Reporting Involvement: It requires material advisors—who may be tax professionals or other non-employee service providers—to disclose detailed information about the tax shelter transaction. This includes the nature of the transaction, the advisor’s role, and any compensation received.Enhancing IRS Oversight: By collecting data on these transactions, the IRS is better positioned to track and evaluate potential tax abuses. The disclosed details help the IRS identify areas where aggressive tax strategies might be misused.Ensuring Compliance: The information provided via Form 8918 assists in enforcing transparency and accountability, thereby deterring the use of questionable tax shelters.
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