Form 8275 Instructions: Disclosure, Filing, and Recordkeeping

Form 8275, the Disclosure Statement, is the form you attach to a return to tell the IRS you’ve taken a tax position that could be questioned, and these Form 8275 instructions walk through the thresholds it protects against, the parts you have to complete, and the deadline for filing it. Used correctly, the disclosure shields you from the 20% accuracy-related penalty on any resulting underpayment, provided your position has at least a reasonable basis in tax law.¹ It is not a blanket waiver. It works only when your position clears certain legal standards and stays clear of a specific list of excluded items.

When the Form Actually Protects You

Form 8275 addresses two slices of the accuracy-related penalty under Internal Revenue Code Section 6662: underpayments caused by disregarding rules such as IRS revenue rulings and notices, and underpayments from a substantial understatement of income tax on non-tax-shelter items.² The penalty is 20% of the portion of the underpayment tied to those categories.¹

For most individual taxpayers, a substantial understatement exists when the understatement exceeds the greater of 10% of the tax that should have been shown on the return or $5,000. If you claim a qualified business income deduction under Section 199A, the percentage drops to 5%. Corporations face a different test: the understatement must exceed the lesser of 10% of the required tax (or $10,000 if greater) and $10,000,000.¹

When you adequately disclose a position on Form 8275 and have a reasonable basis for it, the disclosed item is excluded from the understatement calculation. That exclusion can pull your understatement below the threshold and eliminate the penalty.¹

The Reasonable Basis Standard

Your position must be reasonably based on at least one recognized tax authority: a statute, regulation, revenue ruling, court case, or similar source. Practitioners sometimes describe this as roughly a 20% likelihood of being sustained, compared to the “substantial authority” standard closer to 40% that would let you skip disclosure altogether. If you can point to a legitimate authority supporting your position, even one where the weight of authority leans the other way, you likely clear the bar. A position that is merely arguable or based on a wishful reading of the law does not.

When You Can Skip Form 8275

Each year the IRS publishes a Revenue Procedure identifying items where proper completion of the return itself counts as adequate disclosure. For 2025 tax year returns, that guidance is Revenue Procedure 2026-12. If your item falls within that list and you’ve filled out the applicable forms and schedules correctly, no separate Form 8275 is required. Items with complex or unusual facts that don’t fit the published guidance still need the form.²

Positions Form 8275 Cannot Protect

The list of exclusions is long, and this is where taxpayers get tripped up. The IRS instructions state that disclosure on Form 8275 does not avoid the penalty for:

Negligence, meaning a failure to make a reasonable attempt to comply with the tax code.
Disregard of Treasury regulations, which requires Form 8275-R instead.
Tax shelter items, including any substantial understatement on an item attributable to a partnership, entity, plan, or arrangement with a significant purpose of avoiding federal income tax.
Substantial or gross valuation misstatements, including non-arm’s-length pricing.
Tax benefits claimed from transactions lacking economic substance under Section 7701(o).
Undisclosed foreign financial asset understatements.
Inconsistent estate basis reporting.

The economic substance exclusion is particularly harsh. Undisclosed transactions lacking economic substance carry a doubled penalty of 40%, and filing an amended return after the IRS contacts you about an examination won’t help.¹ If your position falls into any of these categories, Form 8275 simply won’t do what you need.³

Form 8275 or Form 8275-R

Form 8275 covers positions that aren’t contrary to a Treasury regulation. Form 8275-R, the Regulation Disclosure Statement, covers positions that directly challenge or contradict a regulation.⁴ A position contrary to a revenue ruling or IRS notice goes on Form 8275. A position contrary to a Treasury regulation goes on Form 8275-R and must represent a good-faith challenge to the regulation’s validity while still having a reasonable basis.⁵ Filing the wrong form won’t protect you: a position contrary to a regulation disclosed on Form 8275 does not satisfy the disclosure requirements.

Completing Part I: Identifying the Item

Part I is a six-column grid that creates a precise audit trail from your disclosed position to its location on your return. Each row addresses one item, and every column must be filled in.²

Column (a), Rule or regulation: the full citation for the rule you’re addressing, such as a specific revenue ruling number or statutory provision.
Column (b), Item name: the item identified by name. If the item comes from a pass-through entity, label it as such. Items from different pass-through entities each require a separate Form 8275.
Column (c), Description: a complete description. If column (b) says “entertainment expenses,” column (c) should list the actual items, such as theater tickets and catering costs.
Column (d), Form or schedule: the tax form or schedule where the item appears, such as Schedule C or Form 1065.
Column (e), Line number: the specific line on that form.
Column (f), Amount: the dollar amount of the item being disclosed.

If you’re claiming the same tax treatment for a group of similar items in one tax year, describe the group as a whole rather than listing each item separately.²

Completing Part II: Your Legal Argument

Part II is the narrative. The IRS needs enough detail to understand three things: the identity and amount of the item, the relevant facts, and the nature of the legal controversy.

Start with the facts. Lay out the circumstances that affect the tax treatment of the item. Then explain the legal issue those facts create and walk through your reasoning. If your position contradicts a revenue ruling, explain specifically why that ruling doesn’t apply to your facts or why you believe it’s legally flawed. A vague reference to disagreement with the IRS won’t work. The explanation should show that you’ve thought through the authority supporting your position and can articulate a reasonable basis for it.

If Part II runs out of room, continue in Part IV on page two of the form or attach a separate continuation sheet. Any continuation sheet must include your name and taxpayer identification number.²

Completing Part III: Pass-Through Entity Items

Part III applies only when you’re disclosing an item that originated from a pass-through entity: a partnership, S corporation, estate, trust, regulated investment company, real estate investment trust, or real estate mortgage investment conduit.⁶ Complete this section only if the entity itself hasn’t already made the required disclosure on its own return.

Line 1: full name, address, and ZIP code of the pass-through entity.⁶
Line 2: the entity’s Employer Identification Number.
Line 3: the entity’s tax year when the item originated. Watch this closely when the entity uses a fiscal year that differs from your calendar year.
Line 4: where the entity filed its return. If you don’t know, check the Schedule K-1 you received. If the entity filed electronically, enter “e-file.”²

Part III creates the link the IRS needs to trace the item from your individual return back to the entity’s filing.

When and How to File

Attach Form 8275 to the original return it relates to. The form must be filed by the return’s due date, including extensions.³ A late-filed Form 8275 on an otherwise timely return won’t give you penalty protection.

If you missed the disclosure on your original return, you may still be able to file Form 8275 with a qualified amended return. Under Treasury Regulation Section 1.6664-2(c)(3), an amended return qualifies if it’s filed before the earliest of three triggering events: the date the IRS first contacts you about an examination, the date the IRS contacts a promoter connected to a tax avoidance activity you participated in, or, for pass-through items, the date the IRS contacts the pass-through entity about an examination.⁷ Once any of those events occurs, the window closes.

Electronic filing software handles the attachment and transmission of Form 8275 as part of the e-filed return. Paper filers should place the form prominently with the return and mail it to the IRS service center indicated in the instructions for the underlying return.

Two recurring-situation rules matter. Disclosures for carryback or carryover items only need to be filed with the return for the year the item first arose. Recurring items such as depreciation expense require a new Form 8275 for each tax year the item appears.²

Reportable Transactions Need Form 8886 Too

If the position you’re disclosing relates to a reportable transaction, Form 8275 alone is not enough. You must also follow the disclosure requirements in Treasury Regulation Section 1.6011-4(d), which typically means filing Form 8886, Reportable Transaction Disclosure Statement.² Reportable transactions include listed transactions the IRS has identified as tax avoidance schemes, confidential transactions offered under conditions of secrecy with advisor fees, transactions with contractual fee protection tied to tax results, and loss transactions exceeding certain dollar thresholds.⁸ Form 8886 has its own filing requirements and deadlines that run alongside Form 8275.

Frivolous Positions Don’t Belong on This Form

Filing a disclosure statement that advances a frivolous argument, one the IRS has identified as baseless, will not protect you from the accuracy-related penalty and will trigger a separate $5,000 civil penalty under Section 6702. That penalty applies on top of any other penalties you owe. You can withdraw a frivolous submission within 30 days of receiving IRS notice to avoid it, but Form 8275 should never be used as a vehicle for positions that lack any basis in tax law.⁹

Keeping the Records

Keep a copy of every Form 8275 you file along with the supporting documentation: the legal authorities you relied on, the factual narrative, and any professional opinions. The IRS requires you to retain records that support items on your return until the applicable period of limitations expires.¹⁰

For most taxpayers that means at least three years from the date you filed. If you underreport income by more than 25% of the gross income on your return, the period extends to six years. If you file a claim involving worthless securities or a bad debt deduction, keep records for seven years. If you never filed the return or filed a fraudulent one, there is no expiration.¹⁰ A Form 8275 disclosure signals a position the IRS may question, so erring on the longer side is the safer move.

1
Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments
2
Internal Revenue Service. Instructions for Form 8275
3
Internal Revenue Service. Instructions for Form 8275
4
Internal Revenue Service. Instructions for Form 8275-R – Regulation Disclosure Statement
5
Internal Revenue Service. About Form 8275-R, Regulation Disclosure Statement
6
Internal Revenue Service. Form 8275 – Disclosure Statement
7
Internal Revenue Service. 26 CFR Part 1 TD 9186 – Qualified Amended Returns
8
Internal Revenue Service. Instructions for Form 8886
9
Office of the Law Revision Counsel. 26 USC 6702 – Frivolous Tax Submissions
10
Internal Revenue Service. How Long Should I Keep Records