Annual Disclosure Revenue Procedure Updated by IRS

The IRS has updated its annual disclosure revenue procedure (Revenue Procedure 2019-9).  Proper disclosure can prevent imposition of various penalties imposed on taxpayers (IRC §§6662(b)(2), (h), (i) and (j)) and on tax preparers (IRC §6694).

The procedure provides:

In general, this revenue procedure provides guidance for determining when disclosure by return is adequate for purposes of section 6662(d)(2)(B)(ii) and section 6694(a)(2)(B). For purposes of this revenue procedure, the taxpayer must furnish all required information in accordance with the applicable forms and instructions, and the money amounts entered on these forms must be verifiable.

Normally such disclosures will be required to be made on a Form 8275 or Form 8275-R, with this procedure providing for specific exception.  As the procedure indicates:

If this revenue procedure does not include an item, disclosure is adequate with respect to that item only if made on a properly completed Form 8275 or 8275-R, as appropriate, attached to the return for the year or to a qualified amended return.

Special rules apply to corporations required to file a Schedule UTP (Uncertain Tax Position Statement):

A complete and accurate disclosure of a tax position on the appropriate year's Schedule UTP, Uncertain Tax Position Statement, will be treated as if the corporation filed a Form 8275 or Form 8275-R regarding the tax position. The filing of a Form 8275 or Form 8275-R, however, will not be treated as if the corporation filed a Schedule UTP.

The procedure does not made any significant changes to the provisions found in the prior year’s version (Revenue Procedure 2018-11.  As Section 2 notes:

Editorial changes have been made throughout this revenue procedure. In addition, minor changes have been made in order to update the taxable years and tax forms to which this revenue procedure applies. No additional substantive changes have been made.