Disclosure of Uncertain Tax Positions

December 13, 2010

Quick links:     Summary of Issue and Current Status | AICPA Comment Letters | IRS Pronouncements | AICPA Coverage in Video |AICPA Coverage in Newsletters and Journals

Summary of Issue and Current Status:

On Jan. 26, 2010, the IRS announced a proposal to require certain taxpayers to disclose uncertain tax positions (UTPs) annually in their federal income tax returns, including those UTPs for which the taxpayer may have reserved in the audited financial statements prepared under U.S. GAAP (in particular, FASB ASC 740-10, formerly contained in FIN 48), International Financial Reporting Standards (IFRS), or other country-specific financial accounting standards, or tax positions where a reserve has not been recorded due to an expectation to litigate. 

The IRS invited comments on its proposal, and many taxpayers and organizations (including the AICPA) provided feedback prior to the June 1, 2010 deadline.  The IRS considered the comments in the summer 2010. 

On Sept. 7, 2010, the IRS released proposed regulations allowing the IRS to require corporations to file such a schedule, and held a public hearing on Oct. 19, 2010.  The final regulations are effective on Dec. 15, 2010.  Some major modifications and other changes from the original proposal were announced September 24, 2010 with the release of the final Schedule UTP and instructions for 2010. 

For the 2010 and 2011 tax years, the disclosure on Schedule UTP will be applicable for taxpayers where the company or a related party issued audited financial statements where the company has both i) one or more uncertain tax positions that must be reported on Schedule UTP (as defined by the IRS in the instructions for Schedule UTP) and ii) total assets equal to or in excess of $100 million for: 
Corporations filing Form 1120;

  • Insurance companies filing Form 1120 L or 1120 PC; and,
  • Foreign corporations filing Form 1120 F.

The total asset threshold will be reduced to $50 million in 2012 tax years, and reduced to $10 million starting with 2014 tax years.  The IRS is considering whether to extend UTP reporting to other taxpayers beyond those noted above for 2011 or later years. 

On March 23, 2011, the IRS posted seven frequently asked questions (FAQs) regarding Schedule UTP on their website.  On July 19, 2011, the FAQs were modified and new FAQs were added. 

While there are many documents associated with this topic located throughout our website, this page was created to gather together in one place many of the links necessary to take you to information regarding this issue and the AICPA's response. 


AICPA Comment Letters:


IRS Pronouncements and Guidance:


AICPA Coverage on the Topic in Various Newsletters and Journals (note that access to many of these items may be limited to AICPA members or AICPA Tax Section members):

We are the American Institute of CPAs, the world’s largest member association representing the accounting profession. Our history of serving the public interest stretches back to 1887. Today, you'll find our 429,000+ members in 122 countries and territories, representing many areas of practice, including business and industry, public practice, government, education and consulting.

About AICPA

Support

Association of International Certified Professional Accountants. All rights reserved.