The ABA Tax Section has submitted comments to the IRS on Notice 2004-80 (Interim Guidance Under §§ 6111, 6112 and 6708). Here are the Executive Summary and Major Recommendations:

In Notice 2004-801, the Service and Treasury requested public comment “regarding the requirements of §§ 6111, 6112, and 6708, including comments on the definition of material advisor and comments on ways to reduce taxpayer burden and improve disclosure.” On January 28, 2005, the Service and Treasury issued Notice 2005-17, which stated that the Service and Treasury intend to issue further guidance on the issue of the date on which a person becomes a material advisor with respect to a reportable transaction “including whether the obligation of a material advisor arises only when a reportable transaction is entered into by a taxpayer.” The following comments will address certain issues relating to the requirements of §§ 6111, 6112 or 67082 as modified by the interim guidance set forth in Notice 2004-80 and Notice 2005-17, and will offer certain suggestions for reducing taxpayer burden and improving disclosure.

These comments supplement the comments prepared by individual members of the Committee on Administrative Practice and the Tax Shelters Tax Force of the ABA Tax Section and submitted by letter dated January 26, 2005.

We commend the Service and Treasury for promptly issuing Notice 2004-80 and Notice 2005-17 and for clarifying that only a practitioner who makes a “tax statement” may be classified as a “material advisor,” as those terms are defined in Regulations under § 6112. Our primary recommendation is that further guidance clarify that an advisor cannot “become” a material advisor until the taxpayer with respect to whom or for whose benefit the advisor has made a tax statement enters into a transaction. We [also] recommend that:

• [C]lassification as a “material advisor” be based only upon the amount of fees actually received or billed, not upon an advisor’s expectations regarding future receivables.
• [F]urther guidance provide that material advisor status is limited to persons who make tax statements that constitute “material” aid, assistance or advice; casual statements and de minimis tax services should be excluded.
• [F]urther guidance provide that, for purposes of §§ 6707 and 6708, the reporting and list-maintenance obligations of material advisors are limited to providing information that the material advisor knows, or reasonably should know, as of the relevant date.
• [T]he date for the initial filing of disclosures by material advisors should be delayed until further guidance is issued addressing the issues raised by these comments.