Final Regs Clarify Interaction Between Qualified Amended Return And Filing For Reportable Transaction Purposes

Journal of Developing Areas, The, Fall 2006

* T.D. 9309

Treasury and the IRS have issued final regs under Code Sec. 6664, relating to the filing of a qualified amended return. The regulations clarify the interaction between a qualified amended return and filing for reportable transaction purposes.

* Comment. A qualified amended return is used by the IRS to determine whether or not accuracy-related penalties are to be imposed. An amended return is qualified if it is filed after the due date of the original return and before the IRS takes one of a number of administrative actions. Generally, the date is fixed when the IRS first contacts a taxpayer about an examination of the original return. However, an earlier date may apply in certain tax-shelter situations.

Reportable transactions

The final regs amend 2005 temporary regs by removing a reference that states that the requirements for filing a qualified amended return are satisfied where the requirements for filing under the Code Sec. 6011 reportable transaction regulations are satisfied. It was believed that this statement could be misinterpreted as meaning that filing a qualified amended return would provide relief from the Code Sec. 6707A penalty for failing to satisfy the reportable transaction requirements. This interpretation would be erroneous as the final regs are meant to have no effect upon the applicability of the Code Sec. 6707A penalty. Additionally, examples are amended to ensure that there is no confusion.

Listed transactions

The regs provide that the period for filing a qualified amended return is terminated once the IRS has served a John Doe summons on a third party with respect to the taxpayer's tax liability. With respect to taxpayers who have claimed tax benefits from undisclosed listed transactions, the period for filing a qualified amended return is terminated once the IRS requests information related to the transaction that is required to be included on a list under Code Sec. 6112 from any person who made a tax statement to or for the benefit of the taxpayer, or any person who gave material aid, assistance or advice to the taxpayer.

Reference: FED ¶47,015.