Feb. 9, 2026 – Today, the IRS released Revenue Procedure 2026-12 in Internal Revenue Bulletin 2026-7 regarding adequate disclosure to avoid certain penalties.
- What does it apply to? The new revenue procedure addresses adequate disclosure to reduce an understatement of income tax under IRC § 6662(d) and to avoid a preparer penalty under IRC § 6694(a).
- What doesn’t it apply to? The new revenue procedure does not apply to other penalties (including the disregard provisions of IRC § 6662(b)(1); the increased penalty in IRC § 6662(i) for nondisclosed, noneconomic substance transactions; and the increased penalty for understatements from undisclosed foreign financial assets under IRC § 6662(b)(7) and (j)).
- Why issued? The revenue procedure supersedes Rev. Proc. 2024-44 and made minor changes to incorporate new IRC § 6662(m) (added by § 70512 of the One, Big, Beautiful Bill Act (OBBBA), Pub. L. 119-21, 139 Stat. 72 (July 4, 2025)) for a substantial understatement of income tax from disallowed applicable energy credits.
- When is disclosure adequate? For IRC §§ 6662(d)(2)(B)(ii) and 6694(a)(2)(B), disclosure is adequate if a taxpayer provides all required information in accordance with the forms and instructions and the monetary amounts entered are verifiable (meaning that, on audit, a taxpayer can prove the origin of the amount and show good faith in entering that number on the form).
- Interplay with Schedule UTP, Uncertain Tax Position Statement: A complete and accurate disclosure of a tax position on Schedule UTP is treated as if the corporation filed Form 8275/Form 8275-R about the position, but filing Form 8275/Form 8275-R is not treated as if the corporation filed a Schedule UTP.
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Author: Kim Tyson