IRS Announcement 2010-9 Introduces New Tax Reporting Transparency Standards

My recently published article, “Announcement 2010-9 Introduces New Tax Reporting Transparency Standards,” concerns IRS Announcement 2010-9, which proposes additional reporting requirements with respect to uncertain tax positions of certain business taxpayers. This generally includes taxpayers who are subject to Fin 48 or other similar international accounting standards. The IRS is in the process of developing a schedule, which must be filed with such taxpayers’ returns, in which the taxpayers would disclose their uncertain tax positions. Many practitioners have expressed concern that such a schedule could require taxpayers to disclose otherwise privileged information and could create an audit roadmap. The potential application of 2010-9 in the investment funds context could raise additional issues.

Until recently, the IRS has exercised a "policy of restraint" with respect to tax accrual work papers, except in the case of "listed transactions." Many practitioners believe that 2010-9 is a sign that this "policy of restraint" is beginning to change. It is possible that 2010-9 is a result of the Textron decision, which is currently being appealed to the U.S. Supreme Court, which addressed whether tax accrual work papers were privileged.

The article focuses on these issues and poses some additional issues and clarifications that will hopefully be addressed in future guidance.