Summer heat wave doesn't stifle TEI advocacy: IRS schedule UTP, California's strict liability penalty, Canada's pre-budget consultations, and congressional review of state apportionment rules command attention.

• Position: Tax Executives Institute, uncertain tax position

There was no summer vacation for Tax Executives Institute's advocacy efforts as the Institute submitted comments on legislative and administrative issues in the United States, Canada, and at the state level.

Uncertain Tax Position Schedule

On May 28, 2010, TEI filed its comments on the IRS's plan to require taxpayers with assets in excess of $10 million to disclose their uncertain tax positions with their federal corporate income tax filings beginning with the 2010 tax year. IRS Commissioner Douglas Shulman, in a speech accompanying the release of Announcement 2010-9, said that this increased transparency will aid the IRS in achieving its compliance and enforcement objectives of certainty, consistency, and efficiency.

TEI's written comments conveyed its concerns that the compliance burdens of the new schedule will outweigh the benefits of its implementation. To improve the disclosure schedule, the Institute suggested "road testing" the proposed form with taxpayers currently participating in the Compliance Assurance Process (CAP), or implementing the enhanced disclosure regime using a phased approach initially calling for the disclosure of "listed transactions." The Institute's letter advanced several suggestions for improving Schedule UTP, including modifying the requirement to state the maximum potential liability for each uncertain tax position.

"While TEI has significant reservations about Schedule UTP," said 2010-2011 TEI International President Neil Traubenberg, "we commend the process that the IRS has employed in seeking feedback, responding to taxpayer concerns, and evincing a willingness to consider alternative approaches."

TEI's comment letter is reprinted in this issue, beginning at page 219.

Congressional Inquiry on State Taxes

In May, TEI provided testimony to the House Judiciary Committee's Subcommittee on Commercial and Administrative Law on Congress's role in state tax apportionment. Following that hearing, the Subcommittee asked TEI to respond to several supplemental questions. Those questions included the Institute's position on the Mobile Workforce State Income Tax Fairness and Simplification Act, currently introduced as H.R. 2110, and the complexities created when businesses consisting of multiple affiliated entities must file combined state tax returns.

"The Subcommittee's questions reflect the influence of our broad-based membership on tax policy debates at the national and subnational levels," noted Mr. Traubenberg...