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Department of the Treasury
Internal Revenue Service
Instructions for Form 8275

(Rev. October 2024)
Disclosure Statement

Section references are to the Internal Revenue Code Form 8275-R, Regulation Disclosure Statement, instead
unless otherwise noted. of Form 8275.
Future Developments For items attributable to a pass-through entity,
disclosure should be made on the tax return of the entity. If
For the latest information about developments related to
the entity doesn’t make the disclosure, the partner (or
Form 8275 and its instructions, such as legislation
shareholder, etc.) can make adequate disclosure of these
enacted after they were published, go to IRS.gov/
items.
Form8275.
Exception to filing Form 8275. Guidance is published
annually in a revenue procedure in the Internal Revenue
General Instructions
Bulletin that identifies circumstances when an item
Purpose of Form reported on a return is considered adequate disclosure for
purposes of the substantial understatement aspect of the
Form 8275 is used by taxpayers and tax return preparers
accuracy-related penalty and for avoiding the preparer's
to disclose items or positions, except those taken contrary
penalty relating to understatements due to unreasonable
to a regulation, that are not otherwise adequately
positions. See the Example below. You don’t have to file
disclosed on a tax return to avoid certain penalties. The
Form 8275 for items that meet the requirements listed in
form is filed to avoid the portions of the accuracy-related
this revenue procedure. This revenue procedure is
penalty due to disregard of rules or to a substantial
available at IRS.gov.
understatement of income tax for non-tax shelter items if
the return position has a reasonable basis. It can also be Example. Generally, you will have met the
used for disclosures relating to the economic substance requirements for adequate disclosure of a charitable
penalty and the preparer penalties for tax contribution deduction if you complete the Gifts to Charity
understatements due to unreasonable positions or section of Schedule A (Form 1040), Itemized Deductions,
disregard of rules. supply all required information, and attach all related
forms required pursuant to statutes or regulations.
The portion of the accuracy-related penalty
! attributable to the following types of misconduct How To File
CAUTION cannot be avoided by disclosure on Form 8275.
File Form 8275 with your original tax return. Keep a copy
for your records. You may be able to file Form 8275 with
• Negligence. an amended return. See Regulations sections 1.6662-4(f)
• Disregard of regulations. (1) and 1.6664-2(c)(3) for more information.
• Any substantial understatement of income tax on a tax
To adequately disclose items reported by a
shelter item.
pass-though entity, you must complete and file a separate
• Any substantial or gross valuation misstatement
Form 8275 for items reported by each entity.
(including misstatements attributable to non-arm's length
prices) under chapter 1. To adequately disclose a position or positions related to
• Any substantial overstatement of pension liabilities. more than one foreign entity, you must complete and file a
• Any substantial estate or gift tax valuation separate Form 8275 for each foreign entity.
understatements.
• Any claim of tax benefits from a transaction lacking Carryovers, carrybacks, and recurring items.
economic substance (within the meaning of section Carryover items must be disclosed for the tax year in
7701(o)) or failing to meet the requirements of any similar which they originated. You don’t have to file another Form
rule of law. 8275 for those items for the tax years in which the
• Any otherwise undisclosed foreign financial asset carryover is taken into account.
understatement. Carryback items must be disclosed for the tax year in
• Any inconsistent estate basis. which they originated. You don’t have to file another Form
• Any overstatement of the deduction provided in section 8275 for those items for the tax years in which the
170(p). carryback is taken into account.
• Any disallowance of a deduction because of section However, if you disclose items of a recurring nature
170(h)(7). (such as depreciation expense), you must file Form 8275
for each tax year in which the item occurs.
Who Should File
If you are disclosing a position that is contrary to a rule,
Form 8275 is filed by individuals, corporations, and the position relates to a reportable transaction as
pass-through entities, and tax return preparers. If you are defined in Regulations section 1.6011-4(b), you must also
disclosing a position taken contrary to a regulation, use make the disclosure as indicated in Regulations section
1.6011-4(d). See Form 8886, Reportable Transaction

Oct 24, 2024 Cat. No. 62063F

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Disclosure Statement, and its instructions; Notice 2006-6,            The reasonable cause and good faith exception 
2006-5 I.R.B. 385, available at IRS.gov/irb/2006-05_IRB/        !     doesn’t apply to any portion of an underpayment 
ar10.html; and Notice 2010-62, 2010-40 I.R.B. 411,            CAUTION attributable to a transaction that lacks economic 
available at IRS.gov/irb/2010-40_IRB/ar09.html.               substance under section 7701(o).

Accuracy-Related Penalty                                      Adequate disclosure.   Generally, you can avoid the 
Generally, the accuracy-related penalty is 20% of any         disregard of rules and substantial understatement 
portion of a tax underpayment attributable to:                portions of the accuracy-related penalty if the position is 
  1. Negligence or disregard of rules or regulations;         adequately disclosed and the position has at least a 
                                                              reasonable basis. To avoid the disregard of regulations 
  2. Any substantial understatement of income tax;            portion of the accuracy-related penalty, the position taken 
  3. Any substantial valuation misstatement under             must also represent a good-faith challenge to the validity 
chapter 1 of the Internal Revenue Code;                       of the regulation. See Regulations section 1.6662-3(c)(1).
  4. Any substantial overstatement of pension liabilities;      Reasonable basis.    Reasonable basis is a relatively 
  5. Any substantial estate or gift tax valuation             high standard of tax reporting that is significantly higher 
understatement;                                               than not frivolous or not patently improper. The 
                                                              reasonable basis standard isn’t satisfied by a return 
  6. Any claim of tax benefits from a transaction lacking     position that is merely arguable.
economic substance, as defined by section 7701(o), or 
failing to meet the requirements of any similar rule of law;    If the return position is reasonably based on one of the 
                                                              authorities set forth in Regulations section 1.6662-4(d)(3)
  7. Any undisclosed foreign financial asset                  (iii) (taking into account the relevance and persuasiveness 
understatement;                                               of the authorities, and subsequent developments), the 
  8. Any inconsistent estate basis;                           return position will generally satisfy the reasonable basis 
  9. Any overstatement of the deduction provided in           standard even though it may not satisfy the substantial 
section 170(p); or                                            authority standard as defined in Regulations section 
  10. Any disallowance of a deduction because of section      1.6662-4(d)(2). For details, see Regulations sections 
170(h)(7).                                                    1.6662-4(d) and 1.6662-3(b)(3).
                                                                If you failed to keep proper books and records or failed 
  The penalty is 40% of any portion of a tax                  to properly substantiate the items, you cannot avoid the 
underpayment attributable to one or more gross valuation      penalty by disclosure.
misstatements in (3), (4), (5), or (10) above if the 
applicable dollar limitation under section 6662(h)(2) is      Substantial Understatement
met. The penalty also increases to 40% for failing to         An understatement is the excess of:
adequately disclose a transaction that lacks economic 
substance in (6) above. See Economic substance below.           1. The amount of tax required to be shown on the 
The penalty is 40% of any portion of an underpayment          return for the tax year, over
that is attributable to any undisclosed foreign financial       2. The amount of tax imposed which is shown on the 
asset understatement in (7) above. The penalty is 50% of      return for the tax year, reduced by any rebates.
any portion of an underpayment attributable to one or 
                                                                There is a substantial understatement of income tax if 
more overstatements of the deduction provided in section 
                                                              the amount of the understatement for any tax year 
170(p) in (9) above.
                                                              exceeds the greater of:
Economic substance.      To satisfy the disclosure              1. 10% of the tax required to be shown on the return 
requirements under section 6662(i), you may adequately        for the tax year, or
disclose with a timely filed original return (determined with 
                                                                2. $5,000.
regard to extensions) or a qualified amended return (as 
defined under Regulations section 1.6664-2(c)(3)) the           An understatement of a corporation (other than an S 
relevant facts affecting the tax treatment of the             corporation or a personal holding company, as defined in 
transaction.                                                  section 542) is substantial if it exceeds in any year the 
                                                              lesser of:
Note. If you filed a Schedule UTP (Form 1120), Uncertain 
Tax Position Statement, you may not need to file Form           1. 10% of the tax required to be shown on the return 
                                                              for the tax year (or, if greater, $10,000), or
8275 to satisfy the disclosure requirements of section 
6662(i). For more information, see the Instructions for         2. $10 million.
Schedule UTP (Form 1120), Uncertain Tax Position 
Statement.                                                    Reduction of understatement.        The amount of the 
                                                              understatement will be reduced by the part that is 
Reasonable cause exception.     Generally, no                 attributable to the following items.
accuracy-related penalty will be imposed on any portion of    • An item (other than a tax shelter item) for which there 
an underpayment if you show that there was reasonable         was substantial authority for the treatment claimed at the 
cause for that portion and that you acted in good faith with  time the return was filed or on the last day of the tax year 
respect to that portion.                                      to which the return relates.
                                                              • An item (other than a tax shelter item) that is adequately 
                                                              disclosed on this form if there is a reasonable basis for the 

2                                                                              Instructions for Form 8275 (Rev. 10-2024)

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tax treatment of the item. (In no event will a corporation be Note. For more information about the accuracy-related
treated as having a reasonable basis for its tax treatment penalty and preparer penalties, and the means of avoiding
of an item attributable to a multi-party financing these penalties, see the regulations under sections 6662,
transaction entered into after August 5, 1997, if the 6664, and 6694.
treatment doesn’t clearly reflect the income of the
corporation.)
Specific Instructions
For corporate tax shelter transactions (and for tax
shelter items of other taxpayers for tax years ending after Be sure to provide all of the information requested in Parts
October 22, 2004), the only exception to the substantial I, II, and III (if applicable). Your disclosure will be
understatement portion of the accuracy-related penalty is considered adequate if you file Form 8275 and provide the
the reasonable cause exception. For more details, see required information in detail.
Reasonable cause exception, earlier; section 6662(d);
and Regulations section 1.6664-4. Use Part IV on page 2 if you need more space for Parts
Tax shelter items. A tax shelter, for purposes of the I and/or II. Include the corresponding part and line number
substantial understatement portion of the from page 1. You can use a continuation sheet(s) if you
accuracy-related penalty, is a partnership or other entity, need additional space. Be sure to put your name and
plan, or arrangement, with a significant purpose to avoid identifying number on each sheet.
or evade federal income tax. For transactions on or before
Reference ID number. If you are filing Form 8275 to
August 5, 1997, a tax shelter is a partnership or other
disclose a position related to a foreign entity for which an
entity, plan, or arrangement, whose principal purpose is to
information return (such as Form 5471, Information Return
avoid or evade federal income tax.
of U.S. Persons With Respect to Certain Foreign
A tax shelter item is any item of income, gain, loss, Corporations) is filed, enter on Form 8275 the same
deduction, or credit that is directly or indirectly attributable reference ID number for the foreign entity that is entered
to the principal or significant purpose of the tax shelter to on the information return.
avoid or evade federal income tax.
If you are filing Form 8275 to report a position or
Tax Return Preparer Penalties positions related to multiple foreign entities, file a separate
Form 8275 for each foreign entity.
A preparer who files a return or claim for refund is subject
to a penalty in an amount equal to the greater of $1,000 or Part I
50% of the income derived (or to be derived) by the tax
return preparer, with respect to the return or claim, for Column (a). If you are disclosing a position contrary to a
taking a position which the preparer knew or reasonably rule (such as a statutory provision or IRS revenue ruling),
should have known would understate any part of the you must identify the rule in column (a).
liability if: Column (b). Identify the item by name.
• There is or was no substantial authority for the position; If any item you disclose is from a pass-through entity,
• The position is a tax shelter (as defined in section you must identify the item as such. If you disclose items
6662(d)(2)(C)(ii)) or a reportable transaction to which from more than one pass-through entity, you must
section 6662A applies and it wasn’t reasonable to believe
complete a separate Form 8275 for each entity. Also, see
that the position would more likely than not be sustained
How To File, earlier.
on its merits; or
• The position disclosed as provided in section 6662(d) Column (c). Enter a complete description of the item(s)
(2)(B)(ii) isn’t a tax shelter or a reportable transaction to you are disclosing.
which section 6662A applies, and there was no Example. If you are reporting entertainment expenses
reasonable basis for the position. in column (b), then you must list the items for
entertainment expenses in column (c), such as “theater
The penalty won’t apply if it can be shown that there
tickets, catering expenses, and banquet hall rentals.”
was reasonable cause for the understatement and that the
preparer acted in good faith. If you claim the same tax treatment for a group of
similar items in the same tax year, enter a description
In cases where any part of the understatement of the identifying the group of items you are disclosing rather
liability is due to a willful attempt by the return preparer to than a separate description of each item within the group.
understate the liability, or if the understatement is due to
Columns (d) through (f). Enter the location of the
reckless or intentional disregard of rules or regulations by
item(s) by identifying the form number or schedule in
the preparer, the preparer is subject to a penalty equal to
column (d), the line number in column (e), and the amount
the greater of $5,000 or 75% of the income derived (or to
of the item(s) in column (f).
be derived) by the tax return preparer with respect to the
return or claim. This penalty shall be reduced by the Part II
amount of the penalty paid by such person for taking an
Your disclosure statement must include a description of
unreasonable position, or a position with no reasonable
the relevant facts affecting the tax treatment of the item. To
basis, as described immediately above.
satisfy this requirement, you must include information that
A preparer isn’t considered to have recklessly or can reasonably be expected to apprise the IRS of the
intentionally disregarded a rule if a position is adequately identity of the item, its amount, and the nature of the
disclosed and has a reasonable basis. controversy or potential controversy. Information

Instructions for Form 8275 (Rev. 10-2024) 3

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concerning the nature of the controversy can include a       with these laws and to allow us to figure and collect the 
description of the legal issues presented by the facts.      right amount of tax.

        Unless provided otherwise in the General             You are not required to provide the information 
  !     Instructions, earlier, your disclosure won’t be      requested on a form that is subject to the Paperwork 
CAUTION considered accurate unless the information 
                                                             Reduction Act unless the form displays a valid OMB 
described above is provided using Form 8275. For             control number. Books or records relating to a form or its 
example, your disclosure won’t be considered adequate if     instructions must be retained as long as their contents 
you attach a copy of an acquisition agreement to your tax    may become material in the administration of any Internal 
return to disclose the issues involved in determining the    Revenue law. Generally, tax returns and return information 
basis of certain acquired assets. If Form 8275 isn’t         are confidential, as required by section 6103.
completed and attached to the return, the disclosure won’t 
be considered valid even if the information described        The time needed to complete and file this form will vary 
above is provided using another method, such as a            depending on individual circumstances. The estimated 
different form or an attached letter.                        burden for individual taxpayers filing this form is approved 
                                                             under OMB control number 1545-0074 and is included in 
Part III                                                     the estimates shown in the instructions for their individual 
                                                             income tax return. The estimated burden for all other 
Line 4. Contact your pass-through entity if you don’t        taxpayers who file this form is shown below.
know where its return was filed. However, for partners and 
S corporation shareholders, information for line 4 can be 
found on the Schedule K-1 that you received from the         Recordkeeping. . . . . . . . . . . . . . . . . . 3 hr., 35 min.
partnership or S corporation.                                Learning about the law
                                                             or the form. . . . . . . . . . . . . . . . . . .            1 hr.
  If the pass-through entity filed its return electronically 
using e-file, enter “e-file” on line 4.                      Preparing and sending
                                                             the form to the IRS. . . . . . . . . . . . .     1 hr., 6 min.
Paperwork Reduction Act Notice.         We ask for the 
information on this form to carry out the Internal Revenue 
laws of the United States. You are required to give us the   If you have comments concerning the accuracy of 
information if you wish to use this form to make adequate    these time estimates or suggestions for making this form 
disclosure to avoid the portion of the accuracy-related      simpler, we would be happy to hear from you. See the 
penalty due to a substantial understatement of income tax    instructions for the tax return with which this form is filed.
or disregard of rules, or to avoid certain preparer 
penalties. We need it to ensure that you are complying 

4                                                                           Instructions for Form 8275 (Rev. 10-2024)

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