IRS Issues Final Regulations Identifying Charitable Remainder Annuity Trusts as Listed Transactions

The Internal Revenue Service (IRS) recently issued final regulations identifying Charitable Remainder Annuity Trusts as listed transactions. Listed transactions are subject to additional reporting requirements, and they are generally viewed as red flags for tax evasion.

On July 8, 2026, the Internal Revenue Service (IRS) issued final regulations that identify “certain arrangements purporting to be Charitable Remainder Annuity Trusts” as listed transactions. This has important implications for taxpayers with Charitable Remainder Annuity Trusts (CRATs), and these taxpayers must be careful to avoid triggering unwanted scrutiny from the IRS going forward. Learn more from Boston tax evasion lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

What is a “Listed Transaction?”

A “listed transaction” is a financial arrangement that the IRS has determined to present a high risk for abuse. Listed transactions are subject to additional reporting requirements; and, while listed transactions are not inherently abusive, the IRS generally views them as red flags for attempted tax evasion or tax fraud.

What Types of Charitable Remainder Annuity Trusts Qualify as Listed Transactions?

According to the IRS’ new final regulations, a Charitable Remainder Annuity Trust qualifies as a listed transaction if it meets the following requirements:

• “The grantor creates a trust purporting to qualify as a charitable remainder annuity trust under section 664(d)(1) of the Internal Revenue Code (Code);
• “The grantor funds the trust with property having a fair market value in excess of its basis (contributed property);
• “The trustee sells the contributed property;
• “The trustee uses some or all of the proceeds from the sale of the contributed property to purchase an annuity; and
• “On a Federal income tax return, the beneficiary of the trust treats the annuity amount payable from the trust as if it were, in whole or in part, an annuity payment subject to section 72 of the Code, instead of as carrying out to the beneficiary amounts in the ordinary income and capital gain tiers of the trust in accordance with section 664(b).”

The new regulations also apply to transactions that are “the same as, or substantially similar to,” a CRAT meeting these requirements.

What Are the Implications of Failing to Report a Listed Transaction to the IRS?

If a Charitable Remainder Annuity Trust qualifies as a listed transaction, failure to report the CRAT to the IRS can trigger monetary penalties. Failure to report a listed transaction can also increase a taxpayer’s risk of facing an audit or investigation.

How a Boston Tax Evasion Lawyer at Thorn Law Group Can Help

At Thorn Law Group, we assist taxpayers with managing IRS compliance and resolving high-stakes federal tax controversies. If you have questions or concerns, a Boston tax evasion lawyer at our firm can assess your risk exposure, and we can engage with the IRS on your behalf if warranted.

Request a Confidential Initial Consultation

For more information, contact us today. Call 617-692-2989 or inquire online to schedule a confidential consultation with Boston tax evasion lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.