TaxOps

IRS Says UTP Descriptions of Some Tax Positions are Too "Concise"

During its review of Schedule UTP (Uncertain Tax Position Statement) filed by taxpayers for the 2010 year, the Internal Revenue Service discovered that descriptions of some disclosed tax positions were more "concise" than they should have been. A new page on its website provides specific examples of acceptable and unacceptable descriptions.

Schedule UTP requires filers to provide a "concise description" of each uncertain tax position for which the corporation or a related entity has recorded a reserve on its audited financial statement. Accounting standards require corporations to identify these uncertain positions and maintain a reserve. If the position is substantially certain, no reserve is required. The IRS guidance identifies problems with the "concise description" of issues that taxpayer must provide on Schedule UTP, Uncertain Tax Position Statement. The guidance gives examples of insufficient and sufficient descriptions of different issues.

Contact Dan DeLau with questions on UTP statements at 720-227-0065 or delau@taxops.com. See the IRS Schedule UTP Guidance for Preparing Concise Descriptions.