IRC 6111 and IRC 6112: Material Advisor Disclosure and List Maintenance Practitioner Guide

1. Overview: Why IRC 6111 and IRC 6112 Carry the Highest Per-Transaction Advisor Penalties in the Code

IRC 6111 and IRC 6112 are the two statutes that place affirmative disclosure and recordkeeping obligations on the advisor side of a reportable or listed transaction. Congress designed them to complement the taxpayer-side disclosure system (Form 8886, governed by Reg. 1.6011-4 and IRC 6707A) by independently requiring the attorneys, CPAs, financial planners, and other professionals who design and sell these arrangements to come forward to the IRS.

IRC 6111 requires every "material advisor" to file Form 8918 (Material Advisor Disclosure Statement) with the IRS and subjects non-filers to penalties of $50,000 per failure (or $200,000 per failure for listed transactions -- verify current amounts at IRS.gov). IRC 6112 requires those same material advisors to maintain a list of every person who received their advice on a reportable transaction and to furnish that list to the IRS within 20 business days of a written request. A material advisor who ignores the list-maintenance obligation faces the IRC 6708 daily penalty of $10,000 per day after the 20-business-day window closes -- with no statutory cap on the total that can accrue until the list is furnished (verify current amounts at IRS.gov).

The practical stakes have never been higher. In October 2025, Treasury finalized TD 10022, designating certain micro-captive insurance arrangements (those using the IRC 831(b) small-insurance-company election) as listed transactions. Every advisor who provided material tax advice with respect to a qualifying captive arrangement now has a Form 8918 filing obligation that may be retroactive to the date they first provided that advice. Separately, the IRS Large Business and International (LB&I) division has announced a 2026 compliance campaign specifically targeting IRC 6112 list-maintenance failures, with a reported focus on advisors who worked on syndicated conservation easements, micro-captive arrangements, and related high-scrutiny transactions (practitioners should verify current campaign status at IRS.gov).

This guide explains who is a material advisor, what each obligation requires, how the two statutes interact with the client-side disclosure regime, and what a six-step compliance protocol looks like for a practice conducting a retroactive exposure audit.

2. Who Is a Material Advisor Under IRC 6111?

IRC 6111(b) defines a "material advisor" as any person who:

1. Provides any material aid, assistance, or advice with respect to organizing, managing, promoting, selling, implementing, insuring, or carrying out any reportable transaction; and
2. Directly or indirectly derives gross income in an amount that meets or exceeds the applicable threshold in exchange for that aid, assistance, or advice.

Both elements must be present. A person who structured a reportable transaction but received no compensation does not meet the definition. Likewise, a person who was paid above the threshold for advice that touched a reportable transaction but whose advice was not material to the transaction may not meet the first element -- though the IRS reads "material" broadly, and advisors should not assume marginality without a documented factual analysis.

The Fee Threshold Test: Regulatory Nuance

The gross income threshold that triggers material advisor status is set in the Treasury regulations and differs by transaction type and by the type of advisor (individual versus entity). The key thresholds under the regulations, as interpreted and applied by the IRS, have specific dollar amounts that vary by category. The amounts have been reported in practitioner literature as follows (verify all current threshold amounts in Treas. Reg. section 301.6111-3 and at IRS.gov before relying on these figures, as they are subject to regulatory revision):

• For most reportable transactions (excluding listed transactions), the threshold is lower for individuals providing advice to natural-person clients than for entities or for advice to corporate clients.
• For listed transactions, the threshold is typically lower than for other reportable transaction categories, reflecting the greater severity of the listed-transaction designation.
• The threshold applies to gross income derived from providing material aid with respect to the specific reportable transaction, not gross income from all services to the client.

Because the regulatory thresholds carry nuance and have been the subject of IRS guidance updates, every practitioner who advises on structured transactions should verify the current applicable threshold in the regulations and at IRS.gov rather than relying solely on secondary sources.

Who Counts as a Material Advisor in a Transaction Chain?

When multiple professionals contribute to organizing, promoting, or implementing a reportable transaction, each must independently evaluate whether they are a material advisor. An attorney who drafted the transaction documents, a CPA who opined on tax treatment, a financial planner who recommended the arrangement to a client, and a promoter who marketed the structure may each be a material advisor if each provided material aid and each derived gross income above the applicable threshold. The obligations under IRC 6111 and IRC 6112 apply independently to each advisor in the chain -- one advisor's compliance does not satisfy another's obligation.

3. Reportable Transaction Categories Under Reg. 1.6011-4

The material advisor disclosure obligation applies when the underlying transaction is a "reportable transaction" under Treas. Reg. 1.6011-4. The regulation currently recognizes the following categories. Because the IRS updates the lists of designated transactions through published guidance, practitioners must verify the current status of any transaction at IRS.gov before concluding that a specific engagement is or is not reportable.

All thresholds and designation statuses should be independently verified in Treas. Reg. 1.6011-4, the applicable published IRS guidance, and at IRS.gov before advising clients. The IRS updates listed transaction and TOI designations through notices and final regulations on an ongoing basis.

4. IRC 6111 and Form 8918: What to File, When, and What Happens If You Miss the Deadline

Form 8918 Content Requirements

Form 8918 (Material Advisor Disclosure Statement) must contain:

• Identifying information for the material advisor (name, address, TIN, and type of entity).
• A complete description of the reportable transaction, including all steps, principal parties, and the expected tax treatment.
• The type of reportable transaction (listed transaction, transaction of interest, confidential transaction, etc.).
• The name and identifying information of each person to whom the advisor provided material aid (this disclosure list is also the starting point for the IRC 6112 client-list requirement).
• The amount of gross income derived from providing material aid to the transaction.
• Additional information specified in the Form 8918 instructions and in Treas. Reg. section 301.6111-3.

A single Form 8918 may cover multiple clients who received advice with respect to the same transaction. If the advisor provided material aid with respect to more than one separate reportable transaction, a separate Form 8918 is required for each transaction.

Filing Deadline

Form 8918 must be filed by the due date, including extensions, of the material advisor's own federal income tax return for the tax year in which the advisor first became a material advisor with respect to the transaction. For an individual advisor on a calendar tax year, with a six-month extension, this is October 15. For a calendar-year corporate advisor, with extension, this is November 15. Verify the exact deadline for your entity type at IRS.gov.

Failure-to-File Penalties Under IRC 6111(c)

A material advisor who fails to file Form 8918 when required is subject to a penalty per failure. For reportable transactions that are not listed transactions, the penalty is reported in published guidance as $50,000 per failure (verify current penalty amount at IRS.gov, as amounts are subject to change). For listed transactions, the penalty is reported as $200,000 per failure (verify current penalty amount at IRS.gov). These are per-transaction, per-failure penalties. A material advisor who failed to file Form 8918 for each of five separate reportable transactions faces five separate penalty assessments.

5. TD 10022 Micro-Captive Listed Transaction: The Most Significant 2025-2026 Development

For most of the period from 2014 to 2023, the IRS pursued micro-captive insurance arrangements through the courts, issuing proposed regulations, guidance documents, and winning a string of Tax Court cases under the general economic substance and sham-transaction doctrines. However, the IRS's ability to impose the full weight of the listed-transaction penalty regime on advisors was constrained by procedural challenges (principally the CIC Services line of litigation, which questioned whether the IRS could designate listed transactions through informal notices rather than through notice-and-comment rulemaking).

TD 10022 resolves that procedural problem. By issuing a final regulation through formal rulemaking under the Administrative Procedure Act, the IRS designated qualifying micro-captive arrangements as listed transactions in a manner that is procedurally harder to challenge. The scope of the designation covers arrangements where:

• The captive insurance company makes an IRC 831(b) election to be taxed on investment income only.
• The arrangement meets other criteria set out in the final regulation (verify the exact criteria in TD 10022 at IRS.gov and in the Federal Register).

For material advisor purposes, the critical implication is this: any tax professional who provided material tax advice with respect to a qualifying 831(b) captive arrangement and who derived gross income above the applicable material-advisor threshold from that advice is a material advisor with a Form 8918 filing obligation. The obligation arose when TD 10022 became effective, not at some future date. Advisors who were not previously tracking their captive-related engagements as potentially reportable must now conduct a look-back review of all captive advisory work and assess their exposure.

Practitioners Who May Have Immediate Exposure Under TD 10022

• Attorneys who drafted captive insurance program documents for clients.
• CPAs who prepared tax returns for the captive insurance company or advised on the 831(b) election.
• Actuaries and insurance professionals who provided feasibility studies, premium analyses, or risk-distribution opinions that were relied upon for tax purposes.
• Financial advisors who recommended captive arrangements to clients as part of a broader estate-planning or business-planning strategy.
• Promoters and marketers who sold captive programs to multiple clients.

Each of these practitioners must independently assess whether their specific role constitutes "material aid" under IRC 6111 and whether the fee-threshold was met. Verify the current scope of the listed-transaction designation, the applicable fee threshold, and any IRS transition or transition-relief guidance in TD 10022 and at IRS.gov.

6. IRC 6112 List Maintenance: The Continuing Obligation That Outlasts Every Engagement

Form 8918 filing is a one-time event per transaction per advisor. The IRC 6112 list-maintenance obligation is a continuing obligation that persists for at least seven years after the date the reportable transaction was entered into. Every material advisor who was required to file Form 8918 is also required to maintain a client list under IRC 6112, regardless of whether the underlying transaction was ultimately completed, challenged, or settled.

What the IRC 6112 List Must Contain

Treas. Reg. section 301.6112-1 specifies the required contents of the list:

• The name and taxpayer identification number (TIN) of each person to whom the advisor provided material aid with respect to the reportable transaction.
• The dates on which the advisor provided material aid.
• A description of the reportable transaction, including the tax treatment expected to result.
• The amount of fees paid to the advisor for the transaction by each person on the list.
• A copy of any written documents the advisor gave to the listed person that relate to the reportable transaction.

The list must be maintained in a form that can be produced and furnished to the IRS on 20-business-days notice. A material advisor who maintains client files in paper binders in an off-site storage facility, or whose records are held by a predecessor firm, must ensure that the records can realistically be assembled and produced within the statutory 20-day window.

The IRS Written Request and the 20-Business-Day Clock

Under IRC 6112(b)(1), if the IRS requests the list in writing, the material advisor must furnish the list within 20 business days of the written request. The 20-business-day period begins running from the date of the written request, not from the date the advisor receives it. Advisors should treat the postmark date of any IRS written request as the starting point and calculate the response deadline accordingly. Building in a buffer of at least three to five business days for mail delivery is prudent.

If a material advisor receives an IRS written request for an IRC 6112 list and is uncertain whether it is obligated to maintain such a list (because it disputes that it is a material advisor for the relevant transaction), the advisor must take that dispute to the IRS promptly and should not simply ignore the request. Ignoring the request while the dispute is resolved starts the IRC 6708 penalty clock running.

Seven-Year Retention Period

The IRC 6112 list must be retained for at least seven years from the date the reportable transaction was entered into. This is a minimum retention period; if the IRS has issued a written request for the list before the seven-year period expires, the list must continue to be maintained and furnished even if the seven-year clock would otherwise have run. The retention obligation runs from the transaction date, not from the date of the advisory engagement, the date the fee was paid, or the date the Form 8918 was (or should have been) filed.

7. IRS LB&I 2026 Campaign: Focused Examinations of IRC 6112 List-Maintenance Failures

The IRS Large Business and International (LB&I) division is reported to have announced a 2026 compliance campaign focused on material advisor compliance with IRC 6112 list-maintenance requirements. According to practitioner and industry reporting, the campaign is targeting advisors in transactions that the IRS has already identified as abusive or high-risk, with a particular focus on:

• Advisors who structured or promoted syndicated conservation easement (SCE) transactions (verify the current listed-transaction status of SCEs at IRS.gov, given ongoing litigation over Notice 2017-10).
• Advisors who structured or promoted micro-captive insurance arrangements now designated as listed transactions by TD 10022.
• Advisors involved in other listed transactions or high-scrutiny reportable transactions who received IRS list demands under IRC 6112(b) in 2023-2025 and did not respond within the 20-business-day window.

What the Campaign Means for Practitioners in Practice

LB&I campaigns are focused examination programs in which the IRS coordinates resources across multiple examination teams to pursue a defined category of issue. Unlike a random examination, a campaign-driven examination begins from a presumption that the advisor had material advisor obligations. The IRS will typically request the IRC 6112 list, audit the contents of that list (comparing it to Form 8918 disclosures, to client-side Form 8886 filings, and to information gathered from promoter and third-party summonses), and assess IRC 6708 penalties for any days of non-compliance.

Practitioners should also be aware that a campaign-level examination may expand beyond the initial IRC 6112 list request to include the IRC 6111 Form 8918 obligation, the underlying merits of the reportable transaction, and cross-referencing of the advisor's list against the IRS's own records of participant-level Form 8886 filings and examination outcomes. An advisor whose client list shows 40 participants in a now-disallowed transaction, none of whom filed Form 8886, may be inviting both a list-maintenance examination and an examination of their role in the transaction itself.

See our related guide on IRC 6700 and 6701 abusive tax shelter and aiding-and-abetting penalties for the promoter-penalty framework that operates alongside the 6111/6112 disclosure regime.

8. Reasonable Cause Defense: When Late or Incomplete Disclosure Can Be Avoided

Both the IRC 6111(c) non-disclosure penalty and the IRC 6708 list-maintenance penalty are subject to a reasonable cause defense. The standard for reasonable cause differs somewhat between the two penalties, and the facts required to support the defense must be documented before an examination, not reconstructed afterward.

Reasonable Cause for Form 8918 Non-Filing

For the IRC 6111(c) non-filing penalty, reasonable cause requires a showing that the material advisor had a genuine, good-faith belief -- based on a reasonable legal analysis at the time -- that the transaction at issue was not a reportable transaction triggering the Form 8918 obligation. Factors the IRS considers include:

• Whether the advisor obtained a written legal opinion from qualified tax counsel before the filing deadline concluding that the transaction was not a reportable transaction.
• Whether the advisor's reliance on that opinion was reasonable given the information available at the time.
• Whether the advisor promptly filed a Form 8918 after learning of the reportable-transaction designation (for example, after TD 10022 was finalized).
• Whether the advisor made a good-faith effort to determine the applicable rules, even if that effort ultimately reached an incorrect conclusion.

A mere lack of knowledge that Form 8918 existed is generally not reasonable cause. An advisor who was aware of the reportable-transaction framework but chose not to analyze whether their engagement triggered it is not in the same position as an advisor who made a documented good-faith analysis that reached the wrong conclusion.

Reasonable Cause for IRC 6708 List-Maintenance Failure

For the IRC 6708 penalty on list-maintenance failures, reasonable cause generally requires showing that the failure to furnish the list was due to circumstances outside the advisor's control, rather than willful neglect or a conscious decision not to comply. Factors include:

• Whether the advisor made prompt and substantial efforts to assemble the list when the IRS request arrived.
• Whether the records necessary to produce the list were destroyed or made unavailable by events outside the advisor's control.
• Whether the advisor disputed material advisor status and sought guidance from the IRS before the response deadline, rather than ignoring the request.
• Whether the list was ultimately furnished, and how promptly after the reasonable-cause event resolved.

Note that the existence of the IRC 6708 daily penalty itself creates an incentive to furnish the list as promptly as possible even when a reasonable cause defense is being prepared. Every additional day of non-compliance is another $10,000 in potential exposure (verify current amounts at IRS.gov), and the reasonable cause defense reduces or eliminates accrued penalties -- it does not stop the clock from running while the defense is being assembled.

9. Form 8886 vs. Form 8918: The Advisor Side and the Participant Side of the Same Transaction

The reportable-transaction disclosure system has two parallel but distinct tracks: the participant (taxpayer) side and the advisor (material advisor) side. A practitioner working on a reportable transaction who is also a participant in it may owe obligations on both tracks.

Form 8886: The Participant's Obligation

Form 8886 (Reportable Transaction Disclosure Statement) is filed by the taxpayer who participates in a reportable transaction, under Treas. Reg. 1.6011-4. The form is attached to the taxpayer's return for each year in which the taxpayer's tax liability is affected by the transaction. The failure to file Form 8886 is penalized under IRC 6707A, with penalties ranging from $10,000 to $200,000 depending on whether the transaction is a listed transaction and whether the taxpayer is an individual or an entity (verify current penalty amounts at IRS.gov). See our guide on IRC 6707A and Form 8886 reportable transaction disclosure for the participant-side framework.

Form 8918: The Material Advisor's Obligation

Form 8918 is filed by the material advisor, under IRC 6111, and covers all clients who received material aid from that advisor with respect to the reportable transaction. The form is due with the advisor's own tax return (not the client's). The failure to file Form 8918 is penalized under IRC 6111(c). The two sets of penalties are independent: a taxpayer's compliance with Form 8886 does not excuse the advisor's non-compliance with Form 8918, and vice versa.

Interaction and Overlap

The IRS cross-references participant-level Form 8886 filings against material-advisor-level Form 8918 filings as a compliance check. An IRS examination may begin by pulling all Form 8886 filings for a particular transaction type and then checking whether the advisors named in those disclosures filed corresponding Form 8918s. Conversely, a material advisor's Form 8918 -- which identifies each client who received advice -- may trigger IRS inquiries to those clients about whether they filed Form 8886 for the relevant tax years.

A practitioner who is both the material advisor (and thus owes Form 8918 and IRC 6112 list maintenance) and a co-investor in the transaction (and thus may also owe Form 8886) must track both sets of obligations separately. The due dates are tied to different tax years and different returns, so compliance on one track does not automatically satisfy the other.

10. Practitioner Compliance Protocol: 6 Steps to Assess and Remediate IRC 6111 and 6112 Exposure

1. Identify all engagements with potential reportable-transaction exposure. Review all client engagements in open tax years -- and in years from which a disclosed or undisclosed transaction may generate current liability -- for any involvement with the six reportable-transaction categories in Reg. 1.6011-4 (listed transactions, transactions of interest, confidential transactions, contractual protection transactions, loss transactions above threshold, and substantially similar transactions). Do not limit this review to transactions where the IRS has already made contact; the obligation arises from the nature of the transaction, not from IRS inquiry.
2. Check the TD 10022 micro-captive designated listed transaction specifically. For every client engagement involving a micro-captive insurance arrangement (where the captive made an IRC 831(b) election), assess whether the arrangement meets the criteria in TD 10022. If it does, assess whether the gross income from the engagement met the applicable material-advisor fee threshold (verify threshold at IRS.gov). If both conditions are met, a Form 8918 obligation was triggered by the final regulation's effective date.
3. Prepare and file Form 8918 for each identified engagement, or prepare a documented reasonable cause analysis. For each engagement where material advisor status is established, file Form 8918 if not already filed. If the deadline has already passed (which is likely for pre-TD-10022 captive arrangements), a late-filed Form 8918 accompanied by a written reasonable cause statement may reduce or eliminate the IRC 6111(c) penalty. The reasonable cause statement should be contemporaneous with the filing and should set out the legal analysis that supports the argument. Consult qualified legal counsel before filing late.
4. Build or update the IRC 6112 client list for each reportable transaction. Using the identifying information in client files and engagement records, assemble the required IRC 6112 list for each reportable transaction: client name, TIN, date(s) of advice, description of the transaction, expected tax treatment, and fees paid. Confirm the list is in a format that can be produced electronically and assembled and delivered within 20 business days of an IRS written request. Do not assume that records sitting in disconnected client files constitute a "maintained" list within the meaning of the regulation.
5. Set a calendar trigger for the 20-business-day response window. Designate a person in the practice who will receive and immediately route any IRS written request for an IRC 6112 list. Calculate the 20-business-day response deadline from the postmark date of the IRS request (not the receipt date). Set a calendar alert for business day 15 so that the list can be assembled, reviewed, and delivered before the deadline. Build in time for legal review of the list contents before production.
6. Document a reasonable cause analysis in writing, contemporaneously. For every engagement where there was uncertainty about material advisor status at the time of the engagement, document the legal analysis that supported the conclusion reached at the time. This documentation is the foundation of any future reasonable cause defense. Documentation created after the IRS opens an examination is significantly weaker than documentation created at the time of the engagement or at the time of a retroactive status assessment. See our related guide on IRC 6662 accuracy-related penalties for the reasonable basis and reasonable cause standards that apply in overlapping contexts.

Additional Practitioner Steps When an IRS List Demand Has Already Arrived

If a material advisor has already received an IRS written demand for an IRC 6112 list and has not yet responded, the single most urgent priority is to consult qualified legal counsel immediately. Do not allow additional days to pass without taking action, because the IRC 6708 $10,000-per-day penalty (verify current amount at IRS.gov) accrues continuously. Qualified counsel can assess whether a reasonable cause defense exists, whether the advisor is actually a material advisor for the transaction in question (which may be a substantive defense to the list demand), and what the best approach to the IRS is. See our related guide on IRC 6751(b) supervisory approval of penalty assessments for procedural defenses that may be available in penalty-assessment proceedings.

See also our guides on IRC 6694 and 6695 tax preparer penalties for the parallel preparer-penalty framework that may apply concurrently with material advisor exposure.

11. Frequently Asked Questions: IRC 6111 and IRC 6112 Material Advisor Disclosure and List Maintenance