The U.S.-Malta Treaty Retirement Account: The IRS’ Latest Listed Transaction

Abstract: IRS targets Malta Retirement Scheme

The IRS’s duty to ensure the public’s compliance with tax law largely involves defining what taxpayers must report on their tax returns. Since its formation in 1862, when Congress formed the Office of the Commissioner of Internal Revenue under the Treasury Department, citizens of the United States have developed unique schemes to pay less taxes.

To create fairness, Congress granted the IRS the power to label certain taxpayer schemes as “listed transactions.” The IRS uses this power to list a certain transaction, triggering both a taxpayer participant and material advisor obligation to report any participation in said listed transaction including details about the transaction. Participants and material advisors who fail to comply with the listed transaction reporting results in financial penalties enforced by the IRS.

There are currently 36 listed transactions available for viewing on the IRS’s website, yet the newest listing has yet to officially make the list. The Malta Personal Retirement transaction was conceived after the United States signed the U.S.-Malta Tax Treaty in 2008. This Treaty addressed the highly favorable tax law in Malta that allows individuals to place money in an account without being taxed upon contribution or dispersion, so long as the account is considered a pension or retirement account.

Once the IRS became aware of the situation, the IRS began taking measures to place the Malta retirement scheme on their list of reportable transactions. However, in the past year, the IRS began changing the way it lists transactions due to courts rejecting some of their reportable and listed transaction notices (including those dealing with syndicated conservation easements and micro-captives).

In 2022, the Tax Court ruled that the IRS must comply with guidelines enforced by the Administrative Procedure Act (APA). The most recent listed transaction (regarding syndicated conservation easements) was ruled void after the Tax Court found the IRS did not comply with the necessary notice-and-comment requirements. After the transactions were deemed void, participants and material advisors no longer have the obligation to report their conservation easement transactions. The IRS is taking measures to fix the problem, but the process is lengthy. The first major attempt at meeting the court-required APA compliance is the new Proposed Regulations on micro-captives.

To ensure the same error is not repeated with the Malta Personal Retirement Scheme proposal, the IRS is attempting to go through all the necessary steps to ensure proper notice-and-comment requirements are fulfilled so their listed transaction is upheld upon future challenge. Assuming everything goes smoothly in the September public hearing, the Malta Personal Retirement Scheme should successfully be added as the 37th listed transaction, and taxpayer participants and material advisors must abide by this regulation or suffer the penalties.


Pension plans and retirement accounts have been in the United States since 1875 when a company named the American Express Company put in force the first private pension plan. [1] Before then, most companies were so small that they did not need to provide this option for their employees. However, as times have changed, especially at the turn of the 20th Century, larger corporations began providing retirement accounts for their employees. [2] Upon the passing of the Internal Revenue Act of 1921, contributions towards employee pension funds became exempt from federal corporate income, accelerating growth. [3] With time, these pension funds became more and more regulated by the IRS, creating guidelines and rules to enforce fair contributions from all taxpayers across the United States. [4] However, American taxpayers slowly realized that these rules allow the government to limit the amount of capital possible in these accounts. [5] Taxpayers began looking for new methods to avoid these rules. [6]

Before 2011, the U.S.-Malta Tax Treaty attracted very little attention in the United States. [7] Malta is a very small country, forming the Southeastern point of an equilateral triangle between Sicily and Northern Africa that was under British rule until 1964. [8] During World War II, Malta was destroyed by the Germans and Italians who wanted to gain control of the country, forcing the citizens of Malta to live underground while their country was decorated with bomb craters. [9] After successfully surviving the War, the Maltese continued their way of life primarily as a trading port between Southern Europe and North Africa. [10]

In the 1990s, Malta changed course, developing large global financial centers and becoming the most prominent offshore jurisdiction for large international corporations and wealthy third country citizens who took advantage of Malta’s tax-favoring laws to store their off-shore wealth. [11] Americans were still using offshore accounts mainly in the Caribbean and Switzerland for easy access, and only realized the appeal of Malta after the 2011 Treaty. [12] This Treaty created a loophole, where third party citizens could still take advantage of Malta’s tax-favoring laws by creating a pension or retirement account through Malta’s banking system. American taxpayers took advantage of this rule and tried to lay low, successfully hiding the fact that they were storing their money and reaping the rewards in offshore accounts, away from the prying-eyes of the IRS.

Eventually, however, taxpayers and their material advisors started to share this scheme, publishing articles online to get more business, and eventually drew the attention of the IRS. [13] In 2021, a decade after the treaty, the U.S. and Mata entered a Competent Authority Arrangement (CAA) to clarify their mistake in the original treaty where they failed to specifically define a pension fund. [14] A CAA is a “bilateral agreement between the United States and th[eir] treaty partner to clarify or interpret treaty provisions.” [15] However, there seems to be a difference of opinion regarding whether a CAA is binding and if it may change a law without being passed by the U.S. Senate. [16] To address this difference of opinion, the IRS published Proposed Regulations to designate the Malta Personal Retirement transaction as a listed transaction. [17] This provides a high disincentive for potential participants and material advisors to be involved with this method of tax-avoidance, given they would be running the risk of steep penalties being enforced. [18]

I. What is a Listed Transaction?

The Internal Revenue Service’s (IRS) mission is to “[p]rovide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.” [19] This role ensures that the majority of compliant taxpayers comply with tax law, while ensuring the minority of taxpayers who attempt to avoid taxes pay their fair share. [20] A large portion of this mission involves efforts to curb abusive tax transactions. [21] When it comes to tax planning and avoiding, taxpayers become very creative, promoting the IRS to create regulations to help discover and quash abusive tax transactions. [22]

These proposed regulations require taxpayers, participants and material advisors to disclose certain information for listed transactions they have been involved in by filing disclosure statement Form 8886 (Form 8918 for material advisors) and submitting it with their tax return. [23] A “‘listed transaction’ is a transaction that is the same as, or substantially similar to, one that the IRS has determined to be a tax avoidance transaction and identified by IRS notice or other form of published guidance.” [24] Parties who file a listed transaction under Form 8886 may need to do one or all of the following:

(1) disclose the transaction as required by the regulations;

(2) register the transaction with the IRS; or

(3) maintain lists of investors in the transactions and provide the list to the IRS upon request. [25]

These types of transactions may artificially reduce a Taxpayer’s tax liability (the combined amount of taxes a person owes the IRS from income tax, capital gains tax, self-employment tax, and any penalties and interest). [26] Where the IRS disagrees with such a transaction to the point of listing it, it warrants filing a Form 8886. [27]

A. What is Required of Material Advisors?

The IRS defines a material advisor as:[a]nyone who provides material aid, assistance, or advice with respect to organizing, promoting, selling, implementing, insuring, or carrying out any reportable transaction, and [d]irectly or indirectly derives gross income in excess of the threshold amount (or such other amount as may be prescribed by the secretary) for such aid, assistance, or advice. [28]

This definition solely applies to advisors involved in transactions that has been deemed a “reportable transaction” by the IRS, that is, a transaction that may have the potential to be classified as tax avoidance or tax evasion. [29] However, an advisor is not regarded as a material advisor if they make tax statements solely in their capacity as an employee, shareholder, partner, or agent of another person. [30] If an individual fits any of these categories, then all tax statements made are considered to be made by their employer, corporation, partnership or principal. [31] An individual provides material assistance if they makes or assists in producing a “‘tax statement’ to or for the benefit of a taxpayer,” at which point they are considered a material advisor. [32]

A material advisor must first properly disclose the reportable transaction to the IRS, as well as maintain all relevant information about the transaction to produce it to the IRS upon request. [33] This may include all relevant taxpayers who were associated in the reportable transaction. If the IRS requests such a list, the material advisor must produce it within 20 business days from the date of the IRS’s request. [34] To assist material advisors in keeping track of all of this information, the IRS provides Form 13976, the Itemized Statement Component of Advisee List, on their website. This is an optional form to help the material advisor identify: (1) all persons who benefit from the material advisor’s tax statement; and (2) information about the transaction, including “investors, the amounts invested, the structure of the transaction, the tax benefits expected from the transaction, and the names of any other material advisors.” [35]

Material advisors also complete their tasks by filing Form 8918, a disclosure statement submitted to the Office of Tax Shelter Analysis (OTSA). [36] If an advisor is unsure whether they are a material advisor or if the transaction is reportable, the IRS advises the reporting party to err on the side of safety by filing a Form 8918, while placing a banner across the top of the form stating that it is a “protective disclosure.” [37] Form 8918 must be filed by the last day of the month at the end of the calendar quarter in which the material advisor is responsible for all and any of the reportable transactions in which they were associated. [38] The IRS then returns a reportable transaction number to the material advisor, who in turn must report that number to all taxpayers and other material advisors involved in the transaction so those parties can use the number in correlating reporting obligations. [39]

If a material advisor fails to provide any of the necessary forms or lists to the IRS upon their request, harsh penalties may ensue. If the material advisor does not file one of the forms (or files a false or incomplete form) the material advisor may be penalized $50,000 for each failure. [40] This penalty may be increased to $200,000 or fifty percent of the gross income of the material advisor derived from the listed transaction. [41] The gross income is derived from each type of listed transaction and considered separately and is not aggregated. [42] Whichever number is greater will be the imposed penalty. If it is found that the failure to report was intentional, then the penalty increases to seventy-five percent of the gross income of the material advisor. [43] Intentional failure is determined on a case-by-case basis based on all relevant facts and circumstances. [44] Reasonable cause defenses are not applicable to Form 8918 violations. [45] However, a material advisor may request a recission from the Commissioner if the transaction was not a listed transaction, or if “[r]escinding the penalty would promote compliance with the requirements of the Code and effective tax administration.” [46] Therefore, complying with the initial regulations is vitally important and will prevent an unfortunate series of events and dealing with harsh consequences.

B. What is Required of Taxpayer Participants

Once a taxpayer becomes aware that they have been part of a listed transaction, it is their duty to report such transaction in the form of a disclosure statement. [47] A taxpayer should be aware of their listed transaction if “the taxpayer’s return reflects, or the taxpayer knows or has reason to know, that the taxpayer’s tax benefits are derived directly or indirectly from tax consequences or a tax strategy described in IRS guidance as a listed transaction.” [48]

To fulfill the disclosure statement requirement, a taxpayer attaches Form 8886 (Reportable Transaction Disclosure Statement) to the tax return. Form 8886 must include the following information to be considered complete:

(1) describe the expected tax treatment and all potential tax benefits expected to result from the transaction;

(2) describe any tax result protection (as defined in § 301.6111-3(c)(12)) for the transaction; and

(3) identify and describe the transaction in sufficient detail for the IRS to be able to understand the tax structure of the reportable transaction and the identity of all parties involved in it. [49]

A copy of this disclosure statement must also be sent to OTSA “at the same time that any disclosure statement is first filed by the taxpayer pertaining to a particular reportable transaction.” [50] Taxpayers may also submit a ruling request like a material advisor, and the potential obligation to disclose is not suspended during the period that the request is pending. [51] Taxpayers may also request a ruling on the merits of the transaction. [52] The request must fully disclose all relevant facts relating to the reportable transaction and must be done on or before the date that the disclosure or reporting would otherwise have been required. [53]

If the taxpayer fails to disclose any of the above information, they are also subject to penalties similar to those which apply to material advisors but calculated slightly differently. The penalty to taxpayers equals “75% of the decrease in tax shown on the return as a result of the transaction or that would have resulted if the transaction were respected for federal tax purposes.” [54] The minimum penalties are $5,000 for natural persons and $10,000 for all other taxpayers, while the maximum amounts for listed transactions are $10,000 for natural persons or $200,000 for all other taxpayers. [55] So, although a taxpayer may trust a material advisor to handle their affairs, it is still important to understand the applicable rules and guidelines to follow to avoid pitfalls and erroneous mistakes that could be detrimental to taxpayers.

II. The Malta Listed Transaction

A. Overview of the Transaction

In 2011, the country of Malta, an archipelago in the central of the Mediterranean Sea between Sicily and North Africa, enacted personal retirement schemes as a part of the Retirement Pensions Act. [56] These are “tax-favored savings arrangements in Malta that allow individuals or their employers to contribute assets to a trust or other investment vehicle for such individuals’ benefit.” [57] Unlike American individual savings arrangements, in Malta, “there is no requirement that contributions be limited by reference to income earned from employment or self-employment activities, no limitation on contribution amounts, and no restriction on the types of assets (such as securities) that may be contributed.” [58] All distributions placed in these Malta retirement accounts, from the time an individual is fifty, but no later than age seventy-five, may be exempt from Maltese income tax “if the individual elects to receive initial and additional cash lump sum distributions.” [59]

United States taxpayers began interpreting these regulations to their benefit, placing contributions with built-in gains in Malta pension plans, where the contributions continue to appreciate in value tax free. [60] Upon reaching the minimum age of fifty, the taxpayer may then sell the contributions, pocket large lump sum payments labeled “excess funds” and avoid both U.S. and Maltese tax. [61] The appreciated contributions are higher than what would be allowed as contributions to American Individual Retirement Arrangement (IRA) accounts, and individuals are able to add assets from sources such as annuities, securities, partnership interests, and cryptocurrencies. [62]

The Proposed Regulations provides an example of how this scheme works. In Year 1, Taxpayer A who can either be a U.S. citizen or a U.S. resident alien, contributes cash or appreciated property into one of the Malta personal retirement accounts. [63] Year 2, Taxpayer A may sell their contributed assets (cash or property) at a non-taxed gain. [64] In contrast, in the U.S., Taxpayer A does not include the gain on their income tax returns, because with broad interpretation, that gain can be seen as exempt from U.S. taxation due to language found in Articles 18 and 1(5)(a) of the Treaty. [65] This language states that income earned by a pension fund that is a resident of the other State (U.S. or Malta), may not be taxed by either State (U.S. or Malta). [66] American retirement options are subject to far more limitations, making the Malta retirement transaction a more favorable option for taxpayers.

Most of the participants of this transaction are U.S. taxpayers who have no association with Malta other than participating in these transactions. [67] These U.S. taxpayers claim that under their interpretation of the Malta-U.S. income tax treaty, they are justified utilizing the Malta pension plans. [68] However, the government asserts that this interpretation is incorrect, leading to the proposed rule to label the Malta personal retirement scheme as a listed transaction.

B. The U.S. Malta Treaty

As a result of the differences between the two countries’ tax laws, the Convention Between the Government of the United States and the Government of Malta for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income was signed at Valetta in August of 2008 (the Treaty). [69] The Treaty was created to prevent “treaty shopping”, which is the inappropriate use of a tax treaty by third-country residents. [70] Due to the unique features of Malta’s tax system, the Treaty contains more restrictive protections than any other U.S. tax treaty signed with another country. These features include Maltese law not requiring withholding taxes on cross-border payments, as well as providing for a low effective tax rate on income owned by foreign-owned corporations. [71] The Treaty also provides for the exchange of banking information between the tax authorities of each country so that each country can still effectively carry out their domestic tax laws. [72]

To prevent third-country residents from taking advantage of Maltese tax laws, the Treaty “provides for a withholding rate of 15 percent on cross-border portfolio dividend payments, and five percent on dividends when the beneficial owner of the dividend is a company that directly owns at least 10 percent of the stock of the company paying the dividend.” [73] However, there is an exception to this requirement that provides that when a company resident contributes to a pension fund in Malta, they are exempt from withholding on dividends for the purpose of U.S. taxes. [74] The exemption from U.S. income tax also applies to

“(1) ‘pensions and other similar remuneration’ arising in Malta to the extent such pensions or remuneration would be exempt from tax under Maltese law if the beneficial owner were a resident of Malta…

(2) income earned by a ‘pension fund’ established in Malta until such income is distributed.” [75] A “pension fund” is defined under Paragraph (1)(k) of Article 3 of the Treaty as, “a licensed fund or scheme subject to tax only on income derived from immovable property situated in Malta; and operated principally either:

A) to administer or provide pension or retirement benefits; or

B) to earn income for the benefit of one or more persons meeting the requirements of [above] subparagraph[s].” [76]

Once the IRS became aware of what U.S. taxpayers were doing with Malta pension funds, they released a CAA published in the Internal

Revenue Bulletin in December of 2021. [77] In the CAA, the American and the Maltese governments concurred that “individual retirement arrangements established under Malta’s Retirement Pensions Act of 2011 are not considered ‘pension funds’ for purpose of relevant provisions of the Treaty.” [78] Also in 2021, the IRS placed the Maltese pension plans on its “Dirty Dozen” list of abusive tax shelters. The Dirty Dozen represents the worst of the worst tax scams, and the IRS compiles a list annually and reports it on their website, naming common scams that taxpayers may encounter and should look out for while preparing their tax statements. [79] However, after little to no change occurred in the reporting of taxpayers regarding Maltese pension plans, the IRS has now proposed a new regulation in order to classify Malta personal retirement transactions as a listed transaction. [80] This new Proposed Regulation is scheduled for a public hearing on September 21, 2023, with all requests to speak and outlines of topics to be discussed to be submitted no later than August 7, 2023. [81]

C. The U.S. Retirement Account

In the United States, individual saving arrangements such as pension or retirement plans are not entitled the same tax-favoring treatment unless they meet the requirements of an IRA, or a Roth IRA as declared in § 408 in Title 26 of the Internal Revenue Code. [82] Although the IRS considers IRAs to be tax-favored personal savings accounts for retirement, there are still rules that limit the amount of tax a person can save by investing in one of these accounts, which differs from Malta retirement accounts. [83] IRAs and Roth IRAs both require that “an individual’s contributions, other than certain rollovers, are restricted to cash and limited by reference to an individual’s earned income.” [84] However, there are some differences between the two retirement account options.

For IRAs, the amount of money contributed to the account is not taxed when entering the account but is taxed when withdrawn and distributed to the individual for retirement. [85] To contribute to the traditional IRA, only taxable compensation is admitted, excluding compensation such as “earnings and profits from property, such as rental income, interest and dividend income, or any amount received as pension or annuity income, or as deferred compensation.” [86] Upon distribution, the money is fully or partially taxed in the year of distribution. [87] However, distributions made prior to retirement age (59½) are subject to an additional ten percent tax, and lack of withdrawing distributions after the age of seventy-two that do not meet the minimum requirements also incur an excise tax. [88]

Roth IRA contributions are not deductible and taxpayers do not report the contributions on their tax return. Additionally, distributions that are a return of contributions put into the account are not subject to tax. [89] Roth IRAs must be designated as such when set up to ensure appropriate taxation occurs before contributing assets to the account. [90] Both options limit the amount of contributions available, as well as enforce a tax either upon contribution or distribution, making these far less favorable an option in comparison to the Malta pension retirement plans.

D. The IRS Case Against the Malta Transaction

In the new Proposed Regulations, the IRS designates the Malta retirement transaction as a listed transaction, thereby mandating all U.S. account holders and their material advisors to report a significant information associated with the Malta accounts. [91] U.S. Malta account holders claim they have done nothing non-compliant with U.S. law given they claim they compliance with the Treaty. [92] The IRS disagrees for several reasons. [93]

First, the IRS argues Treaty benefits regarding Malta personal retirement accounts are not available to U.S. account holders because although the Treaty never specifically defines the terms “pension” and “retirement”, the IRS claims these terms should have been interpreted in accordance with United States tax law. [94] Since it is U.S. citizens who are benefiting from these Malta individual retirement account and not citizens of Malta, it is only logical that U.S. tax law applies.

Second, the IRS states that Malta retirement accounts do not provide “retirement benefits” for purposes of the Treaty. [95] This is because “Maltese law does not condition the tax benefits it provides for these arrangements upon reasonably analogous requirements of U.S. law.” [96] The IRS argues that U.S. retirement account requirements, which include that an individual’s contributions must be made in cash that is based on income earned from employment activities, should also apply to those retirement accounts U.S. taxpayers open in Malta. [97] The Treaty merely exempts “qualified rollovers from a pension or retirement arrangement that is tax-favored under the same country’s laws.” [98]

Third, the Treaty was created to avoid double taxation, not to create instances of non-taxation “especially in cases in which the person establishing the retirement arrangement has no other connection to the treaty jurisdiction.” [99] Thus, the IRS argues, the benefits were solely for U.S. taxpayers working in Malta. Lastly, the IRS believes that in certain circumstances, one or more judicial doctrines may apply to disqualify the transaction benefits.

The Treasury Department will also make an exception for U.S. individuals who transferred their otherwise U.S. compliant foreign pension or retirement accounts to Malta in accordance with the competent foreign law before the Proposed Regulations were published in the Federal Register, and these individuals shall not be treated as participants in this new listed transaction. [100] That being said, U.S. citizens without this fact pattern who participate in Malta personal retirement schemes after June 6, 2023, and do not report such transaction on a U.S. Federal income tax return shall be subject to penalties. [101]

III. Analysis

In the attempt to combat abusive tax schemes, the IRS developed the comprehensive strategy of placing designated listed transactions on their website to be transparent with taxpayers about the potential harms associated with engaging in one of these schemes. However, by merely listing a particular transaction on their website does not always ensure the IRS has properly complied with all administrative law requirements for making taxpayers subject to the penalties for failing to disclose the listed transaction. The Administrative Procedures Act (APA) is “the legal authority for rulemaking and promulgation of procedures necessary to ensure fairness and equity in administration of the federal laws, including the income tax laws.” [102] The APA guidelines and requirements directly affect the affairs of the IRS, mandating strict requirements to protect the public at large. This includes IRS activities such as final regulations, temporary regulations, proposed regulations, revenue rulings, revenue procedures, orders, and notices. [103] These administrative agencies are held to a higher standard than would be necessary if Congress had given a legislative directive to a particular agency. [104]

In recent court cases, administrative agencies, particularly the IRS, have come under attack regarding these procedures that have been mandated by the APA. One example is the listing of certain syndicated conservation easement transactions. Conservation easements were created to encourage people with certain types of property to donate property rights to a charitable organization, [105] typically a land trust. This ensures certain property remains in its current form, such as wetlands or forests to remain preserved for wildlife, while in return, the owner of the property will be able to take the donative value of the land as a tax deduction. [106]

However, the IRS determined that certain taxpayers began abusing the system through a scheme that would generate a sizable charitable deduction which far exceeds the amount of their investment. [107] These transactions came to the attention of the IRS, who in turn published Notice 2017-10, declaring the scheme as a listed transaction, requiring investors and material advisors to declare their transactions on disclosure statement forms. [108] Then in the 2022 case of Green Valley Investors, LLC v. Commissioner, the U.S. Tax Court held that Notice 2017-10 was invalid because it failed to comply with the notice and comment requirements of the APA. [109] This requirement necessitates an agency not only issue a notice of proposed rulemaking, but also allow an opportunity for the public to comment either through written comments, or requests to speak at a public hearing. [110] The IRS contended that they do not have to comply with the APA because Congress delegated these powers specifically to the IRS in 2004 with the American Jobs Creation Act (AJCA). [111] The Tax Court did not agree, resulting in the invalidation of Notice 2017-10 and putting the IRS in the unfortunate position of trying to re-finalize the regulation as soon as due consideration of public comments is deemed completed. [112]

Although the IRS disagrees with the Tax Court ruling and is still fighting to get the ruling overturned, the IRS has begun taking precautionary measures to ensure new regulations are in accordance with APA guidelines. The proposal for the Malta Personal Retirement Scheme to become a listed transaction includes the notice and comment requirement that was lacking in the syndicated conservation easement proposal. After the input is fully considered, the IRS may issue a final regulation or temporary regulation that is published in the Federal Register. Once the regulation is final and the Malta Personal Retirement transaction is a listed transaction, then taxpayers will have to comply with the regulation or pay the correlative fines.


For some time, the IRS has been able to freely “list” certain transactions as reportable on tax returns for American taxpayers without interference from the courts. Due to the recent Green Valley Investors, LLC v. Commissioner Tax Court decision, the IRS is discovering that there are limits on the power to list transactions. To mend this problem, the IRS is having to go back and provide proper notice-and-comment allocated time to the general public in order to properly “list” a transaction. In the case of the Malta Personal Retirement transaction, the IRS is addressing this problem, the issuance of the Proposed Regulations, to ensure that the scheme becomes a listed transaction. The listed transaction will apply to all transactions in which U.S. citizens or resident aliens:

(1) transfer assets into and receive distributions from a personal retirement scheme established under Malta’s Retirement Pension Act of 2011; and

(2) take a position on their U.S. federal income tax return that the income, gains, or distributions aren’t taxable in the United States because of the 2008 U.S.-Malta income tax treaty. [113]

The United States may also have to address the Treaty, clarifying ambiguous language regarding pension funds and retirement accounts so there is no additional confusion amongst taxpayers and material advisors. From the time the Proposed Regulations becomes finalized, participant taxpayers and material advisors will be forced to report such participation on their respective listed transaction disclosure forms.

Show Footnotes

* Prof. Beckett Cantley (University of California, Berkley, B.A. 1989; Southwestern University School of Law, J.D. cum laude 1995; and University of Florida, College of Law, LL.M. in Taxation, 1997), teaches International Taxation at Northeastern University and is a shareholder in Cantley Dietrich, LLC. Prof. Cantley would like to thank Melissa Cantley and his law clerk, Adrienne Tauscheck, for their contributions to this article.

** Geoffrey Dietrich, Esq. (United States Military Academy at West Point, B.S. 2000; Brigham Young University Law School, J.D. 2008, Loyola Law School, Los Angeles, LL.M. in Taxation 2023) is a shareholder in Cantley Dietrich, LLC.


[1] The History of the Pension Plan, DUE, 2023, (Accessed Oct. 19, 2023).

[2] Id.

[3] Id.

[4] See id.

[5] See id.

[6] See id.

[7] Jay Adkisson, The Grinch who Stole The Maltese Pension Plan, Forbes (Dec. 23, 2021),

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Id.

[13] Id.

[14] IRS: Competent Authority Arrangements, (last visited May 23, 2023).

[15] Id.

[16] See Adkisson, supra note 9.

[17] Prop. Treas. Reg. § 1.6011-12(b)(2), 88 Fed. Reg. 37186 (June 7, 2023).

[18] Id.

[19] Who Is The IRS? IRS Careers (2020),,we%20should%20perform%20that%20role.

[20] Id.

[21] Id.

[22] See EP Abusive Tax Transactions IRS (last updated Mar. 2, 2023),,other%20form%20of%20published%20guidance.

[23] Id.

[24] Id.

[25] Id.

[26] What is Tax Liability?, Ramsey Solutions (April 3, 2023),,t%20paid%20from%20previous%20years.

[27] See EP Abusive Tax Transactions, supra note 24.

[28] Id.

[29] Megan L. Brackney, A Crash Course on Reportable Transaction Penalties for Material Advisors, Journal of Taxation, 160, 160-61 (2017).

[30] Instructions for Form 8918, IRS (Last updated Nov. 2021)

[31] Id.

[32] Brackney, supra note 31, at 161.

[33] Id.

[34] Id. at 162.

[35] Id.

[36] Id.

[37] 26 C.F.R. § 301.611-3(g).

[38] Brackney, supra note 31, at 162.

[39] Id.

[40] 26 C.F.R. § 6707(b)(1).

[41] 26 C.F.R. § 6707(b)(2).

[42] See 26 C.F.R. § 301.6707-1(a)(2).

[43] See 26 C.F.R. § 6707(b)(2).

[44] Id.

[45] Penalty Relief for Reasonable Cause, IRS (Aug. 2, 2023),natural%20disasters%20or%20civil%20disturbances. (Individual taxpayers, not material advisors, may qualify for a reasonable cause defense if they demonstrate they exercised ordinary care and prudence and were nevertheless unable to file the form or pay taxes on time. Examples of valid reasons for reasonable cause defenses can be fires, natural disasters, inability to get records, and death or serious illness of immediate family.)

[46] 26 C.F.R. § 301.6707-1(e)(1).

[47] 26 C.F.R. § 1.6011-4.

[48] Ray A. Knight, Full Disclosure: When tax transactions must be reported, Journal of Accountancy, (Feb. 1, 2021),,as%20a%20listed%20transaction%20(Regs. (citing 26 C.F.R 1.6011-4(c)(3)(i)(A)).

[49] Id.

[50] 26 C.F.R 1.6011-4(e).

[51] 26 C.F.R § 1.6011-4(f).

[52] Knight, supra note 50.

[53] See id.

[54] Id.

[55] Id.; See also 20 C.F.R. § 301.7701-6(a) (defining natural persons as someone who has rejected or renounced United States citizenship because the taxpayers are citizens exclusively of a State, however these natural persons are still subject to federal taxes.)

[56] Prop. Treas. Reg. § 1.6011-12, supra note 19, at 37189.

[57] Id.

[58] Id.

[59] Id.

[60] Proposed Regs Name Malta Pension Scheme as Listed Transaction, taxnotes (June 7, 2023),

[61] Id.

[62] Id.

[63] Prop. Treas. Reg. § 1.6011-12, supra note 19, at 37190.

[64] Id.

[65] Id.

[66] Id.

[67] Proposed Regs Name Malta Pension Scheme as Listed Transaction, supra note 62.

[68] Id.

[69] Convention for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income, Malta-U.S., Aug. 8, 2008, TIAS 10-1123.

[70] Id.

[71] Id.

[72] See id.

[73] Id.

[74] Id.

[75] Prop. Treas. Reg. § 1.6011-12, supra note 19.

[76] Id.

[77] See id.

[78] Id.

[79] Dirty Dozen, IRS (last updated Apr. 5, 2023), (including Employee Retention Credit Claims, Phishing emails sent during filing season, third-party promoters of false fuel tax credit claims, and nine more make up the dirty dozen list).

[80] Supra, note 54.

[81] Id.

[82] 26 U.S.C. § 408A.

[83] Arrangements, IRS (IRAs) (last updated Apr. 6, 2023),,company%2C%20or%20other%20financial%20institution.

[84] Conventions for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income, supra note 71.

[85] Irs: Arrangements (IRAs), supra note 85.

[86] Id.

[87] Id.

[88] Id.

[89] Id.

[90] Id.

[91] Prop. Treas. Reg. § 1.6011-12, supra note 19.

[92] Id.

[93] Id.

[94] Irs: Arrangements (IRAs), supra note 85.

[95] Id.

[96] Id.

[97] See id.

[98] Id.

[99] Id.

[100] Id.

[101] Id.

[102] CCH AnswerConnect Editorial, Are syndicated conservation easements reportable transactions?, Walters Kluwer: Tax and Accounting (Dec. 22, 2022),

[103] Id.

[104] Id.

[105] Jay Adkisson, The IRS Leaves a Lump of Coal for Syndicated Conservation Easements in Notice 2017-10, FORBES (Dec. 27, 2016),

[106] Id.

[107] Id.

[108] Id.

[109] Jay Adkisson, The IRS Loses Notice 2017-10 Regarding Syndicated Conservation Easement Tax Shelters for APA Non-Compliance, FORBES (Nov. 14, 2022), (citing Green Valley Investors, LLC v. Commissioner, 159 T.C. 5 (Nov. 9, 2022).

[110] Rulemaking Process, Federal Communications Commission,,requirement%20for%20notice%20and%20comment. Accessed Oct. 19, 2023.

[111] Adkisson, supra note 107.

[112] CCH AnswerConnect Editorial, supra note 104.

[113] Proposed Regs Name Malta Pension Scheme as Listed Transaction, supra note 62.