A. Listed Transactions—Generally
The IRS keeps a current listing of tax shelters that it has deemed to be tax avoidance transactions. Practitioners and taxpayers are not prohibited from participating in listed transactions—but civil and criminal career-ending consequences may be imposed on taxpayers, practitioners, and promoters that do not disclose their participation in a listed transaction where they are required to. Note: The IRS requires that all participation in any tax shelter that has the potential for tax evasion or avoidance, listed or unlisted, however the most draconian penalties surround non-disclosure of participation in listed transactions.
The IRS keeps a real time list of “listed transactions on its website that can be accessed here: https://www.irs.gov/Businesses/Corporations/Listed-Transactions—LB&I-Tier-I-Issues
B. Is a listed transaction limited to those identified on the IRS’s website?
No. A listed transaction includes not only those transactions described on the IRS website but in addition any transaction that is deemed to be the same as or substantially similar to any of the transactions listed on their website. Moreover, reporting requirements exist for all transactions with the potential for tax evasion or avoidance.
C. What are some examples of listed transactions?
Below are a few examples from the most recent update to the IRS website of Listed Transactions. A cursory review of them shows how broad and of wide application a listed transaction can be.
Transactions include those involving: