With the IRS Because They Are Being Handled Improperly
IRS has made many deductions reportable, but require specific
forms to properly disclose the transaction.
In an attempt to curb the use of abusive tax shelters, new, stiff
penalties are in effect for failure to adequately disclose a
reportable transaction to the IRS. But unlike most other
penalties, the law significantly limits the IRS’s ability to rescind
or abate these penalties for reasonable cause or other
This means that taxpayers must be much more vigilant in
identifying and disclosing these transactions. Even your CPA
may not recognize a particular transaction as reportable.
Don't fall into the trap of thinking that reportable transactions
are solely limited to what the IRS calls "abusive tax shelters."
The definition of a reportable transaction includes many
transactions that are routine and perfectly legitimate. It can
include any transaction with the potential for tax evasion or
avoidance. If you entered into any arrangement with the
primary purpose of avoiding or reducing taxes, that is probably
a reportable transaction that need to be disclosed.