Rev. Proc. 2015-16: Updated “adequate disclosure” guidance

Updated “adequate disclosure” guidance

Internal Revenue Bulletin 2015-7 (dated February 17, 2015) includes Rev. Proc. 2015-16—guidance concerning the circumstances when disclosure on a tax return of an item or position is determined to be adequate to reduce the penalty under section 6662(d) relating to a substantial understatement for purposes of the accuracy-related penalty.

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Rev. Proc. 2015-16 also applies for purposes of avoiding the return preparer penalty under section 6694(a).

Read text of Rev. Proc. 2015-16 included in IRB 2015-7 [PDF 187 KB]

Adequate disclosure

Rev. Proc. 2015-16 provides that if disclosure of an item or position is not addressed in the revenue procedure, disclosure is adequate only if made on a properly completed Form 8275, Disclosure Statement, Form 8275-R, Regulation Disclosure Statement, or on a completed Schedule UTP, Uncertain Tax Position Statement, as appropriate, attached to the return or to a qualified amended return within the meaning of Reg. section 1.6664-2(c)(3).

For these purposes, a qualified amended return is an amended return or a timely request for an administrative adjustment under section 6227, filed after the due date of the return for the tax period (determined without regard to extension) and generally before contact by the IRS regarding an examination.

No substantive changes

Rev. Proc. 2015-16 updates Rev. Proc. 2014-15, but reports: “No substantive changes have been made.”

A non-exclusive list of examples of other penalty provisions to which Rev. Proc. 2015-16 does not apply were reinserted into this year’s revenue procedure, following their deletion from Rev. Proc. 2014-15, intended to “increase clarity.”

Rev. Proc. 2015-16 applies for any income tax return filed on 2014 tax forms for a tax year beginning in 2014, and filed in 2015 for short tax years beginning in 2015.

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