n-17-08.pdf

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Transaction of Interest -- Section 831(b) Micro-Captive Transactions

Notice 2017-08

SECTION 1. BACKGROUND
On November 1, 2016, the Department of the Treasury (the “Treasury
Department”) and the Internal Revenue Service (the “IRS”) released Notice 2016-66,
2016-47 I.R.B. 745, identifying transactions that are the same as, or substantially similar
to, the transaction described in section 2.01 of Notice 2016-66 as transactions of
interest for purposes of § 1.6011-4(b)(6) of the Income Tax Regulations and §§ 6111
and 6112 of the Internal Revenue Code. Notice 2016-66 alerted persons involved in
these transactions to certain responsibilities and penalties that may arise from their
involvement with these transactions.
Generally, §1.6011-4(e)(1) provides that the disclosure statement for a reportable
transaction must be attached to the taxpayer’s tax return for each taxable year for which
a taxpayer participates in a reportable transaction. In addition, a disclosure statement
for a reportable transaction must be attached to each amended return that reflects a
taxpayer’s participation in a reportable transaction. A copy of the disclosure statement
must be sent to the Office of Tax Shelter Analysis (OTSA) at the same time that any
disclosure statement is first filed by the taxpayer pertaining to a particular reportable
transaction.
In addition, §1.6011-4(e)(2)(i) provides that if a transaction becomes a
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transaction of interest after the filing of a taxpayer’s tax return (including an amended
return) reflecting the taxpayer’s participation in the transaction of interest and before the
end of the period of limitations for assessment of tax for any taxable year in which the
taxpayer participated in the transaction of interest, then a disclosure statement must be
filed, regardless of whether the taxpayer participated in the transaction in the year the
transaction became a transaction of interest, with OTSA within 90 calendar days after
the date on which the transaction became a transaction of interest.
Section 301.6111-3(e) provides that the material advisor’s disclosure statement
for a reportable transaction must be filed with OTSA by the last day of the month that
follows the end of the calendar quarter in which the advisor became a material advisor
with respect to the reportable transaction or in which the circumstances necessitating an
amended disclosure statement occur.
Section 3.03 of Notice 2016-66 provided that the rules regarding the time for
providing disclosure of a transaction described in section 2.01 of Notice 2016-66 are in
§ 1.6011-4(e), with respect to participants in the transaction of interest, and § 301.6111-
3(e), with respect to material advisors. Notice 2016-66 further provided that, if, under
§ 1.6011-4(e), a participant is required to file a disclosure statement with respect to a
transaction described in section 2.01 of Notice 2016-66 after November 1, 2016, and
prior to January 30, 2017, that disclosure statement will be considered to be timely filed
if the taxpayer alternatively files the disclosure with the Office of Tax Shelter Analysis by
January 30, 2017.
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After the release of Notice 2016-66, the Treasury Department and the IRS
received several requests for an extension of time for participants and material advisors
filing disclosure statements. This notice modifies section 3.03 of Notice 2016-66 to
provide an extension of time for the filing of those disclosure statements.
SECTION 2. EXTENSION AND MODIFICATION OF TIME FOR DISCLOSURE
The time for providing disclosure of a transaction described in section 2.01 of
Notice 2016-66 set forth in § 1.6011-4(e), with respect to participants in the transaction
of interest, and § 301.6111-3(e), with respect to material advisors, is extended.
Accordingly, section 3.03 of Notice 2016-66 is modified as follows:
.03 Time for Disclosure
a. Participants
For rules regarding the time for providing disclosure of a transaction
described in section 2.01 of this notice, see § 1.6011-4(e). However, if, under
§ 1.6011-4(e)(1), a taxpayer is required to file a disclosure statement with respect
to a transaction described in section 2.01 of this notice after November 1, 2016,
and prior to May 1, 2017, that disclosure statement will be considered to be
timely filed if the taxpayer alternatively files the disclosure with the Office of Tax
Shelter Analysis by May 1, 2017 (because April 30 is a Sunday). In addition, for
purposes of disclosure of transactions described in section 2.01 of this notice, the
90-day period provided in § 1.6011-4(e)(2)(i) is extended to 180 days.

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b. Material advisors
For rules regarding the time for providing disclosure of a transaction
described in section 2.01 of this notice, see § 301.6111-3(e). However, if under §
301.6111-3(e) a material advisor is required to file a disclosure statement with
respect to a transaction described in section 2.01 of this notice by January 31,
2017, that disclosure statement will be considered to be timely filed if the material
advisor files the disclosure with the Office of Tax Shelter Analysis by May 1, 2017
(because April 30 is a Sunday).
SECTION 3. EFFECT ON OTHER DOCUMENTS
Section 3.03 of Notice 2016-66 is modified.
SECTION 4. DRAFTING INFORMATION
The principal author of this notice is John E. Glover of the Office of Associate
Chief Counsel (Financial Institutions & Products). For further information regarding this
notice contact Mr. Glover at (202) 317-6995 (not a toll-free call).
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