Update: New IRS Rules On Tax Reporting Of Uncertain Positions

by McGrath North Tax Group

(402) 341-3070

Under the recent Ann. 2010-30, the IRS released a draft schedule (Schedule UTP) (and related instructions) which would be used by larger corporate taxpayers to report their uncertain tax positions beginning with the 2010 tax year. Within that announcement, the IRS stated that the following taxpayers with both: (a) assets of $10 million or more; and (b) uncertain tax positions, will be required to file the new Schedule UTP if the taxpayer, or a related party, issued audited tax statements:

  • Corporations required to file Form 1120.
  • Farm corporations required to file Form 1120F.
  • Insurance companies required to file either Form 1120PC or Form 1120L.

The IRS further announced that for the 2010 tax year, it will not require a Schedule UTP from other Form 1120 filers (e.g., real estate investment trusts), tax exempt organizations, or pass-through entities. However, the IRS will determine the filing and disclosure requirements for such entities after receiving and considering comments on the proposal.

In related news, the U.S. Supreme Court has declined to review the decision of the First Circuit Court of Appeals in the Textron case, which we previously highlighted in a newsletter article. The Textron decision gave the IRS broad authority to review the tax accrual workpapers of corporations.

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