Schedule UTP: IRS findings.

• Author: Adams, Robert D.
• Position: Uncertain tax position

Since the inception of Schedule UTP, Uncertain Tax Position Statement, much has been spoken and written about it. Now, there is enough data to report what the IRS has found regarding Schedule UTP filings by corporations with $100 million or more of total assets on their tax return balance sheets, and what the IRS is doing with that information. This column provides an overview of those findings. Additional information is available on the AICPA IRS Practice and Procedure group's "Disclosure of Uncertain Tax Positions" webpage at tinyurl. com/2bwkhsg.

Schedule UTP was first required to be filed for tax year (TY) 2010 returns by corporations that:

* Issue or are included in audited financial statements that report reserves for contingent U.S. income tax liabilities in accordance with FASB Accounting Standards Codification Subtopic 740-10 (formerly FIN 48, Accounting for Uncertainty in Income Taxes) or any other accounting standard for positions in the corporations' U.S. income tax returns;

* File Forms 1120, U.S. Corporation Income Tax Return; 1120-F, U.S. Income Tax Return of a Foreign Corporation; 1120-L, U.S. Life Insurance Company Income Tax Return; or 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return; and

* Report total assets of $100 million or more on their tax return balance sheets.

In accordance with transition rules for 2012, Schedule UTP is required for corporate tax returns that meet the first two criteria listed above and that report $50 million or more of total assets oh their tax return balance sheets. That threshold drops to $10 million for 2014 tax returns.

Schedule UTP was created and is required as part of the IRS strategy to improve compliance through greater transparency. The IRS expects Schedule UTP to reduce the time it takes to find issues and give revenue agents and taxpayers more time during tax audits to discuss the law as it applies to the facts, rather than looking for information. In addition, it is expected to help identify areas of uncertainty that require guidance and to allow prioritization in the selection of issues and taxpayers for examination.

The IRS Large Business & International (LB&I) Division created Schedule UTP. LB&I maintains a centralized review process that enables it to (1) review every Schedule UTP that is filed and analyze the schedules to determine if the disclosures comply with the relevant instructions; (2) select issues for audit and identify trends; (3) identify gaps in guidance and move to fill those gaps; and (4)...