What Will the States Do About Uncertain Tax Position Reporting?

What Will the States Do About Uncertain Tax Position Reporting?

There's no shortage of  concerns being expressed by taxpayers and practitioners about uncertain tax position disclosure requirements. The Service has done its level best to clarify the vision for improved transparency ever since Announcement 2010-9 was issued in January.  But try as it might, taxpayer worries seem only to be intensifying. The issues are manifold, as Shahzad Malik* points out in his commentary on this site, "Announcement 2010-9: A New IRS Approach to Transparency for Uncertain Tax Positions."

But the states have yet to weigh in, and no one really knows what to expect. Panelists at the ABA Section of Taxation meeting in Washington the first week of May weren't sure where to begin speculating.  The "easiest" approach would be for the states simply to fall in line with the IRS direction, which of course is far from being cast in stone.  However, as ABA panelists pointed out, states decoupling from federal tax provisions may not follow suit.  And with the fiscal conditions facing most of the states, the truth is there are simply too many wild cards to allow for an "educated" guess as to what will happen.

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* Shahzad Malik is Tax Practice Chair at Stradling Yocca Carlson & Rauth in Newport Beach, CA.