The Treasury Department and the Internal Revenue Service has issued interim guidance on two new penalty provisions enacted as part of new tax legislation passed by Congress last year.
The American Jobs Creation Act creates a new penalty for the failure to disclose information about “reportable transactions,” which are transactions that the Treasury Department and IRS have determined to be potentially abusive.
Notice 2005-11 provides interim guidance regarding application of this penalty to taxpayers who are required to disclose reportable transactions.
In addition, the Act creates a higher penalty if a taxpayer understates their tax liability relating to a reportable transaction, although the penalty may be avoided if the taxpayer had reasonable cause and acted in good faith.
Notice 2005-12 provides interim guidance to taxpayers regarding these provisions, including when a taxpayer may rely on the advice of a tax advisor. |
