Impact of the New Anti-Tax Shelter Rules on Non-Tax Shelter Lawyers and Accountants
Arizona Legal Studies Discussion Paper No. 06-13
NYU Annual Institute on Federal Taxation, Vol. 64, January 24, 2006
67 Pages Posted: 8 Feb 2006
After many proposed and temporary regulations and recent legislative changes, major portions of the new anti-tax shelter rules are now final. Although targeted at abuses, the regime is broad and can unexpectedly impact lawyers and accountants involved in common business transactions. This article is meant to help tax practitioners navigate these complicated rules in daily practice addressing questions such as . . . There are so many rules - which apply to taxpayers and which apply to advisors? Do I need to worry about disclosure even when I don't have a tax-motivated transaction? What if I didn't disclose a transaction that I now understand to be a reportable transaction? What are my options? My partnership sent me a listed transaction protective disclosure - does this affect my personal return? I am a taxpayer - should I care if my advisor's correspondence states that it does not provide me penalty protection - What am I paying them for? I am an advisor - if I add the Circular 230 caveat to all of my correspondence, is it business as usual? If I prepare tax returns, am I governed by the Circular 230 rules on "covered opinions"? What if I prepare studies or reports for taxpayers under section 382 or section 482? Should I be nervous if someone tells me my e-mail was a covered opinion on a transaction where I am a material advisor on an undisclosed reportable transaction that is also a "listed transaction"? We answer these questions at the end of this article. This article focuses on two pieces of the anti-tax shelter rules: (1) the rules that define "reportable" transactions and require taxpayers and advisors to disclose those transactions and (2) the Circular 230 rules that govern tax opinions. The article does not discuss other parts of the regime such as (i) the strengthened reasonable cause exception and the disqualified advisor/opinion rules under new section 6662A; (ii) individual state tax shelter rules; and (iii) audit independence rules for accounting firms doing tax work for their audit clients.
Keywords: tax shelter, Circular 230, listed transactions, tax penalties
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