Overview
Title
Agency Collection Activities; Requesting Comments on Section 6708, Failure To Maintain List of Advisees With Respect to Reportable Transactions
Agencies
ELI5 AI
The IRS wants people to tell them if it's okay and helpful to collect certain information about people who give advice on tricky money matters, like special tax deals. They are asking for ideas on how to make this easier and better by May 5, 2025.
Summary AI
The Internal Revenue Service (IRS) is inviting public comments on the information collection related to Treasury Decision (TD) 9764, specifically regarding Section 6708, which deals with penalties for not maintaining lists of advisees for reportable transactions. This is part of a broader initiative to reduce paperwork burdens as per the Paperwork Reduction Act of 1995. The IRS is particularly interested in feedback on the necessity, accuracy, and ways to improve the collection process. Comments, due by May 5, 2025, will become public and assist in gaining approval for the collection tools used.
Abstract
The Internal Revenue Service, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. The IRS is soliciting comments concerning the collection of information in Treasury Decision (TD) 9764, Section 6708 Failure to Maintain List of Advisees with Respect to Reportable Transactions.
Keywords AI
Sources
AnalysisAI
The document in question is a notice from the Internal Revenue Service (IRS), which is a part of the U.S. Treasury Department. As published in the Federal Register, this notice seeks public comments on an information collection initiative related to Treasury Decision 9764. This decision pertains to Section 6708 of the Internal Revenue Code (IRC), which deals with penalties for failing to maintain lists of advisees involved in reportable transactions. The IRS's aim here is to collect feedback to improve the process and reduce the paperwork burden, in line with the Paperwork Reduction Act of 1995. Feedback is invited by May 5, 2025.
General Summary
The IRS is looking for comments on how to better handle information related to reportable transactions, specifically around maintaining lists of people (advisees) who have been given guidance on these transactions. This feedback process is an effort to make the system more efficient by reducing unnecessary paperwork and making compliance easier for those involved. The IRS is focusing on understanding the necessity and accuracy of their information collection processes and is considering ways to enhance them through public input.
Significant Issues and Concerns
Several issues emerge from the document. Firstly, there is a lack of clarity about what precisely counts as a "reportable transaction," which might confuse those unfamiliar with IRS terminology. Secondly, the criteria for identifying a "material advisor" under IRC section 6111 is not explained, leaving readers unclear about who is obligated to provide these lists.
The estimated number of responses and burden hours, which are very modest (five responses requiring a total of 40 hours annually), are listed without background data or justification. This lack of transparency makes it difficult for the public to understand or evaluate these figures.
Additionally, the document uses potentially complex legal terms without offering simplified explanations or resources for further reading, which could make it inaccessible to those not versed in tax law. Lastly, while the IRS encourages a range of feedback, it does not specify how submitted comments will be evaluated or influence decisions, potentially discouraging public participation.
Impact on the Public
For the general public, this document could lead to better transparency in IRS practices, especially concerning complex financial transactions that might otherwise be opaque. By making the processes surrounding reportable transactions clearer and more efficient, this initiative could simplify compliance for individuals and entities involved.
Impact on Specific Stakeholders
For material advisors, estate trustees, and individuals who are directly subject to the reporting requirements, clarifying and potentially easing the administrative burdens would likely be welcome. However, the lack of clarity and potential ambiguity in the document regarding responsibilities and definitions could initially impose additional research or consultation burdens on these stakeholders to fully understand their obligations.
Ultimately, this effort could lead to a more straightforward interaction with the IRS, potentially saving time and reducing errors for those involved in advising on or participating in reportable transactions. However, achieving this will depend largely on how the IRS integrates public input into actual policy changes and whether they subsequently provide clear and accessible guidance on any adjustments to their procedures.
Issues
• The document does not provide a detailed explanation of what constitutes 'reportable transactions' under IRC section 6708, which could lead to ambiguity for the reader.
• The document mentions the requirement for material advisors to make lists available but does not clarify the criteria for being classified as a material advisor under IRC section 6111.
• The estimated number of responses (5) and total annual burden hours (40) might not seem significant; however, no justification or background data is provided, potentially undermining transparency regarding estimation methods.
• Potentially complex legal references, such as IRC sections 6708 and 6112, are cited without simplified explanations or links to further resources, which could make the document difficult to understand for lay readers.
• While the request for comments includes a wide range of topics, it does not specify how those comments will be weighted or analyzed, which may lead to uncertainty about the impact of public input on the decision-making process.