Material Advisors
The 2004 Jobs Act also provides similar penalties for “material advisors” who fail to register any reportable transaction with the IRS or keep investor lists as required. The penalties apply to transactions entered into after October 22, 2004.
Each material advisor is required to file a Form 8264 to register any reportable transaction and maintain an investor list open to IRS inspection.
Generally, a material advisor is a person who receives or expects to receive a minimum fee with respect to a reportable transaction, and the person makes a “tax statement” to or for the benefit of a participant in the reportable transaction. The minimum fee is $250,000 if every person who benefits from the transaction is a C corporation and $50,000 for all others, including partnerships (tiered or otherwise) with an individual partner. The amount is reduced to $25,000 and $10,000, respectively, for listed transactions.
Material advisors who fail to file Form 8264 are subject to a $50,000 penalty per incident. If the transaction is a listed transaction, the penalty is increased to the greater of 1) $200,000 or 2) 50% of the fees received by the material advisor for providing advice to the taxpayer. Material advisors who fail to maintain the list of investors open to IRS inspection are subject to a $10,000-per-day penalty. Plus, the statute of limitations is suspended for any listed transaction that is not disclosed.
For More Information
Contact your BKD advisor or:Lisa G. Workman
Director of Tax Services
417.831.7283
