A Crash Course on Reportable Transaction Penalties for Material Advisors

Abstract

Practitioners who are “material advisors” with respect to “reportable transactions,” are required to report to the IRS, and to maintain information about, those transactions, and are subject to onerous penalties if they fail to comply. The definition of a “material advisor” is complex, and it is helpful to break it down into its components. However, if there is any question as to whether you are a material advisor, rather than parsing these definitions, and potentially ending up on the losing side of the argument with the IRS years down the road, consider protectively filing the required reports and maintaining lists.