Deviling details: lots of changes surrounding the reporting of UTP.

• Author: Dellinger, Kip
• Position: Regulatoryupdate

in Announcement 2010-9, issued in January 2010, the IRS notified certain corporate taxpayers that it intended to require disclosure in their annual tax return of any federal uncertain tax positions (UTP) in accordance with Accounting Standards Codification Topic 740.10 (formerly FIN 48) that these corporations reported on and disclosed in audited financial statements.

Announcement 2010-30 was then issued in March and accompanied by proposed Schedule UTP and related instructions that requested comments from tax professionals and taxpayers with regard to the proposed disclosure regime.

The comments received were numerous and generally negative. Indeed, many of the comments questioned the authority to require such disclosure, and virtually all the letters extensively criticized the scope and reporting thresholds of the proposals.

Nonetheless, the IRS used its rule-making authority Sept. 8 to make clear that it intends to require certain corporation taxpayers to disclose UTPs on a schedule attached to the taxpayer's return beginning with returns filed for calendar year 2010. The IRS amended the regulations under Sec. 6012, which requires corporations to file income tax returns.

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Historically, the IRS has been granted broad authority to prescribe the form and content of returns. The proposed regulation addition authorizes the IRS to require that certain corporations must disclose UTPs in accordance with forms, instructions or other appropriate guidance provided by the IRS.

The UTP disclosures apply to forms 1120, 1120-F (foreign corporations), 1120-L (life insurance companies) and 1120-P (property and casualty insurance companies).

The IRS then released announcements 2010-75 and 2010-76 Sept. 24, which significantly revised initial reporting requirements.

In view of the language of the regulations, the cliche that the devil is in the details is appropriate and both the initial and final 2010 Schedule UTP and the instructions represent those details.

Announcement 2010-75

This announcement addresses the substantive reporting aspects of the disclosure regime. According to the initial proposals, corporate taxpayers with total assets of $10 million or more would be required to comply with the disclosure regime. While that threshold remains, the revisions to the disclosure regime provide that it will be phased in between 2010 and 2014.

For tax years beginning in 2010 and 2011 the threshold for filing UTP will be $100 million; $50...