8886-T Instructions for Form 8886-T

Instructions for Form 8886-T

Department of the Treasury
Internal Revenue Service

(December 2019)

Disclosure by Tax-Exempt Entity Regarding Prohibited Tax Shelter Transaction
Section references are to the Internal Revenue
Code unless otherwise noted.

General Instructions
Future Developments

filed by the entity. If the tax-exempt entity
is a plan entity (defined below), Form
8886-T must be filed by the entity
manager (defined on page 2).

For the latest information about
developments related to Form 8886-T and
the instructions, such as legislation
enacted after they were published, go to
IRS.gov/Form8886-T.

Note. If the entity is a fully self-directed
qualified plan, IRA, or other savings
arrangement, the entity manager is the
plan participant, beneficiary, or owner who
approved or caused the entity to be a
party to the prohibited tax shelter
transaction.

Purpose of Form

Definitions

Certain tax-exempt entities (defined
below) are required to file Form 8886-T to
disclose information with respect to each
prohibited tax shelter transaction to which
the entity is a party. See Prohibited tax
shelter transaction below. See Party to a
prohibited tax shelter transaction below to
determine if the tax-exempt entity is a
party to a prohibited tax shelter
transaction. See Regulations section
1.6033-5 for more information. Form
8886-T is available for public inspection.
A separate Form 8886-T must be filed
for each prohibited tax shelter transaction.
In addition to filing Form 8886-T, a
tax-exempt entity and/or entity manager(s)
may be liable for excise taxes in
connection with the prohibited tax shelter
transaction. For more information, see the
Instructions for Form 4720, Return of
Certain Excise Taxes Under Chapters 41
and 42 of the Internal Revenue Code, and
the Instructions for Form 5330, Return of
Excise Taxes Related to Employee
Benefit Plans.
A taxable party to a prohibited tax
shelter transaction must provide a
statement to any tax-exempt entity that is
party to the transaction that the
transaction is a prohibited tax shelter
transaction. See Tax-exempt entity below.
If a tax-exempt entity participates in
any reportable transaction (defined in
Regulations section 1.6011-4), the
tax-exempt entity may also be required to
file Form 8886, Reportable Transaction
Disclosure Statement. For more
information, see the Instructions for Form
8886.
Frequency of disclosure. A single
disclosure is required for each prohibited
tax shelter transaction.

Who Must File

If the tax-exempt entity is a non-plan entity
(defined below), Form 8886-T must be
Jan 02, 2020

Tax-exempt entity. A tax-exempt entity
is an entity which is either a plan entity
(defined below) or a non-plan entity
(defined below).
Non-plan entity. Non-plan entities are
tax-exempt entities described in section
4965(c)(1), (c)(2), or (c)(3). The following
tax-exempt entities are non-plan entities.
• An organization described in section
501(c) or 501(d).
• Entities described in section 170(c)
including a state, a possession of the
United States, the District of Columbia, or
a political subdivision of a state or
possession of the United States (but not
including the United States).
• An Indian tribal government.
See Regulations section 1.6033-5 for
more information.
Plan entity. Plan entities are
tax-exempt entities described in section
4965(c)(4), (c)(5), (c)(6), (c)(7), or (c)(8).
The following tax-exempt entities are plan
entities.
• A plan described in section 401(a)
which includes a trust exempt from tax
under section 501(a).
• An annuity plan described in section
403(a) or annuity contract described in
section 403(b).
• A qualified tuition program described in
section 529.
• An eligible deferred compensation plan
described in section 457(b) that is
maintained by a governmental employer
described in section 457(e)(1)(A).
• An individual retirement account within
the meaning of section 408(a).
• An individual retirement annuity within
the meaning of section 408(b).
• An Archer medical savings account
within the meaning of section 220(d).
• A custodial account treated as an
annuity contract under section 403(b)(7)
(A).

Cat. No. 49104P

• A Coverdell education savings account
as defined in section 530.
• A health savings account within the
meaning of section 223(d).
• An ABLE program described in section
529A.
See Regulations section 1.6033-5 for
more information.
Party to a prohibited tax shelter transaction. A tax-exempt entity is a party to a
prohibited tax shelter transaction if it:
• Facilitates the transaction by reason of
its tax-exempt, tax indifferent, or
tax-favored status;
• Is identified in published guidance, by
type, class, or role, as a party to a
prohibited tax shelter transaction. See
example in Regulations section
53.4965-4(c).
Prohibited tax shelter transaction.
Generally, a prohibited tax shelter
transaction is a transaction that is a listed
transaction (including subsequently listed
transaction), a confidential transaction, or
a transaction with contractual protection.
See definitions of these terms on pages 1
and 2.
Note. In general, if the IRS determines by
published guidance that a transaction will
be excluded from the definition of listed
transaction, confidential transaction, or
transaction with contractual protection, the
transaction will not be considered a
prohibited tax shelter transaction.
Listed transaction. A listed transaction
is a transaction that is the same as or
substantially similar to any of the types of
transactions that the IRS has determined
to be a tax avoidance transaction and are
identified by notice, regulation, or other
form of published guidance as a listed
transaction. For existing guidance, see
Notice 2009-59, 2009-31 I.R.B. 170 and
IRS.gov/Businesses/Corporations/ListedTransactions.
Subsequently listed transaction. A
subsequently listed transaction is a
transaction that is identified in published
guidance as a listed transaction after the
tax-exempt entity has entered into the
transaction and that was not a confidential
transaction or transaction with contractual
protection at the time the entity entered
into the transaction. See section 4965(e)
(2) for more information.
Substantially similar. A transaction is
substantially similar to another transaction
if it is expected to obtain the same or

similar types of tax consequences and is
either factually similar or based on the
same or similar tax strategy. Receipt of an
opinion regarding the tax consequences
of the transaction is not relevant to the
determination of whether the transaction is
the same as or substantially similar to
another transaction. Further, the term
substantially similar must be broadly
construed in favor of disclosure. See
Regulations section 1.6011-4(c)(4) for
examples.
Confidential transaction. A confidential
transaction is a transaction that is offered
under conditions of confidentiality and for
which a minimum fee (defined below) was
paid to an advisor. A transaction is
considered to be offered under conditions
of confidentiality if the advisor places a
limitation on disclosure of the tax
treatment or tax structure of the
transaction and the limitation on
disclosure protects the confidentiality of
the advisor's tax strategies. The
transaction is treated as confidential even
if the conditions of confidentiality are not
legally binding on the taxpayer. See
Regulations section 1.6011-4(b)(3) for
more information.
Minimum fee. For a corporation, or a
partnership or trust in which all of the
owners or beneficiaries are corporations
(looking through any partners or
beneficiaries that are themselves partners
or trusts), the minimum fee is $250,000.
For all others, the minimum fee is $50,000.
The minimum fee includes all fees paid
directly or indirectly for the tax strategy,
advice or analysis of the transaction
(whether or not related to the tax
consequences of the transaction),
implementation and documentation of the
transaction, and tax preparation fees to
the extent they exceed customary return
preparation fees. Fees do not include
amounts paid to a person, including an
advisor, in that person's capacity as a
party to the transaction.
Transaction with contractual protection. A transaction with contractual
protection is a transaction for which a
participant (or related party as defined
under section 267(b) or 707(b)) has the
right to a full refund or partial refund of
fees if all or part of the intended tax
consequences from the transaction are
not sustained. It also includes a
transaction for which fees are contingent
on the realization of tax benefits from the
transaction. For exceptions and other
details, see Regulations section
1.6011-4(b)(4) and Rev. Proc. 2007-20.
Entity manager. In the case of a plan
entity, entity manager means the person
who approves or otherwise causes the
tax-exempt entity to be a party to the
prohibited tax shelter transaction. See
section 4965(d)(2).

Recordkeeping

The entity or entity manager must keep a
copy of all documents and other records
related to a prohibited tax shelter
transaction. See Regulations section
1.6001-1(c) and 53.6001-1 for more
details.

When To File
General rules. Generally, the due date
for filing Form 8886-T depends on whether
the tax-exempt entity is a party to a
prohibited tax shelter transaction to
reduce its own federal tax liability or,
alternatively, whether it is a party to such a
transaction to facilitate the transaction by
reason of its tax-exempt, tax indifferent, or
tax-favored status.
In the case of a tax-exempt entity that
is a party to a prohibited tax shelter
transaction because it facilitates the
transaction by reason of its tax-exempt,
tax indifferent, or tax-favored status, Form
8886-T must be filed on or before May 15
of the calendar year following the close of
the calendar year during which the
tax-exempt entity entered into the
prohibited tax shelter transaction. See
section 1.6033-5(d)(1).
Entities identified as a party to a prohibited tax shelter transaction by published guidance. In the case of a
tax-exempt entity that becomes a party to
a prohibited tax shelter transaction
because it is identified in published
guidance by type, class, or roles as a party
to a prohibited tax shelter transaction, the
published guidance will specify the due
date of Form 8886-T.
Subsequently listed transaction. In the
case of a tax-exempt entity that is a party
to a prohibited tax shelter transaction
because the transaction was
subsequently listed, Form 8886-T must be
filed by May 15 of the calendar year
following the close of the calendar year
during which the transaction was identified
as a listed transaction. See section
1.6033-5(d)(2).

Where To File

Send the return to the:
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0027

Penalties

There is a monetary penalty under section
6652(c) for the failure to disclose
information required under section
6033(a)(2) with respect to a prohibited tax
shelter transaction. The penalty for failure
to include information with respect to a
prohibited tax shelter transaction is $105
for each day during which such failure
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continues, not to exceed $54,000 for each
required disclosure. In addition, the IRS is
authorized to make a written demand on
the entity or entity manager specifying a
future date by which the required
disclosure must be filed. If there is a failure
to comply with this demand, there is an
additional penalty in the amount of $105
per day after the expiration of the time
specified in the demand, not to exceed
$10,500 for each required disclosure. In
the case of a non-plan entity (defined on
page 1), the penalty is imposed on the
tax-exempt entity. In the case of a plan
entity (defined on page 1), the penalty is
imposed on the entity manager. These
penalties are adjusted for inflation. See
section 6652(c) for more information on
penalties.
A penalty is assessed to the
tax-exempt entity (for a non-plan entity) or
to the entity manager (for a plan entity) for
each failure to timely file Form 8886-T in
accordance with its instructions and
Regulations section 1.6033-5. Form
8886-T must be completed in its entirety
with all required attachments to be
considered complete. Do not enter
“Information provided upon request,” or
“Details available upon request,” or any
similar statement in the space provided.
Inclusion of any such statements subjects
the tax-exempt entity (for a non-plan
entity) or the entity manager (for a plan
entity) to penalty. See section 6652(c) for
more information.

Public Inspection

A completed Form 8886-T is available for
public inspection as required under
section 6104.

Specific Instructions
Name and Address

Enter the name and address of the
tax-exempt entity. Include the suite, room,
or other unit number after the street
address. If the Post Office does not deliver
mail to the street address, show the P.O.
box number instead of the street address.
The name and address should be the
same as shown on other forms filed with
the IRS.

Employer Identification
Number (EIN)

Enter the employer identification number
of the tax-exempt entity. In the case of a
fully self-directed qualified plan, or an IRA
(or other savings arrangement) that does
not have and is not required to obtain an
EIN, leave the EIN box blank. Do not enter
a social security number.

Who Must Sign
Non-plan entity. The director, trustee,
officer, or other official authorized to sign
for the non-plan entity (defined on page 1)
must sign Form 8886-T.
Plan entity. For plan entities (defined on
page 1), the entity manager (defined on
page 2) must sign Form 8886-T.

How To Complete
Form 8886-T

In order to be considered complete, Form
8886-T must be completed in its entirety
with all required attachments. Do not
simply write “See Attached.” If the
information required exceeds the space
provided, complete as much information
as possible in the available space and
attach the remaining information on
additional sheets. The additional sheets
must be in the same order as the lines to
which they correspond. You must also
include the entity name and identifying
number at the top of each additional
sheet.

Line 1

Check the box which indicates the type of
tax-exempt entity that is a party to a
prohibited tax shelter transaction.

Line 2

Check the box for all categories that apply
to the transaction being reported. The
categories of prohibited tax shelter
transactions (listed, confidential, and
transaction with contractual protection)
are described on pages 1 and 2. Do not
report more than one transaction on this

form. If the transaction is substantially
similar to a listed transaction, check the
box next to “listed transaction.” See
Substantially similar on page 2. If you
checked the listed transaction box, you
must also identify the transaction on line 3.
If the transaction is a listed
transaction or substantially similar
CAUTION to a listed transaction, you must
check the listed transaction box in addition
to any others that may apply.

!

Line 3

If you selected “listed transaction” on
line 2, provide a brief identifying
description of the listed transaction and
identify the notice, revenue ruling,
regulation (for example, Regulations
section 1.643(a)-8 or Notice 2003-81
modified and supplemented by Notice
2007-71, 2007-35 I.R.B. 472),
announcement, or other published
guidance that identified the listed
transaction. For guidance identifying listed
transactions, see Notice 2009-59,
2009-31 I.R.B. 170. For further updates,
go to IRS.gov/Businesses/Corporations/
Listed-Transactions.

Line 4

Provide the complete names and
addresses of all other parties (whether
taxable or tax-exempt) to the transaction,
if known. If you need additional space,
attach separate sheets. At the top of each
additional sheet, write “Line 4” and enter
the tax-exempt entity's name and
identifying number.
Paperwork Reduction Act Notice. We
ask for the information on this form to carry

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out the Internal Revenue laws of the
United States. You are required to give us
the information. We need it to ensure that
you are complying with these laws and to
allow us to figure and collect the right
amount of tax. You are not required to
provide the information requested on a
form that is subject to the Paperwork
Reduction Act unless the form displays a
valid OMB control number. Books or
records relating to a form or its instructions
must be retained as long as their contents
may become material in the administration
of any Internal Revenue law. Generally,
tax returns and return information are
confidential, as required by section 6103.
However, certain returns and return
information of tax-exempt organizations
and trusts are subject to public disclosure
and inspection, as provided by section
6104. The time needed to complete and
file this form will vary depending on
individual circumstances. The estimated
burden for tax-exempt organizations filing
this form is approved under OMB control
number 1545-0047 and is included in the
estimates shown in the instructions for
their information return.
If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form simpler,
we would be happy to hear from you. You
can send us comments from IRS.gov/
FormComments. Or you can write to the
Internal Revenue Service, Tax Forms and
Publications Division, 1111 Constitution
Ave. NW, IR-6526, Washington, DC
20224. Don’t send the form to this office.
Instead, see Where To File, on page 2.