Material Advisor Disclosure of Reportable Or Listed Transactions
MATERIAL ADVISOR DISCLOSURE OF REPORTABLE OR LISTED TRANSACTIONS
Regulation 39-22-656
(1)Colorado Disclosure Statement for Federal Transactions and Colorado Listed Transactions.
(a)Federal Transactions. A material advisor, who is required to file with the Internal Revenue Service pursuant to United States Department of the Treasury Regulation 26 C.F.R. § 301.60111-3, as effective on August 3, 2007 (hereinafter “Treasury Regulation § 301.60111-3”) a disclosure statement with respect to a Federal Transaction described in Department regulation 39-22-652, shall file with the Department a complete copy of the IRS form 8918, or any successor form, and amendments thereto, that the material advisor filed, or should have filed, with the Internal Revenue Service.
(b)Colorado Listed Transactions.
(i)Except as otherwise noted below, the provisions of Treasury Regulation §301.6111-3 shall apply to a material advisor with respect to a Colorado Listed Transaction.
(ii)The following provisions of Treasury Regulation § 301.6111-3 are modified as follows:
(A)“Listed transaction,” as defined in subsection 3(c)(2) of the Treasury Regulation § 301.6111-3 means a Colorado Listed Transaction.
(B)“Tax” or “Federal tax” means Colorado income tax.
(C)The gross income threshold set forth in subsections 3(b)(3)(i)(B) and 3(b)(3)(ii) (but not 3(b)(3)(i)(A))of Treasury Regulation § 301.6111-3 appliesy and without regard to the state in which the gross income is earned.
(iii)The following provisions of Treasury Regulation §301.6111-3 shall not apply with respect to a Colorado Listed Transaction:
(A)Subsections 3(b)(2)(i)(B) and (D),
(B)Subsections 3(b)(2)(ii)(B) through (D),
(C)Subsection 3(b)(3),
(C)sSubsection 3(b)(4)(i)(B),
(D)Subsections 3(c)(1) and (13),
(E)The form and content of the disclosure statement set forth in subsection 3(d)(1); except, provisions of said subsection relating to an incomplete form (i.e., Material Advisor’s Colorado Listed Transactions Disclosure Statement) and the requirement to amend such form apply,.
(F)Time for providing disclosure set forth in subsection 3(e) and (f) (see, subsection (c) of Department regulation 39-22-656(c), below, for applicable deadlines), but the remaining provisions of subsection (3(e) (regarding time period to file amended disclosures) and (f) (regarding designation agreements) shall apply,
(G)sSubsection 3(h) (regarding rulings), and
(H)effective / applicability date set forth in Subsection 3(i).,
(iv)Content of disclosure. A material advisor shall, with respect to a Colorado Listed Transaction, file a Material Advisor’s Disclosure Statement, which shall include the following:
(A)Material advisor’s name, identifying number, telephone number, mailing address; contact person’s name, title, and telephone number. If the material advisor is party to a designation agreement, the name(s), address(es), telephone number(s), contact name(s) and telephone number(s), of the other parties to the agreement.
(B)Names, including trade names, if any, mailing and physical location addresses of the Owner and of the Captive Entity.
(C)A description of the material aid, assistance, or advice provided.
(D)Signature of The disclosure statement shall be signed by the material advisor and shall include the following attestation: “I declare that I have examined this statement, and to the best of my knowledge and belief, it is true, correct, and complete.”
(E)For a Colorado Listed Transaction that is also a Federal Transaction, the material advisor shall file a complete copy of IRS form 8918, or any successor form, and amendments thereto that the material advisor filed, or should have filed, with the Internal Revenue Service, and shall not file a Material Advisor’s Colorado Listed Transaction Disclosure Statement.
(v)Retention of Information. A material advisor shall, with respect to a Colorado Listed Transaction, retain, for a period of seven years from the date the person first becomes a material advisor, any records in the material advisor’s possession or control regarding the following items:
(A)tThe role of any other entity(ies) or individual(s) known or reasonably believed known to have provided material aid, assistance, or advice to the transaction and the name, address, identifying number (if known), and telephone of such entity(ies) or individual(s)
(B)wWhether a related entity or individual is needed, an entity or individual without Colorado income tax nexus is needed, a tax-exempt entity is needed, and/or an entity that is not includable in a Colorado combined return is needed, in order to obtain the intended tax benefit created by the transaction, and, if so, the name of each such entity or individual, a description of the role of each individual or entity and the name of the individual’s or entity’s country of existence, or state of incorporation and/or state of commercial domicile if a particular country or state (including a particular type of country or state, e.g., separate filing state or combined reporting state) is required to obtain the intended tax benefit.
(C)wWhether, in order to obtain the intended tax benefit, the income, or gain from the transaction, is allocated directly or indirectly to an individual or entity that has a net operating loss and/or unused loss or credit and, if so, a description of the role of each individual or entity in the transaction.
(D)aA description or copy of the financial instruments used in the transaction.
(E)aA description or explanation of the intended tax benefit created by the transaction in each year.
(F)tThe state and federal tax code section(s) used to claim the tax benefit(s) generated by the transaction
(G)aA description of the transaction(s) for which material aid, assistance, or advice, was provided, including the following:
(I)the nature of the expected tax treatment and expected tax benefits created by the transaction for all affected years,
(II)the years the tax benefits are expected to be claimed,
(III)the role of the entities or individuals identified in subsections 1 and 2, above,
(IV)the role of the financial instruments identified in subsection 4, above,
(V)a description of how the state and federal tax code section(s) identified in subsection 6, above, are applied and how they allow the taxpayer to obtain the desired tax treatment.
(c)Time for Providing a Disclosure Statement.
(i) The material advisor must, with respect to a Federal Transaction or Colorado Listed Transaction, file the applicable disclosure statement within six months of the date in which the transaction is entered into by the taxpayer. If the person is not a material advisor (see, Treasury Regulation § 301.6111-3(b)(4)) until after the six month period, then the disclosure statement is due the month following the month in which the person first becomes a material advisor..
(ii)The material advisor is not required to file in any subsequent year a disclosure statement for the same or substantially similar transaction, unless the material advisor becomes aware of facts that indicate the disclosure statement is materially incorrect or incomplete. The material advisor shall file an amended disclosure statement on the last day of the month following the quarter in which the material advisor knew or should have known the facts that necessitate the filing of an amended disclosure statement.
(iii)Notwithstanding subparagraph (i) of this paragraph (c), the Department shall waive the application of any penalty for any disclosure statement for a Colorado Listed Transaction that is filed by a material advisor prior to March 31, 2010. This provision is designed to allow any material advisor to comply with the provisions of this regulation.
(d)Filing a Disclosure Statement. Disclosure statements shall be filed with the:
Colorado Department of Revenue
Field Audit Section
720 S. Colorado Boulevard
Suite 400N
Denver, Colorado 80246
(2)Effective Date. A material advisor shall file a disclosure statement concerning a transaction for which the material advisor provides material aid, assistance, or advice with respect to organizing, managing, promoting, selling, implementing, insuring, or carrying out such transaction and such material aid, assistance, or advice is provided by the material advisor on or after May 9, 2009 or the transaction with respect to which the material aid, assistance or advice is provided, occurs on or after May 9, 2009, even though the material aid, assistance, or advice is provided prior to such date.
(3)Incorporation by Reference. United States Department of the Treasury Regulation 26 C.F.R. §301.60111-3, as effective on August 3, 2007 (“Treasury Regulation § 301.60111-3”) is hereby incorporated by reference. This regulation 39-22-656 does not incorporate later amendments to or editions of Treasury Regulation § 301.60111-3. A copy of Treasury Regulation § 301.60111-3 has been provided to the state publications depository and distribution center. Treasury Regulation § 301.60111-3 may be examined at any state publications depository library. Additionally, the Department shall maintain certified copies of the complete text of Treasury Regulation § 301.60111-3, which shall be available for public inspection during regular business hours. Certified copies of the material incorporated shall be provided at cost upon request. Any member of the public wishing to obtain or examine a copy of Treasury Regulation § 301.60111-3 may contact the:
Colorado Department of Revenue
Office of Tax Policy
1375 Sherman Street
Denver, Colorado, 80203