SECTION 3. BACKGROUND

.01 If section 6662 applies to any portion of an underpayment of tax required to be shown on a return, an amount equal to 20 percent of the portion of the underpayment is added to the tax. The penalty rate increases to 40 percent in the case of gross-valuation misstatements under section 6662(h), nondisclosed noneconomicsubstance transactions under section 6662(i), or undisclosed foreign financial

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that the position would more likely than not be sustained on the merits. See Notice 2009–5, 2009–3 I.R.B. 309 (January 21, 2009) for interim penalty compliance rules for tax shelter transactions.

.05 In general, this revenue procedure provides guidance for determining when disclosure by return is adequate for purposes of section 6662(d)(2)(B)(ii) and section 6694(a)(2)(B). For purposes of this revenue procedure, the taxpayer must furnish all required information in accordance with the applicable forms and instructions, and the money amounts entered on these forms must be verifiable.

.06 Fiscal- and short tax-year returns. (a) In general. This revenue procedure may apply to a return for a fiscal tax year that begins in 2013 and ends in 2014. This revenue procedure may also apply to a short year return for a period beginning in 2014 if the return is to be filed before the 2014 forms are available. (Note that individuals are generally not put in this position, as the only situation in which a short year arises is when filing a decedent’s final return for a fractional part of a year, which is due the fifteenth day of the fourth month following the close of the 12month period that began with the first day of such fractional part of the year (after the 2014 form is available). See Treas. Reg. § 1.6072–1(b).) In the case of fiscalyear and short-year returns, the taxpayer must take into account any tax law changes that are effective for tax years beginning after December 31, 2013, even though these changes are not reflected on the form.

(b) Tax law changes effective after December 31, 2013. This document does not take into account the effect of tax law changes effective for tax years beginning after December 31, 2013. If a line referenced in this revenue procedure is affected by such a change and requires additional reporting, a taxpayer may have to file Form 8275, Disclosure Statement, or Form 8275–R, Regulation Disclosure Statement, until the Service prescribes criteria for complying with the requirement.

.07 A complete and accurate disclosure of a tax position on the appropriate year’s Schedule UTP, Uncertain Tax Position Statement, will be treated as if the corporation filed a Form 8275 or Form 8275–R regarding the tax position. The filing of a

Form 8275 or Form 8275–R, however, will not be treated as if the corporation filed a Schedule UTP.