The Internal Revenue Service is planning to require corporate taxpayers to provide brief descriptions of their uncertain tax positions along with the maximum amount of tax exposure if those positions are not sustained.

IRS Commissioner Doug Shulman, in a speech to the New York State Bar Association, said the IRS is looking for ways to make its audit and examination processes more efficient. “It would add efficiency to the process if we had access to more complete information earlier in the process regarding the nature and materiality of a taxpayer’s uncertain tax positions,” he said, according to his prepared remarks.

The new disclosure requirement would cut to the chase, he said, helping the IRS “prioritize selection of issues and taxpayers for examination.” The IRS published the eight-page proposed disclosure requirement and is seeking taxpayer comment on it through March 29.

Shulman said it would apply to corporate taxpayers with assets of at least $10 million who prepare financial statements that are subject to Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes, now found in the Accounting Standards Codification under sub-topic 740-10 on Income Taxes.

FIN 48 took effect in 2007 requiring companies to disclose in their financial statements where they may have some uncertainty about positions they’ve taken on their corporate tax returns. Corporate taxpayers challenged FIN 48 vigorously, claiming it provided the IRS with a roadmap to perform the tax audit.

The IRS disclosure requirement would compel companies to provide with their tax returns a “concise description” of those positions, along with the maximum amount of U.S. income tax exposure if those positions are not sustained under a legal challenge. “By concise, we mean a few sentences that inform us of the nature of the issue, and not pages of factual description or legal analysis,” Shulman said.

The IRS announcement points out that case law has given the IRS the right to ask for more detailed information about the analysis that goes into corporate tax returns and uncertain tax positions, especially by asking for the tax accrual work papers that form the basis for establishing corporate tax positions.

“We could have asked for more—a lot more—but chose not to,” Shulman said. “We believe we have crafted a proposal that gives us the information we need to do our job without trying to get in the heads of taxpayers as to the strengths and weaknesses of their positions.”

The proposal does not require companies to disclose their risk assessment or the amounts they’ve reserved to pay taxes in case they might lose a particular tax argument, Shulman said. It also does not change the IRS “policy of restraint” with respect to asking for the work papers, he said. Instead, the disclosure requirement focuses on maximum exposures “so we can allocate our exam resources appropriately,” he said.

“We do not believe we will be adding substantial new work or burden on taxpayers,” he said. “These taxpayers are already required to establish tax reserves for uncertain positions in determining their financial statement income under U.S. or foreign accounting standards, such as FIN 48. So the work is already being done. We are asking for more transparency.”