

‘‘Reportable Transaction Disclosure 

Statement’’ (or successor form), 

available on the date the taxpayer 

attempts to satisfy this paragraph in 

accordance with § 1.6011–4(d) (in effect 

on that date) and the instructions to that 

form. The taxpayer must indicate on the 

Form 8886 that the form is being 

submitted for purposes of section 

6501(c)(10) and the tax return(s) and 

taxable year(s) for which the taxpayer is 

making a section 6501(c)(10) disclosure. 

The section 6501(c)(10) disclosure will 

only be effective for the tax return(s) 

and taxable year(s) that the taxpayer 

specifies he or she is attempting to 

disclose for purposes of section 

6501(c)(10). If the Form 8886 contains a 

line for this purpose then the taxpayer 

must complete the line in accordance 

with the instructions to that form. 

Otherwise, the taxpayer must include 

on the top of Page 1 of the Form 8886, 

and each copy of the form, the following 

statement: ‘‘Section 6501(c)(10) 

Disclosure’’ followed by the tax return(s) 

and taxable year(s) for which the 

taxpayer is making a section 6501(c)(10) 

disclosure. For example, if the taxpayer 

did not properly disclose its 

participation in a listed transaction the 

tax consequences of which were 

reflected on the taxpayer’s Form 1040 

for the 2005 taxable year, the taxpayer 

must include the following statement: 

‘‘Section 6501(c)(10) Disclosure; 2005 

Form 1040’’ on the form. The taxpayer 

must submit the properly completed 

Form 8886 and a cover letter, which 

must be completed in accordance with 

the requirements set forth in paragraph 

(g)(5)(i)(B) of this section, to the Office 

of Tax Shelter Analysis (OTSA). The 

taxpayer is permitted, but not required, 

to file an amended return with the Form 

8886 and cover letter. Separate Forms 

8886 and separate cover letters must be 

submitted for each listed transaction the 

taxpayer did not properly disclose 

under section 6011. If the taxpayer 

participated in one listed transaction 


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over multiple years, the taxpayer may 

submit one Form 8886 (or successor 

form) and cover letter and indicate on 

that form all of the tax returns and 

taxable years for which the taxpayer is 

making a section 6501(c)(10) disclosure. 

If a taxpayer participated in more than 

one listed transaction, then the taxpayer 

must submit separate Forms 8886 (or 

successor form) for each listed 

transaction, unless the listed 

transactions are the same or 

substantially similar, in which case all 

the listed transactions may be reported 

on one Form 8886. 

(B) Cover letter. A cover letter to 

which a Form 8886 is to be attached 

must identify the tax return(s) and 

taxable year(s) for which the taxpayer is 

making a section 6501(c)(10) disclosure 

and include the following statement 

signed under penalties of perjury by the 

taxpayer and if the Form 8886 is 

prepared by a paid preparer, the Form 

8886 must be signed under penalties of 

perjury by the paid preparer as well: 

Under penalties of perjury, I declare that I 

have examined this reportable transaction 

disclosure statement and, to the best of my 

knowledge and belief, this reportable 

transaction disclosure statement is true, 

correct, and complete. Declaration of 

preparer (other than taxpayer) is based on all 

information of which the preparer has any 

knowledge. 

(C) Taxpayer under examination or 

Appeals consideration. A taxpayer 

making a disclosure under paragraph 

(g)(5) of this section with respect to a 

taxable year under examination or 

Appeals consideration by the IRS must 

satisfy the requirements of paragraphs 

(g)(5)(i)(A) and (B) of this section and 

also submit a copy of the submission to 

the IRS examiner or Appeals officer 

examining or considering the taxable 

year(s) to which the disclosure under 

paragraph (g) of this section relates. 

(D) Date the one-year period will 

begin to run if paragraph (g)(5) satisfied. 

Unless an earlier expiration is provided 

for in paragraph (g)(6) of this section, 

the time to assess tax under paragraph 

(g) of this section will not expire before 

one year after the date on which the 

Secretary is furnished the information 

from the taxpayer that satisfies all the 

requirements of paragraphs (g)(5)(i)(A) 

and (B) of this section and, if applicable, 

paragraph (g)(5)(i)(C) of this section. If 

the taxpayer does not satisfy all of the 

requirements on the same date, the oneyear period will begin on the date that 

the IRS is furnished the information 

that, together with prior disclosures of 

information, satisfies the requirements 

of paragraph (g)(5) of this section. For 

purposes of paragraph (g)(5) of this 

section, the information is deemed 

furnished on the date the IRS receives 

the information. 

(ii) Exception for returns other than 

annual returns. The IRS may prescribe 

alternative procedures to satisfy the 

requirements of this paragraph (g)(5) in 

a revenue procedure, notice, or other 

guidance published in the Internal 

Revenue Bulletin for circumstances 

involving returns other than annual 

returns. 

(6) Material advisor’s disclosure of a 

listed transaction not properly disclosed 

by a taxpayer under section 6011—(i) 

Method of disclosure. In response to a 

written request of the IRS under section 

6112, a material advisor with respect to 

a listed transaction must furnish to the 

IRS the information described in section 

6112 and § 301.6112–1(b) in the form 

and manner prescribed by section 6112 

and § 301.6112–1(e). If the information 

the material advisor furnishes identifies 

the taxpayer as a person who engaged in 

the listed transaction, regardless of 

whether the material advisor provides 

the information before or after the 

taxpayer’s failure to disclose the listed 

transaction under section 6011, then the 

requirements of this paragraph (g)(6) 

will be satisfied for that taxpayer. The 

requirements of this paragraph (g)(6) 

will be considered satisfied even if the 

material advisor furnishes the 

information required under section 6112 

to the IRS after the date prescribed in 

section 6708 or published guidance 

relating to section 6708. 

(ii) Date the one-year period will begin 

if paragraph (g)(6) is satisfied. Unless an 

earlier expiration is provided for in 

paragraph (g)(5) of this section, the time 

to assess tax under paragraph (g) of this 

section will expire one year after the 

date on which the material advisor 

satisfies the requirements of paragraph 

(g)(6)(i) of this section with respect to 

the taxpayer. For purposes of paragraph 

(g)(6) of this section, information is 

deemed to be furnished on the date that, 

in response to a request under section 

6112, the IRS receives the information 

from a material advisor that satisfies the 

requirements of paragraph (g)(6)(i) of 

this section with respect to the taxpayer. 

(7) Tax assessable under this section. 

If the period of limitations on 

assessment for a taxable year remains 

open under this section, the Secretary 

has authority to assess any tax with 

respect to the listed transaction in that 

year. This includes, but is not limited 

to, adjustments made to the tax 

consequences claimed on the return 

plus interest, additions to tax, 

additional amounts, and penalties that 

are related to the listed transaction or 

adjustments made to the tax 

consequences. This also includes any 

item to the extent the item is affected by 

the listed transaction even if it is 

unrelated to the listed transaction. An 

example of an item affected by, but 

unrelated to, a listed transaction is the 

threshold for the medical expense 

deduction under section 213 that varies 

if there is a change in an individual’s 

adjusted gross income. An example of a 

penalty related to the listed transaction 

is the penalty under section 6707A for 

failure to file the disclosure statement 

reporting the taxpayer’s participation in 

the listed transaction. Examples of 

penalties related to the adjustments 

made to the tax consequences are the 

accuracy-related penalties under 

sections 6662 and 6662A. 

(8) Examples. The rules of paragraph 

(g) of this section are illustrated by the 

following examples: 

Example 1. No requirement to disclose 

under section 6011. P, an individual, is a 

partner in a partnership that entered into a 

transaction in 2001 that was the same as or 

substantially similar to the transaction 

identified as a listed transaction in Notice 

2000–44 (2000–2 CB 255). P claimed a loss 

from the transaction on his Form 1040 for the 

tax year 2001. P filed the Form 1040 prior to 

June 14, 2002. P did not disclose his 

participation in the listed transaction because 

P was not required to disclose the transaction 

under the applicable section 6011 regulations 

(TD 8961). Although the transaction was a 

listed transaction and P did not disclose the 

transaction, P had no obligation to include on 

any return or statement any information with 

respect to a listed transaction within the 

meaning of section 6501(c)(10) because TD 

8961 only applied to corporations, not 

individuals. Accordingly, section 6501(c)(10) 

does not apply. 

Example 2. Taxable year to which the 

failure to disclose relates when transaction is 

identified as a listed transaction after 

taxpayer files a tax return for that year. (i) 

In January 2009, A, a calendar year taxpayer, 

enters into a transaction that at the time is 

not a listed transaction. A reports the tax 

consequences from the transaction on its 

individual income tax return for 2009 timely 

filed on April 15, 2010. The time for the IRS 

to assess tax against A under the general 

three-year period of limitations for A’s 2009 

taxable year would expire on April 15, 2013. 

A only participated in the transaction in 

2009. On March 1, 2012, the IRS identifies 

the transaction as a listed transaction. A does 

not file the Form 8886 with OTSA by May 

30, 2012. 

(ii) The period of limitations on assessment 

for A’s 2009 taxable year was open on the 

date the transaction was identified as a listed 

transaction. Under the applicable section 

6011 regulations (TD 9350, 2007–38 IRB 

607), A must disclose its participation in the 

transaction by filing a completed Form 8886 

with OTSA on or before May 30, 2012, which 

is 90 days after the date the transaction 

became a listed transaction. A did not 

disclose the transaction as required. A’s 

failure to disclose relates to taxable year 2009 


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51534 Federal Register / Vol. 74, No. 193 / Wednesday, October 7, 2009 / Proposed Rules 

even though the obligation to disclose did 

not arise until 2012. Section 6501(c)(10) 

operates to keep the period of limitations on 

assessment open for the 2009 taxable year 

with respect to the listed transaction until at 

least one year after the date A satisfies the 

requirements of paragraph (g)(5) of this 

section or a material advisor satisfies the 

requirements of paragraph (g)(6) of this 

section with respect to A. 

Example 3. Requirements of paragraph 

(g)(6) satisfied. Same facts as Example 2, 

except that on April 5, 2013, the IRS hand 

delivers to Advisor J, who is a material 

advisor, a section 6112 request related to the 

listed transaction. Advisor J furnishes the 

required list with all the information 

required by section 6112 and § 301.6112–1, 

including all the information required with 

respect to A, to the IRS on May 13, 2013. The 

submission satisfies the requirements of 

paragraph (g)(6) even though Advisor J 

furnishes the information outside of the 20- 

business-day period provided in section 

6708. Accordingly, under section 6501(c)(10), 

the period of limitations with respect to A’s 

taxable year 2009 will end on May 13, 2014, 

one year after the IRS received the required 

information, unless the period of limitations 

remains open under another exception. Any 

tax for the 2009 taxable year not attributable 

to the listed transaction must be assessed by 

April 15, 2013. 

Example 4. Requirements of paragraph 

(g)(5) also satisfied. 

Same facts as Examples 2 and 3, except 

that on May 23, 2013, A files a properly 

completed Form 8886 and signed cover letter 

with OTSA both identifying that the section 

6501(c)(10) disclosure relates to A’s Form 

1040 for 2009. A satisfied the requirements 

of paragraph (g)(5) of this section as of May 

23, 2013. Because the requirements of 

paragraph (g)(6) were satisfied first as 

described in Example 3, under section 

6501(c)(10) the period of limitations will end 

on May 13, 2014 (one year after the 

requirements of paragraph (g)(6) were 

satisfied) instead of May 23, 2014 (one year 

after the requirements of paragraph (g)(5) 

were satisfied). Any tax for the 2009 taxable 

year not attributable to the listed transaction 

must be assessed by April 15, 2013. 

Example 5. Period to assess tax remains 

open under another exception. 

Same facts as Examples 2, 3, and 4, except 

that on April 1, 2013, A signed Form 872, 

consenting to extend, without restriction, its 

period of limitations on assessment for 

taxable year 2009 under section 6501(c)(4) 

until July 15, 2014. In that case, although 

under section 6501(c)(10) the period of 

limitations would otherwise expire on May 

13, 2014, the IRS may assess tax with respect 

to the listed transaction at any time up to and 

including July 15, 2014, pursuant to section 

6501(c)(4). Section 6501(c)(10) can operate to 

extend the assessment period but cannot 

shorten any other applicable assessment 

period. 

Example 6. Requirements of (g)(5) not 

satisfied. 

In 2009, X, a corporation, enters into a 

listed transaction. On March 15, 2010, X 

timely files its 2009 Form 1120, reporting the 

tax consequences from the transaction. X 

does not disclose the transaction as required 

under section 6011 when it files its 2009 

return. The failure to disclose relates to 

taxable year 2009. On February 12, 2014, X 

completes and files a Form 8886 with respect 

to the listed transaction with OTSA but does 

not submit a cover letter, as required. The 

requirements of paragraph (g)(5) of this 

section have not been satisfied. Therefore, 

the time to assess tax against X with respect 

to the transaction for taxable year 2009 

remains open under section 6501(c)(10). 

Example 7. Taxable year to which the 

failure to disclose relates when transaction is 

identified as a listed transaction after first 

year of participation. 

(i) On December 30, 2003, Y, a corporation, 

enters into a transaction that at the time is 

not a reportable transaction. On March 15, 

2004, Y timely files its 2003 Form 1120, 

reporting the tax consequences from the 

transaction. On April 1, 2004, the IRS issues 

Notice 2004–31 that identifies the transaction 

as a listed transaction. Y also reports tax 

consequences from the transaction on its 

2004 Form 1120, which it timely filed on 

March 15, 2005. Y did not attach a completed 

Form 8886 to its 2004 Form 1120 and did not 

send a copy of the form to OTSA. The general 

three-year period of limitations on 

assessment for Y’s 2003 and 2004 taxable 

years would expire on March 15, 2007, and 

March 17, 2008, respectively. 

(ii) The period of limitations on assessment 

for Y’s 2003 taxable year was open on the 

date the transaction was identified as a listed 

transaction. Under the applicable section 

6011 regulations (TD 9108), Y should have 

disclosed its participation in the transaction 

with its next filed return, which was its 2004 

Form 1120, but Y did not disclose its 

participation. Y’s failure to disclose with the 

2004 Form 1120 relates to taxable years 2003 

and 2004. Section 6501(c)(10) operates to 

keep the period of limitations on assessment 

open for the 2003 and 2004 taxable years 

with respect to the listed transaction until at 

least one year after the date Y satisfies the 

requirements of paragraph (g)(5) of this 

section or a material advisor satisfies the 

requirements of paragraph (g)(6) of this 

section with respect to Y. 

Example 8. Section 6501(c)(10) applies to 

keep one partner’s period of limitations on 

assessment open. 

T and S are partners in a partnership, TS, 

that enters into a listed transaction in 2010. 

T and S each receive a Schedule K–1 from 

TS on April 11, 2011. On April 15, 2011, TS, 

T and S each file their 2010 returns. Under 

the applicable section 6011 regulations, TS, 

T, and S each are required to disclose the 

transaction. TS attaches a completed Form 

8886 to its 2010 Form 1065 and sends a copy 

of Form 8886 to OTSA. Neither T nor S files 

a disclosure statement with their respective 

returns nor sends a copy to OTSA on April 

15, 2011. On May 17, 2011, T timely files a 

completed Form 8886 with OTSA pursuant 

to § 1.6011–4(e)(1). T’s disclosure is timely 

because T received the Schedule K–1 within 

10 calendar days before the due date of the 

return and, thus, T had 60 calendar days to 

file Form 8886 with OTSA. TS and T 

properly disclosed the transaction in 

accordance with the applicable regulations 

under section 6011, but S did not. S’s failure 

to disclose relates to taxable year 2010. The 

time to assess tax with respect to the 

transaction against S for 2010 remains open 

under section 6501(c)(10) even though TS 

and T disclosed the transaction. 

Example 9. Section 6501(c)(10) satisfied 

before expiration of three-year period of 

limitations under section 6501(a). 

Same facts as Example 8, except that on 

August 27, 2012, S satisfies the requirements 

of paragraph (g)(5) of this section. No 

material advisor satisfied the requirements of 

paragraph (g)(6) of this section with respect 

to S on a date earlier than August 27, 2012. 

Under section 6501(c)(10), the period of time 

in which the IRS may assess tax against S 

with respect to the listed transaction would 

expire no earlier than August 27, 2013, one 

year after the date S satisfied the 

requirements of paragraph (g)(5). As the 

general three-year period of limitations on 

assessment under section 6501(a) does not 

expire until April 15, 2014, the IRS will have 

until that date to assess any tax with respect 

to the listed transaction. 

Example 10. No section 6112 request. 

B, a calendar year taxpayer, entered into a 

listed transaction in 2010. B did not comply 

with the applicable disclosure requirements 

under section 6011 for taxable year 2010; 

therefore, section 6501(c)(10) applies to keep 

the period of limitations on assessment open 

with respect to the tax related to the 

transaction until at least one year after B 

satisfies the requirements of paragraph (g)(5) 

of this section or a material advisor satisfies 

the requirements of paragraph (g)(6) of this 

section with respect to B. In June 2011, the 

IRS conducts a section 6700 investigation of 

Advisor K, who is a material advisor to B 

with respect to the listed transaction. During 

the course of the investigation, the IRS 

obtains the name, address, and TIN of all of 

Advisor K’s clients who engaged in the 

transaction, including B. The information 

provided does not satisfy the requirements of 

paragraph (g)(6) with respect to B because the 

information was not provided pursuant to a 

section 6112 request. Therefore, the time to 

assess tax against B with respect to the 

transaction for taxable year 2010 remains 

open under section 6501(c)(10). 

Example 11. Section 6112 request but the 

requirements of paragraph (g)(6) are not 

satisfied with respect to B. 

Same facts as Example 10, except that on 

January 2, 2014, the IRS sends by certified 

mail a section 6112 request to Advisor L, 

who is another material advisor to B with 

respect to the listed transaction. Advisor L 

furnishes some of the information required 

under section 6112 and § 301.6112–1 to the 

IRS for inspection on January 13, 2014. The 

list includes information with respect to 

many clients of Advisor L, but it does not 

include any information with respect to B. 

The submission does not satisfy the 

requirements of paragraph (g)(6) of this 

section with respect to B. Therefore, the time 

to assess tax against B with respect to the 

transaction for taxable year 2010 remains 

open under section 6501(c)(10). 

Example 12. Section 6112 submission 

made before taxpayer failed to disclose a 

listed transaction. 


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Federal Register / Vol. 74, No. 193 / Wednesday, October 7, 2009 / Proposed Rules 51535 

Advisor M, who is a material advisor, 

advises C, an individual, in 2010 with 

respect to a transaction that is not a 

reportable transaction at that time. C files its 

return claiming the tax consequences of the 

transaction on April 15, 2011. The time for 

the IRS to assess tax against C under the 

general three-year period of limitations for 

C’s 2010 taxable year would expire on April 

15, 2014. The IRS identifies the transaction 

as a listed transaction on November 1, 2013. 

On December 5, 2013, the IRS hand delivers 

to Advisor M a section 6112 request related 

to the transaction. Advisor M furnishes the 

information to the IRS on December 30, 2013. 

The information contains all the required 

information with respect to Advisor M’s 

clients, including C. C does not disclose the 

transaction on or before January 30, 2014, as 

required under section 6011 and the 

regulations under section 6011. Advisor M’s 

submission under section 6112 satisfies the 

requirements of paragraph (g)(6) of this 

section even though it occurred prior to C’s 

failure to disclose the listed transaction. 

Thus, under section 6501(c)(10), the period 

of limitations to assess tax against C with 

respect to the listed transaction will end on 

December 30, 2014 (one year after the 

requirements of paragraph (g)(6) of this 

section were satisfied), unless the period of 

limitations remains open under another 

exception. 

Example 13. Transaction removed from the 

category of listed transactions after taxpayer 

failed to disclose. 

D, a calendar year taxpayer, entered into a 

listed transaction in 2011. D did not comply 

with the applicable disclosure requirements 

under section 6011 for taxable year 2011; 

therefore, section 6501(c)(10) applies to keep 

the period of limitations on assessment open 

with respect to the tax related to the 

transaction until at least one year after D 

satisfies the requirements of paragraph (g)(5) 

of this section or a material advisor satisfies 

the requirements of paragraph (g)(6) of this 

section with respect to D. In 2016, the IRS 

removes the transaction from the category of 

listed transactions because of a change in 

law. Section 6501(c)(10) continues to apply 

to keep the period of limitations on 

assessment open for D’s taxable year 2011. 

Example 14. Taxes assessed with respect to 

the listed transaction. 

(i) F, an individual, enters into a listed 

transaction in 2009. F files its 2009 Form 

1040 on April 15, 2010, but does not disclose 

his participation in the listed transaction in 

accordance with section 6011 and the 

regulations under section 6011. F’s failure to 

disclose relates to taxable year 2009. Thus, 

section 6501(c)(10) applies to keep the period 

of limitations on assessment open with 

respect to the tax related to the listed 

transaction for taxable year 2009 until at least 

one year after the date F satisfies the 

requirements of paragraph (g)(5) of this 

section or a material advisor satisfies the 

requirements of paragraph (g)(6) of this 

section with respect to F. 

(ii) On July 1, 2014, the IRS completes an 

examination of F’s 2009 taxable year and 

disallows the tax consequences claimed as a 

result of the listed transaction. The 

disallowance of a loss increased F’s adjusted 

gross income. Due to the increase of F’s 

adjusted gross income, certain credits, such 

as the child tax credit, and exemption 

deductions were disallowed or reduced 

because of limitations based on adjusted 

gross income. In addition, F now is liable for 

the alternative minimum tax. The 

examination also uncovered that F claimed 

two deductions on Schedule C to which F 

was not entitled. Under section 6501(c)(10), 

the IRS can timely issue a statutory notice of 

deficiency (and assess in due course) against 

F for the deficiency resulting from (1) 

disallowing the loss, (2) disallowing the 

credits and exemptions to which F was not 

entitled based on F’s increased adjusted gross 

income, and (3) being liable for the 

alternative minimum tax. In addition, the IRS 

can assess any interest and applicable 

penalties related to those adjustments, such 

as the accuracy-related penalty under 

sections 6662 and 6662A and the penalty 

under section 6707A for F’s failure to 

disclose the transaction as required under 

section 6011 and the regulations under 

section 6011. The IRS cannot, however, 

pursuant to section 6501(c)(10), assess the 

increase in tax that would result from 

disallowing the two deductions on F’s 

Schedule C because those deductions are not 

related to, or affected by, the adjustments 

concerning the listed transaction. 

(9) Effective/applicability date. The 

rules of this paragraph (g) apply to 

taxable years with respect to which the 

period of limitations on assessment did 

not expire before the date of publication 

of the Treasury decision adopting these 

rules as final regulations in the Federal 

Register. However, taxpayers may rely 

on the rules of this paragraph (g) for 

taxable years with respect to which the 

period of limitations on assessment 

expired before the date of publication of 

the Treasury decision. If an individual 

does not choose to rely on the rules of 

this paragraph (g), Rev. Proc. 2005–26 

(2005–1 CB 965) will continue to apply 

to taxable years with respect to which 

the period of limitations on assessment 

expired on or after April 8, 2005, and 

before the date of publication of the 

Treasury decision adopting these rules 

as final regulations in the Federal 

Register. 

Linda E. Stiff, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. E9–24112 Filed 10–6–09; 8:45 am] 

BILLING CODE 4830–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–HQ–OAR–2009–0597; FRL–8966–6] 

RIN 2060 AP87 

Prevention of Significant Deterioration 

(PSD): Reconsideration of 

Interpretation of Regulations That 

Determine Pollutants Covered by the 

Federal PSD Permit Program 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Proposed rule; reconsideration. 

SUMMARY: In a December 18, 2008 

memorandum, EPA established an 

interpretation of the regulatory phrase 

‘‘subject to regulation’’ that is applied to 

determine the pollutants subject to the 

federal Prevention of Significant 

Deterioration (PSD) program under the 

Clean Air Act (CAA or Act). On 

February 17, 2009, the EPA 

Administrator granted a petition for 

reconsideration of the regulatory 

interpretation in the memorandum. 

However, the Administrator did not 

grant a request to stay the 

memorandum, so the interpretation 

remains in effect for the federal PSD 

program pending completion of this 

reconsideration action. This document 

implements the grant of reconsideration 

by discussing and requesting public 

comment on various interpretations of 

the regulatory phrase ‘‘subject to 

regulation.’’ The interpretations 

discussed in this document include our 

current and preferred interpretation, 

which would make PSD applicable to a 

pollutant on the basis of an EPA 

regulation requiring actual control of 

emissions of a pollutant, as well as 

interpretations that would make PSD 

applicable to a pollutant on the basis of 

an EPA regulation requiring monitoring 

or reporting of emissions of a pollutant, 

the inclusion of regulatory requirements 

for specific pollutants in an EPAapproved state implementation plan 

(SIP), an EPA finding of endangerment, 

and the grant of a section 209 waiver. 

This document also takes comments on 

related issues and other interpretations 

that could influence this 

reconsideration. 

DATES: Comments. Comments must be 

received on or before December 7, 2009. 

Public Hearing. If anyone contacts 

EPA requesting a public hearing by 

October 22, 2009, we will hold a public 

hearing approximately 30 days after 

publication in the Federal Register. 

ADDRESSES: Submit your comments, 

identified by Docket ID No. EPA–HQ– 


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