In a move likely to meet with resistance from corporations, theInternal Revenue Service has proposed new rules that would requirecompanies to provide the agency with a list of their “uncertain taxpositions.”

The IRS's proposal “will certainly change the dynamic in manyaudits,” says Matt Miller, senior director for tax and economicpolicy at Financial Executives International (FEI.) “Just the merefact of identifying issues as uncertain is significant and reallykind of provides a road map to the IRS, which obviously is ofconcern to companies.”

FEI supports transparency, Miller says, but the IRS proposal“appears to go beyond transparency. It involves the disclosure ofexposure items to possible adversaries.”

The proposed rules would apply to companies with assets of $10million or more that prepare their financial statements incompliance with FIN 48. On a new schedule to be included inbusiness tax returns, companies would have to provide a descriptionof each uncertain position, including the sections of the InternalRevenue Code and the tax years involved, and the amount of federalincome tax the company would owe if the position were disallowed.The IRS says companies would not have to provide their riskassessments for the uncertain tax positions or the amount of taxreserves related to the positions.

Currently, under FIN 48, companies include in their financialstatements a single number reflecting the total reserves they havetaken related to all uncertain tax positions, not just thoseinvolving federal income tax. The numbers the IRS requirementswould elicit would probably be much larger, since they would showthe total amount of federal income tax involved, and much moreinformative for the agency.

The IRS proposal comes as Textron appeals to the U.S. SupremeCourt a federal appeals court decision that would give the IRSgreater access to companies' tax work papers than the agency hashad in the past. In its announcement, the IRS says that except forthe new information it is asking companies to disclose on uncertaintax positions, it “intends to retain the existing policy ofrestraint for requesting tax accrual workpapers.”

“This initiative could be viewed as an approach by the IRS toobtain certain information contained in the tax accrual work paperswithout the IRS having to request those work papers,” Millersays.

In a speech Tuesday, IRS Commissioner Doug Shulman said theagency spends up to 25% of its time in audits of big companieslooking for issues. The new regulations would make audits moreefficient by reducing the time the IRS spends identifying issuesand helping it “prioritize selection of issues and taxpayers forexamination,” Shulman said.