As if the previous requirements for analyzing and documenting the nature of possible uncertain tax positions for filers of Forms 1120, 1120-F, 1120-L and 1120-C was not enough, the IRS is now proposing the filing of a schedule UTP (Uncertain Tax Position Statement) by companies with total assets of more than $10 million beginning in the 2010 tax year. Schedule UTP will require disclosures entailing each uncertain tax position noted by a taxpayer, whether it be adequately reserved or not, and the disclosure of the maximum potential liability relating to each tax position.
In many cases, this requirement will result in un-warranted additional procedures for taxpayers and their advisers. Unfortunately, this will often result in increased service fees with little added benefit to the IRS. The AICPA’s proposed change serves as the first attempt to limit these proposed requirements of the IRS. If implemented, these changes if implemented will substantially reduce the number of companies required to file the schedule UTP and will also require the IRS to substantially rely support provided by taxpayers during the 2009 tax year.
With the end of the 2010 calendar tax year fast approaching, we can only hope that the IRS considers the AICPA proposed changes before signing off on the new pronouncement.