IRS CCA: Penalty Avoidance from Adequate Disclosure of Noneconomic Substance Transactions Guidance (IRC §6662)

To avoid the 40% penalty under I.R.C. §6662(i), Notice 2010-62 requires taxpayers to disclose noneconomic substance transactions on Form 8275 or Form 8275-R, the Chief Counsel’s Office advised. Notice 2010-62 further requires that for transactions that are both reportable transactions under §6011 and transactions lacking economic substance under §6662(b)(6), taxpayers must disclose the transaction both on Form 8886 and Form 8275, the IRS stated. However, the 2019 Policy Statement on the Tax Regulatory Process prevents the IRS from arguing that Notice 2010-62 has the force and effect of law, the IRS noted. ...