The IRS has updated its guidance that identifies circumstances under which a disclosure on a taxpayer’s income tax return with respect to an item or position is “adequate” for reducing the understatement of income tax under Code Sec. 6662(d) regarding the substantial understatement aspect of the accuracy-related penalty, and for avoiding the tax return preparer penalty under Code Sec. 6694(a) regarding understatements due to unreasonable positions. The guidance does not apply to any other penalty provisions.
The IRS made editorial changes to Rev. Proc. 2019-9, I.R.B. 2019-2, 292, and other minor changes, but did not make any additional substantive changes.
The guidance applies to tax years beginning in 2019 and returns filed on 2019 tax forms. It also applies to returns filed on 2019 forms for short tax years beginning in 2020.