Academic journal article Journal of Accountancy

IRS Proposes Disclosure of Uncertain Tax Positions

Academic journal article Journal of Accountancy

IRS Proposes Disclosure of Uncertain Tax Positions

Article excerpt

The IRS said on Jan. 26 (Announcement 2010-9) that it may require businesses to disclose with their tax returns any uncertain tax positions for which they must establish a reserve, as well as those for which they have not established a reserve because they expect to litigate the position or have determined "that the Service has a general administrative practice not to examine the position."

The disclosure would be made on a schedule to be filed with Form 1120, U.S. Corporation Income Tax Return, "or other business tax returns." The requirement would apply to taxpayers with total assets exceeding $10 million and related entities, but otherwise, the announcement did not distinguish the types of business entities affected, such as public and private corporations and pass-throughs.

IRS Commissioner Doug Shulman called the proposal reasonable and measured.

"We could have asked for more ... a lot more ... but chose not to," Shulman said in a speech to the New York State Bar Association Tax Section. He underscored the announcement's assurance that the Service's "policy of restraint" toward summoning tax accrual and other financial audit workpapers, as stated in Announcement 2002-63, will remain intact. Taxpayers will not be required to disclose their tax reserve amounts or risk assessments for uncertain tax positions. …

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