IRS Announces Release of Draft Schedule to Report Uncertain Tax Positions

On April 19, the IRS announced that it was releasing draft Schedule UTP and draft instructions as part of its initiative to require certain business taxpayers to report uncertain tax positions on their returns (Announcement 2010-30). (See previous JofA coverage of this proposal.)

According to the announcement, taxpayers with uncertain tax positions and assets of $10 million or more will be required to file Schedule UTP beginning with the 2010 tax year if they, or a related entity, filed audited financial statements. Affected taxpayers include corporations required to file Form 1120, insurance companies required to file Form 1120L or 1120PC, and foreign corporations required to file Form 1120F.

For 2010 tax years, the IRS will not require Schedule UTP from taxpayers who file other forms in the 1120 series, or from passthrough entities or tax-exempt organizations.

Under the draft instructions, a taxpayer who properly files Schedule UTP will be treated as having filed Form 8275 or 8275-R, and the IRS says it is considering other circumstances in which a tax position reported on Schedule UTP need not be reported elsewhere on the return or another disclosure statement.

The IRS has requested comments on the draft schedule and instruction, as well as on its proposal to require reporting of uncertain tax positions on the tax return, by June 1. Comments can be submitted by e-mail to Announcement.Comments@irscounsel.treas.gov, with “Announcement 2010-9” in the subject line.