Reporting Uncertain Tax Positions: Implications of the New IRS Return Schedule

Preparing for New Transparency Demands and Managing Disclosure Risks

Draft Schedule UTP and Instructions Were Published April 19

Recording of a 110-minute CPE/CLE webinar with Q&A


Conducted on Thursday, May 6, 2010

Recorded event now available

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Program Materials

This CLE webinar will prepare corporate tax professionals to comply with coming IRS policy on reporting uncertain tax positions and give insights into how to calculate maximum tax liability and describe each reserved position. The panel will also explain the potential risks to previously protected workpaper information.

Description

No federal income tax regulatory development in recent months has been more significant than the IRS plan, as stated in Announcement 2010-09, to make companies with more than $10 million in assets disclose all uncertain tax positions in a new schedule to be filed along with their returns.

By insisting that taxpayers report even those uncertain positions for which no reserve exists, the IRS requirement will surpass FIN 48. Also, companies will need to state maximum federal tax liability for each position (without regard to a risk adjustment) and disclose some unreserved positions.

In short, the IRS is imposing an entirely new process on corporate tax departments, and prudent tax professionals must prepare now. The April 19, 2010 publication of draft Schedule UTP and its instructions provides sufficient detail on the coming mandate to start that planning.

Listen as our panel of veteran federal tax advisors analyzes the new reporting regimen for uncertain tax positions and helps you strategize for proper compliance right from the start.

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Outline

  1. Key terms of IRS Announcement 2010-9
    1. Disclosure of “uncertain tax positions” on new schedule accompanying returns, to also include:
      1. Code sections potentially affected by position
      2. Description of tax years affected
      3. Statement that position involves item of income/gain/loss/deduction/credit
      4. Statement that position involves permanent inclusion or exclusion of any item
      5. Statement of whether position involves determination of value of any property or right
      6. Statement whether position involves computation of basis
    2. Disclosure of maximum federal tax liability for each position
    3. Consideration of possible failure-to-file or non-disclosure penalties
  2. Potential implications
    1. Possible ties to Textron case and policy of restraint
    2. Timing and wording of disclosures
      1. Would risk assessments or tax reserve amounts have to be disclosed?
      2. What competitors and auditors could do with information
    3. How states will react and choose to track IRS policy

Benefits

The panel will address these and other key issues:

  • Calculating the maximum amount for each uncertain tax position, given the lack of a materiality requirement and the inherent complexity in valuing certain exposures.
  • Meeting the requirement for a "concise description" of each reserved position.
  • Evaluating whether this new policy will undermine the IRS' policy of restraint with regard to tax workpapers given that core information would be included with a tax return.

Faculty

Robin Greenhouse
Robin Greenhouse

Tax Partner
McDermott Will & Emery

She represents clients on major tax controversies with the IRS at audit or appeals, and in tax litigation before the...  |  Read More

Todd Simmens
Todd Simmens
Partner and National Director, Tax Controversy and Procedure
BDO USA

He focuses on assisting clients with tax disputes, IRS procedure and penalties, and reportable transaction rules. He...  |  Read More

Ronald Kerridge
Ronald Kerridge

Partner
K&L Gates

He works in both tax controversies and transactional tax matters, principally on corporate and individual taxpayer...  |  Read More

Adam Tejeda
Adam Tejeda

Attorney
K&L Gates

He works with clients on a wide range of tax matters associated with domestic and international business...  |  Read More

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