Do I need to file form 8275-R?

Form 8275-R is used by taxpayers and income tax preparers to disclose positions taken on a tax return that are contrary to Treasury regulations. The form is filed to avoid the portions of the accuracy-related penalty due to disregard of regulations or to a substantial understatement of income tax if the return position has a reasonable basis. It can also be used for disclosures relating to the preparer penalties for income tax understatements due to positions taken contrary to regulations.

The portion of accuracy-related penalty attributable to the following types of misconduct cannot be avoided by disclosure on Form 8275-R:

• Negligence.
• Substantial understatement of tax on a tax shelter item.
• Substantial valuation misstatement under chapter 1.
• Substantial overstatement of pension liabilities.
• Substantial estate or gift tax valuation understatements.

Because of the importance to the self-assessment system of disclosing positions contrary to regulations, the requirements for making such disclosures are stringent:

• The disclosure is adequate only if it is made separately on a Form 8275-R, and
• The penalty for reckless or intentional disregard of a regulation may be avoided by disclosure only if the position represents a good faith challenge to the validity of the regulation and has a reasonable basis.

Instead of Form 8275-R, use Form 8275, Disclosure Statement, for the disclosure of items or positions which are not contrary to regulations but which are not otherwise adequately disclosed.

Form 8275-R is filed by individuals, corporations, pass-through entities, and income tax return preparers.

For items attributable to a pass-through entity, disclosure should be made on the tax return of the entity. If the entity does not make the disclosure, the partner (or shareholder, etc.) may make adequate disclosure of these items.

For more information, see Form 8275-R Instructions.