The Internal Revenue Service blinked. The agency has retreatedfrom some of the most worrisome and time-consuming provisions ofits proposed requirement that companies report their uncertain taxpositions with a new Form UTP. However, once the wording of theinstructions for the new form is finalized, accountants and taxattorneys at companies with more than $100 million in assets willhave to start preparing the new form, which will apply to thecurrent tax year.

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

Shulman said the agency is dropping a requirement that companiesassign a dollar value to each uncertain tax position. Companieswill only be required to rank those positions, with no valueassigned. And smaller companies will have more time to prepare forthe requirement: those with $50 million or more in assets mustcomply in the 2012 tax year, and those with $10 million or morehave until 2014.