IRS Issues New Guidance for Disclosing Errors on Previously Filed Corporate Returns

On November 16, 2022, the U.S. Internal Revenue Service (IRS) released Rev. Proc. 2022-39, which provides special procedures for certain large corporate taxpayers to disclose errors or omissions on previously filed income tax returns after the initiation of an audit. Eligible corporate taxpayers can now report errors or omissions that were not known at the time of filing of a return on Form 15307, “Post-Filing Disclosure for Specified Large Business Taxpayers,” to avoid the potential imposition of accuracy-related and understatement penalties. Rev. Proc. 2022-39 also sets forth procedures for eligible taxpayers to report additional taxes due or to submit a disclosure regarding an item or position on a previously filed return to avoid potential accuracy-related penalties. The new procedures replace and render obsolete the disclosure procedures provided by Rev. Proc. 94-69 for certain corporations subject to annual IRS examinations. 

A properly completed Form 15307 is treated as a qualified amended return if the taxpayer furnishes it to the IRS no later than 30 days from the date of a written request for the form (or a later date agreed to in writing by the IRS). Taxpayers must include a description of all items that would result in an adjustment on Form 15307, and each description must reasonably apprise the IRS of the identity of the item, its amount, and the nature of the controversy or potential controversy. Taxpayers also are required to include a computation of the increase or decrease in taxable income or a change in tax credits with respect to each item disclosed on the form, but they are not required to include a recomputation of total tax liability for the year or include a recomputation of any affected items. 

Eligible taxpayers under Rev. Proc. 2022-39 are taxpayers selected for examination under the Large Corporate Compliance Program or the Large Partnership Compliance Program if, on the date of first contact by the IRS concerning an examination, at least four out of five of the taxpayer’s prior-year income tax returns are or were under examination under the respective program (or a successor program).