On 29 January 2018, the US Internal Revenue Service (IRS) has issued the Revenue Procedure 2018-11 to recognize circumstances under which the disclosure on a taxpayer’s income tax return with respect to an item or position is adequate for the purpose of reducing the understatement of income tax under section 6662(d) of the Internal Revenue Code (relating to the substantial understatement aspect of the accuracy-related penalty), and for the purpose of avoiding the tax return preparer penalty under section 6694(a) (relating to understatements due to unreasonable positions) with respect to income tax returns.
Revenue Procedure 2018-11 will apply to any income tax return filed on 2017 tax forms for a taxable year beginning in 2017, and to any income tax return filed in 2018 on 2017 tax forms for short taxable years beginning in 2018.
