IRS Revises Reporting of Uncertain Tax Positions
In response to feedback from stakeholders, the IRS has made changes to the final form and instructions for Schedule UTP for reporting uncertain tax positions.
The recently released final form and instructions include the following changes:
- Contrary Authorities in Column (c): For taxpayers using Schedule UTP instead of Form 8275 to disclose a tax position they have identified as contrary to a rule, column (c) is the applicable column for disclosing that rule. The IRS said it routinely receives disclosures on Form 8275 citing the "authoritative sources" listed in the draft instructions, so the draft instructions for that section included citations for guidance not published in the Internal Revenue Bulletin (IRB). In response to feedback, the instructions have been revised to list only published IRB guidance and court decisions.
- Columns (i) to (k): The revised instructions clarify that the request in these columns is not for the amount of the unrecognized tax benefit but rather for the amount of the line item on the taxpayer's return that includes the unrecognized tax benefit.
The instructions also make clarifications to the concise description section. The expanded policy of restraint detailed in Announcement 2010-76 remains in effect.
Also, the IRS will treat a complete and accurate disclosure of a tax position on the appropriate year's Schedule UTP as if the corporation filed a Form 8275 or Form 8275-R regarding the tax position for the accuracy-related penalty due to disregard of rules or regulations or a substantial understatement of income tax.