IRS Announces Plan to Require Disclosure of FIN48 Information by Corporations With Assets Greater than $10 Million

As some had surmised was likely to happen, the IRS is getting ready to make use of the data regarding uncertain tax positions being assembled by entities to comply with FIN48 (now in FASB ASC 740-10). The IRS announced that it is considering requiring business taxpayers with total assets in excess of $10 million that have financial statements prepared to which FIN48 is applicable to give more detailed disclosures of uncertain tax positions.  Announcement 2010-9 the IRS has asked for comments to be submitted by March 29, 2010.  The IRS expects to issue a schedule on which the disclosures will be made, and the disclosures will be required on returns filed after the schedule is released.

The description of items required to be disclosed for an uncertain position will include:  1) the Code sections potentially implicated by the position, 2) a description of the taxable year or years to which the position relates, 3) a statement that the position involves an item of income, gain, loss, deduction, or credit against tax, 4) a statement that the position involves a permanent inclusion or exclusion of any item, the timing of that item, or both, 5) a statement whether the position involves a determination of the value of any property or right; and 6) a statement whether the position involves a computation of basis.

The announcement contains multiple citations to the Supreme Court’s 1984 decision in United States v. Arthur Young, 465 US 805 to note that the IRS could require even greater detail than is being proposed.  The service claims that although it is issuing this disclosure standard, it is otherwise going to retain its existing policy of restraint as described in Announcement 2002-63.

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