The Internal Revenue Service blinked. The agency has retreated from some of the most worrisome and time-consuming provisions of its proposed requirement that companies report their uncertain tax positions with a new Form UTP. However, once the wording of the instructions for the new form is finalized, accountants and tax attorneys at companies with more than $100 million in assets will have to start preparing the new form, which will apply to the current tax year.

IRS Commissioner Douglas Shulman promised that his agency's long-standing “policy of restraint” would apply to the new measure, in terms of agency auditors using the new UTP form as a guide to which areas to audit.

Shulman said the agency is dropping a requirement that companies assign a dollar value to each uncertain tax position. Companies will only be required to rank those positions, with no value assigned. And smaller companies will have more time to prepare for the requirement: those with $50 million or more in assets must comply in the 2012 tax year, and those with $10 million or more have until 2014.