Announcements 2010-9: disclosure of uncertain tax positions and the IRS policy of restraint

On Jan 26, 2010, the Internal Revenue Service (IRS) released Announcement 2010-9, stating the IRS's intention to require certain business tax payers to disclose on a new tax return schedule the uncertain tax positions (UTP) for which reserves are recorded under financial accounting standards. Draft Schedule UTP does not require disclosure of taxpayers' tax accrual workpapers, nor does it require disclosure of specific reserve amounts. For purposes of the schedule, a tax position taken in a tax return means a tax position that would result in an adjustment to a line item on the tax return (or would be included in a section 481(a) adjustment) if the position is not sustained. As a general matter, TEI agrees that transparency is beneficial for the tax system. Thus, many of the recent initiatives undertaken by Congress, the IRS, and the SEC to promote greater transparency and corporate accountability have had salutary effects upon both tax administration and the financial reporting system.