Form 8886 Due Date and Filing Requirements

Form 8886, the Reportable Transaction Disclosure Statement, is a document used by taxpayers to notify the Internal Revenue Service (IRS) about their participation in certain transactions. The IRS identifies these “reportable transactions” as having the potential for tax avoidance. Filing this form is a disclosure requirement and does not automatically mean the tax treatment of the transaction is improper. Any taxpayer, including individuals, corporations, partnerships, and trusts, who participates in a reportable transaction and is required to file a federal tax return must file Form 8886.

Determining the Filing Deadline

The deadline for filing Form 8886 is the same as the due date of the taxpayer’s income tax return for the year of participation, and the form must be attached to that return. This due date automatically includes any extensions granted for filing the tax return. For instance, if a taxpayer files an extension to October 15, then Form 8886 is also due by that extended date.

This filing obligation applies for each year the taxpayer participates in the transaction, requiring a separate Form 8886 to be attached to the tax return for each of those years. This requirement extends to amended returns reflecting participation in a reportable transaction. Similarly, if a transaction results in a loss that is carried back to a prior tax year, the disclosure form must be attached to the application for a tentative refund, such as Form 1045 or Form 1139.

Separate Filing Requirement with OTSA

For the very first tax year that a Form 8886 is filed for a specific transaction, the taxpayer must send an identical copy of that form to the IRS Office of Tax Shelter Analysis (OTSA). This is a distinct and separate action from simply attaching the form to the annual tax return. The due date for mailing or faxing this copy to OTSA is the same as the due date for the tax return with which the original form is filed, including any extensions.

The copy should be mailed to the Internal Revenue Service at OTSA Mail Stop 4915, 1973 Rulon White Blvd., Ogden, UT 84201. As an alternative to mailing, the IRS also permits this separate copy to be faxed to OTSA at 844-253-2553. This procedural step applies only to the initial year of disclosure for a given transaction; subsequent annual filings of Form 8886 for the same ongoing transaction do not require a separate copy to be sent to OTSA.

Penalties for Failure to Disclose

Failing to meet the filing deadlines for Form 8886 can lead to penalties under Internal Revenue Code (IRC) Section 6707A. These penalties are imposed for each failure to properly disclose, which includes not attaching the form to the tax return, not sending the required copy to OTSA, or filing an incomplete form. The penalty is not contingent on whether the transaction actually resulted in an underpayment of tax.

The penalty is 75% of the decrease in tax resulting from the transaction, but the final amount is subject to specific limits that vary by the type of transaction. For most reportable transactions, the penalty has a minimum of $5,000 for individuals and $10,000 for other entities, and a maximum of $10,000 for individuals and $50,000 for other entities.

For listed transactions—those specifically identified by the IRS as tax avoidance schemes—the penalty is still 75% of the tax decrease, but the maximum increases to $100,000 for an individual and $200,000 for other entities. Unlike other reportable transactions, there is no minimum penalty for failing to disclose a listed transaction.

These disclosure penalties are separate from any other penalties that may apply. For example, if a reportable transaction leads to an understatement of tax, a separate accuracy-related penalty of 20% of the understatement may be imposed. This rate increases to 30% if the transaction was not properly disclosed on Form 8886.