2021-12-22
IRS Rev. Proc. 2021-52 updated Rev. Proc. 2020-54 procedures and identified circumstances for whether disclosure on a taxpayer’s income tax return for reducing penalties.
The revenue procedure updates Rev. Proc. 2020-54, 2020-53 I.R.B. 1806, and identifies circumstances under which the 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 Internal Revenue Code section 6662(d) (substantial understatement aspect of the accuracy-related penalty);
avoiding the tax return preparer penalty under section 6694(a) (understatements due to unreasonable positions) with respect to income tax returns.
The revenue procedure does not apply with respect to any other penalty provisions, including but not limited to:
the disregard provisions of the section 6662(b) (1) accuracy-related penalty;
the section 6662(i) increased accuracy-related penalty in the case of nondisclosed non-economic substance transactions, and
the section 6662(b)(7) and (j) increased accuracy-related penalty in the case of undisclosed foreign financial asset understatements).
If the revenue procedure does not include an item or position, disclosure is adequate with respect to that item or position only if made on a properly completed Form 8275 or 8275-R, as appropriate, attached to the return for the year or to a qualified amended return (See Treas. Reg. §1.6664-2(c) for information about qualified amended returns).
The revenue procedure applies to any income tax return filed on 2021 tax forms for a taxable year beginning in 2021, and to any income tax return filed in 2022 on 2021 tax forms for short taxable years beginning in 2022.