Rev. Proc. 2019-09: Adequate disclosures to reduce accuracy-related penalty

December 21, 2018

The IRS has released an advance version of Rev. Proc. 2019-09 concerning circumstances when a disclosure on a taxpayer’s income tax return with respect to an item or position is adequate for purposes of reducing the accuracy-related penalty under section 6662(d) (specifically relating to the substantial understatement aspect of the accuracy-related penalty) and for purposes of avoiding the tax return preparer penalty under section 6694(a).

Rev. Proc. 2019-09 [PDF 40 KB] updates Rev. Proc. 2018-11 and makes editorial but “no additional substantive changes.”

Rev. Proc. 2019-09 applies to any income tax return filed on 2018 tax forms for a tax year beginning in 2018, and to any income tax return filed in 2019 on 2018 tax forms for short tax years beginning in 2019.

Rev. Proc. 2019-09 does not apply with respect to any other penalty provisions—including the disregard provisions of the section 6662(b)(1) accuracy-related penalty, the section 6662(b)(6) accuracy-related penalty and the section 6662(i) increased accuracy-related penalty in the case of nondisclosed noneconomic substance transactions, and the section 6662(j) increased accuracy-related penalty in the case of undisclosed foreign financial asset understatements. If Rev. Proc. 2019-09 does not include an item, disclosure is adequate with respect to that item only if made on a properly completed Form 8275 or 8275-R, attached to the return for the year or to a qualified amended return.


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