DC currents: IRS set to roll out uncertain tax positions schedule.

• Author: Goldstein, Benson S.

THE AICPA AND OTHERS HAVE SIGNIFIcant concerns about the scope and direction of the IRS's quest to roll out Schedule UTP, Uncertain Tax Position Statement, for tax year 2010. According to the IRS, certain taxpayers with total assets equal to or greater than $10 million will be required to disclose their uncertain tax positions on Schedule UTP (REG-119046-10). These taxpayers include business entities that file Form 1120, U.S. Corporation Income Tax Return; Form 1120-F, U.S. Income Tax Return of a Foreign Corporation; Form 1120-L, Life Insurance Company Income Tax Return; or Form 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return.

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Despite the serious concerns raised by CPAs, attorneys, and business taxpayers about the proposed uncertain tax position (UTP) program, the IRS remains committed to its current schedule for rolling out Schedule UTP. In September, the IRS issued proposed regulations that would require the use of Schedule UTP for tax years beginning after December 15, 2009, and ending after the date the final regulations are published in the Federal Register (REG-119046-10). The IRS has not released any final details of the UTP program beyond these proposed regulations, but it is conceivable that it will have made such details public by the time this column is published. The purpose of this item is to remind AICPA members about an extremely important issue, one that will have a very significant impact on the income tax returns of a critical segment of the U.S. economy.

The IRS announced the proposed UTP initiative in a series of public releases--Announcements 2010-9, 2010-17, and 2010-30. These announcements should be viewed as the IRS's articulation of the UTP initiative in its "proposal" stage; the program's final details are imminent. Announcement 2010-9 states that Schedule UTP will require:

* A concise description of each UTP for which the taxpayer or related entity has recorded a reserve in its financial statements; and

* The maximum amount of potential federal tax liability attributable to each UTP, determined without taking into account the taxpayer's assessment of its likelihood of prevailing or winning on the merits of the issue.

Announcement 2010-9 states that a UTP includes a position for which a tax reserve must be established under FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, Accounting for Income...