Schedule UTP: update on IRS findings.

Author:Chambers, Valrie
Position:Uncertain tax position
 
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The IRS has now received virtually all Schedules UTP, Uncertain Tax Position Statement, that relate to tax years beginning in 2010 (TY 2010) and, as of March 2013, probably about two-thirds of Schedules UTP for tax years beginning in 2011 (TY 2011). This item provides an overview of the IRS's statistics on those filings and is an update to the Schedule UTP statistics discussed in the October 2012 issue of The Tax Adviser (see Adams, "Schedule UTP: IRS Findings," 43 The Tax Adviser 700 (Oct. 2012)).

The previous item also gave statistics about Schedule UTP filers in the Compliance Assurance Program (CAP) and informed readers about IRS training and audit activity relating to Schedule UTP, including what the IRS is doing with taxpayers that do not fully comply with Schedule UTP instructions. That information has not basically changed and is not repeated here. Additional information is available on the AICPA IRS Practice and Procedure "Disclosure of Uncertain Tax Positions" webpage at tinyurl.com/2bwkhsg.

Schedule UTP was first required to be filed with 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 74010 (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 TY 2012, Schedule UTP is required for corporate tax returns that meet the first two criteria above and that report $50 million or more of total assets on their tax return balance sheets. That threshold drops to $10 million for TY 2014 returns.

The IRS Large Business 8c International (LB&I) Division created Schedule UTP. LB8cI maintains a centralized review process that enables it to (1) review all Schedules UTP filed and analyze them 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 them; and (4) determine the proper use and treatment of...

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