Schedule UTP Guidance – Initial Observations

Abstract:     
In this article, the author discusses the IRS’s Schedule UTP guidance issued on September 24, 2010. He commends the IRS for the extensive guidance issued, and specifically expanding its policy of restraint. However, he believes several issues remain with the policy of restraint that may need to be considered by both corporations and the IRS. Specifically, the IRS may have been (i) too generous by not conditioning the expanded policy of restraint on adequate completion of Schedule UTP, and (ii) not generous enough by leaving opportunities for it to pursue tax reserves and tax opinions in certain cases.

In addition, the author raises several questions surrounding the IRS’s new reserve ranking approach – a substitute for the maximum tax adjustment disclosure previously proposed in draft Schedule UTP. The most important question is likely to be whether the IRS obtains the information necessary to meet its stated goal of prioritizing audit selection and selecting issues for audit.

Number of Pages in PDF File: 6

Keywords: Schedule UTP, Tax Gap, Tax Accrual Workpapers, and Work-Product Doctrine

Accepted Paper Series