TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, June 28, 2012

Columbia Journal of Tax Law's Tax Matters: Schedule UTP

Columbia The Columbia Journal of Tax Law has published the third edition of its Tax Matters feature, with multiple short pieces responding to a specific cutting-edge tax law issue.  This issue's prompt is by Michael J. Graetz (Columbia):

IRS Announcement 2010-75 created a reporting requirement that certain corporations with audited financial statements file a Schedule UTP (Uncertain Tax Position) Form beginning with the 2010 tax year. In the Schedule UTP, a corporation must disclose all uncertain US tax positions taken in its tax return for which the corporation has recorded a tax reserve for financial accounting purposes. In addition, the corporation must rank the magnitude of the reserves reported on the form. A corporation must also disclose uncertain tax positions for which no reserve is recorded for financial reporting purposes if the corporation believes that it is more likely than not that it would need to litigate the position to sustain the benefit.

Furthermore, the First Circuit ruled in United States v. Textron (2009) that the work product doctrine does not protect tax accrual workpapers created for financial filings and auditing purposes from discovery requests by the IRS.

What effects, if any, have the UTP requirement and Textron decision had on how tax directors and clients evaluate tax planning and documentation of transactions? Although the IRS has announced a policy of restraint for both, how much have the UTP requirement and Textron decision expanded the IRS’s ability to obtain tax reserve information? Do you believe that other jurisdictions will attempt to implement similar reporting regimes, and if so, how would this development affect the management of global tax controversies?

Previous issues of Tax Matters

Scholarship, Tax | Permalink

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