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- Posts by Philip Karter
ShareholderPhilip Karter specializes in tax controversy and tax litigation matters. In his 40-year career, Mr. Karter has litigated Federal tax cases in the United States District Courts, the United States Tax Court and the United States Court ...
Predictably, there has been a good deal of consternation accompanying the release of IRS Announcement 2010-09, which continues the trend away from the Service's traditional "policy of restraint" in seeking to uncover uncertain tax positions. The first chink in this long-standing policy of restraint was exhibited in Announcement 2002-63, where the Service expanded the circumstances under which it would seek tax accrual workpapers. Prior to the earlier Announcement, workpaper demands were limited to workpapers relating to listed transactions provided such transactions had been disclosed. Thereafter, a taxpayer who engaged in more than one listed transaction, whether previously disclosed or not, was subject to a demand to disclose all workpapers. The IRS's summons enforcement action in Textron relied on Announcement 2002-63 to seek all of the taxpayer's workpapers (arguing that six separate SILO transactions fit within the scope of its new policy).
Announcement 2010-09 goes significantly further in eroding the policy of restraint by placing the onus on the taxpayer to make its own affirmative disclosures of uncertain positions rather than requiring the Service to deduce them from the taxpayer's workpapers. What has received little attention, however, are the implications of the Service's intention to require the new disclosure form not only for taxpayers who record a reserve in their financial statements for uncertain tax positions, but also taxpayers who "expect[] to litigate the position."