Tax Matters

Vol. 3, No. 2

Each edition of Tax Matters consists of free-flowing responses by three tax practitioners to a question regarding a current issue in tax law and policy. Tax Matters commentaries provide insightful perspectives on a broad range of topics, making important contributions to the dialogue within the tax bar about cutting-edge issues. Although the commentaries are certainly of interest to the academic community, they are primarily directed toward tax professionals and their clients.

IRS Announcement 2010-75 created a reporting requirement that certain corporations with audited financial statements file a Schedule UTP (Uncertain Tax Position) Form beginning with the 2010 tax year. In the Schedule UTP, a corporation must disclose all uncertain US tax positions taken in its tax return for which the corporation has recorded a tax reserve for financial accounting purposes. In addition, the corporation must rank the magnitude of the reserves reported on the form. A corporation must also disclose uncertain tax positions for which no reserve is recorded for financial reporting purposes if the corporation believes that it is more likely than not that it would need to litigate the position to sustain the benefit.Furthermore, the First Circuit ruled in United States v. Textron (2009) that the work product doctrine does not protect tax accrual workpapers created for financial filings and auditing purposes from discovery requests by the IRS.What effects, if any, have the UTP requirement and Textron decision had on how tax directors and clients evaluate tax planning and documentation of transactions? Although the IRS has announced a policy of restraint for both, how much have the UTP requirement and Textron decision expanded the IRS’s ability to obtain tax reserve information? Do you believe that other jurisdictions will attempt to implement similar reporting regimes, and if so, how would this development affect the management of global tax controversies?

Michael J. Graetz, Columbia Alumni Professor of Tax Law, Wilbur H. Friedman Professor of Tax Law, Columbia Law School

Reflections on the True Impact of the IRS’ Schedule UTP Reporting Requirements

Ken Kuykendall

Evolving Tax Risk Analysis and Disclosure

Neil Traubenberg

Minimizing Potential Privilege Implications Caused by the UTP Schedule

Yuni Yan