Companies Still Grappling with UTP Reporting Issues

Apr 26, 2011   

Several months ago, we reported on the Internal Revenue Service (IRS) promulgating its final guidance for corporations required to file uncertain tax position (UTP) statements. The initial deadline for corporations with total assets equal to or exceeding $100 million to file its 2010 taxes with Schedule UTP, “Uncertain Tax Position Statement,” is fast approaching. Yet despite this formal guidance, IRS answers to FAQs, and a blogosphere full of information from tax practitioners, PricewaterhouseCoopers LLP (PwC) reports that companies are still facing major uncertainties with respect to their UTP reporting issues.

In a Practitioner webcast on March 21, 2011, PwC Tax Partner Ken Kuykendall stated that there is “a lot of uncertainty in these rules,” and reported that companies are hoping for more guidance from the IRS on reporting guidelines before the first Schedules must be filed.

The primary questions identified by would-be Schedule UTP filers include the uncertainty surrounding the definitions of what it means to have “recorded a reserve for an uncertain position” and “position taken on a return.” Kuykendall added that issues such as how to handle net operating losses (NOLs) “ and other attributes that embed and carry forward uncertain tax positions into future years “ are also a source of substantial confusion for companies.

Finally, Kuykendall referred to additional UTP issues that are “lurking in the background.” These issues include uncertainty over the reporting of multi-year positions, foreign positions, purchase accounting, and affirmative claims and amended reserves. He added that the IRS must also provide additional guidance to companies regarding the determination of reserve amounts for the purposes of ranking UTPs, a requirement of the Schedule.

Luke Cherveny, PwC Tax Director also spoke at the Practitioner webcast and added that PwC foresees UTP compliance as a “multi-phase process” beginning with fostering internal communications to develop UTP-required information. Cherveny warned that companies will face “gaps” between the information that is currently available and that which needs to be reported. Without a plan as to how to bridge those gaps, he opined, companies are going to falter in their reporting obligations.

If your company is facing uncertainty over UTP reporting, let us assist you in meeting your needs and putting that uncertainty to rest. Our tax law practitioners can help identify your UTP reporting requirements and process the information you need to achieve compliance. Contact us for a consultation today at