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Wisconsin Department of Revenue

 Material Advisor Requirements to Disclose Reportable Transactions

  1. Who is a "material advisor"?
  2. What is a material advisor required to disclose to Wisconsin?
  3. What form does a material advisor use to disclose a reportable transaction to Wisconsin?
  4. For what periods does a material advisor have to disclose reportable transactions to Wisconsin?
  5. When does a material advisor have to make the disclosure to Wisconsin?
  6. Where does a material advisor send Wisconsin disclosure statements?
  7. What penalties apply to material advisors if they fail to follow these requirements?
  8. Are there other consequences that may apply to material advisors relating to abusive tax shelters?
  1. Who is a " material advisor"?

    Any person who provides material aid, assistance or advice with respect to organizing, managing, promoting, selling, implementing, insuring, or carrying out any reportable transaction and who derives income from these services in an amount that exceeds the following:

    • If the services are provided to an individual, $50,000. This threshold reduces to $10,000 if the reportable transaction is a listed transaction.
    • If the services are provided to an entity and not an individual, $250,000. This threshold reduces to $25,000 if the reportable transaction is a listed transaction.

  2. What is a material advisor required to disclose to Wisconsin?

    A material advisor is required to disclose to Wisconsin any reportable transaction for which the material advisor provided services to a taxpayer who is required to file a Wisconsin income or franchise tax return.

    Additionally, a material advisor must maintain a list identifying the name and taxpayer identification number of each Wisconsin taxpayer for whom the advisor provided services as a material advisor regarding a reportable transaction, and must provide the list at the Wisconsin Department of Revenue's written request. This list must be maintained for seven years after the date the services were provided.

  3. What form does a material advisor use to disclose a reportable transaction to Wisconsin?

    The material advisor should submit a copy of the federal form used to disclose the transaction to the IRS. Depending on when the transaction took place, that form may be Form 8918, Material Advisor Disclosure Statement, or Form 8264, Application for Registration of a Tax Shelter. There is no specific form required for the list of Wisconsin taxpayers affected by the reportable transaction.

  4. For what periods does a material advisor have to disclose reportable transactions to Wisconsin?

    For reportable transactions that are not listed transactions (and have not subsequently become listed transactions), only transactions for which the material advisor provided services after October 27, 2007 must be disclosed to Wisconsin. This also applies to the requirement to maintain the list of Wisconsin taxpayers affected by a reportable transaction.

    For listed transactions, a material advisor must disclose to Wisconsin the transactions for which the material advisor provided services on or after January 1, 2001, or before January 1, 2001 if the transaction affected a taxpayer's Wisconsin tax liability for a taxable year beginning on or after January 1, 2001.

  5. When does a material advisor have to make the disclosure to Wisconsin?

    The IRS currently requires these disclosures by the last day of the month following the end of the applicable calendar quarter. The federal due date may be January 31, April 30, July 31, or October 31. The due dates for Wisconsin disclosures are shown below:

    • For material advisor forms due to the IRS on October 31, 2007, the deadline for sending a copy to Wisconsin is March 31, 2008.
    • For material advisor forms due to the IRS before October 31, 2007, the deadline for sending a copy to Wisconsin is May 31, 2008.
    • For material advisor forms due to the IRS on or after January 31, 2008, the deadline for sending a copy to Wisconsin is 60 days after the federal due date for the form.

  6. Where does a material advisor send Wisconsin disclosure statements?

    Material advisors should send the Wisconsin disclosures to:

    Wisconsin Department of Revenue
    Tax Shelters Program
    P.O. Box 8958
    Madison, WI 53708-8958

  7. What penalties apply to material advisors if they fail to follow these requirements?

    • $100,000 for a material advisor's failure to disclose a listed transaction.
    • $15,000 for a material advisor's failure to disclose a reportable transaction that is not a listed transaction.
    • $10,000 for each day the material advisor does not provide the list of affected Wisconsin taxpayers, beginning with the 21st day after receipt of the Department's request for the list.

  8. Are there other consequences that may apply to material advisors relating to abusive tax shelters?

    Effective October 27, 2007, any person who organizes or assists in organizing a tax shelter or participates in the sale of any interest in a tax shelter, and who makes a statement that the person knows or has reason to know is false or fraudulent regarding the allowabilty of tax benefits to be achieved with the tax shelter, is subject to a penalty in an amount of 50% of the person's gross income derived from such act.

FOR MORE INFORMATION PLEASE CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Tax Shelters Program
P.O. Box 8958
Madison, WI 53708-8958
Phone: (608) 266-7177
Fax: (608) 267-0834
E-Mail Additional Questions

Last updated January 15, 2008