Uncertain Tax Positions

Uncertain Tax Positions

February 09, 2010

UNCERTAIN TAX POSITIONS would have to be identified on a schedule filed with corporate tax returns in the future under a new Internal Revenue Service proposal.

The IRS commissioner,Douglas Shulman,made the proposal at a meeting of the New York State Bar Association tax section in late January.Lee Sheppard wrote in Tax Notes magazine:“The silence in the room was palpable.The commissioner left without taking questions.”

The IRS wants corporations with assets of more than $10 million thatare already required by FIN 48 or other accounting rules to disclose uncertain tax positions in their financial statements to attach a schedule to their annual tax returns with a concise statement of each uncertain position,the reason for the uncertainty,and the amountof additional taxes the company would have to pay if the position were disallowed in whole. The IRS wants comments by March 29. The proposal is in Announcement 2010-9. Shulman argued that this will help IRS agents zero in more quickly in audits on where they should spend their time.Some speculate agents will be able to save even more time by simply disallowing all the positions the company identified