Schedule UTP - Why So Few Disclosures?

6 Pages Posted: 28 Mar 2013 Last revised: 26 Apr 2013

See all articles by J. Richard (Dick) Harvey

J. Richard (Dick) Harvey

Villanova University School of Law and Graduate Tax Program

Date Written: March 1, 2013


The IRS has published statistics indicating the average corporate taxpayer disclosed 2 to 3 uncertain tax positions per Schedule UTP. As one of the architects of Schedule UTP, I was expecting more UTP disclosures per return. This article explores potential explanations for this “expectation gap” ranging from those that are positive, to those that are relatively benign, to those that should clearly result in IRS action.

Positive explanations include corporate taxpayers no longer taking aggressive tax positions because of the Schedule UTP disclosure requirement. Benign explanations include taxpayers no longer recording truly immaterial reserves. Explanations that should result in IRS action include corporations:

• Recording a tax reserve but arguing no disclosure is necessary because the reserve is not “required”; • Failing to record a relatively material tax reserve that is then posted to an auditor's net effects schedule; and • Failing to record a tax reserve by constructing a FIN 48 probability distribution table with only a 50 percent probability of litigation.

Finally, the IRS should consider imposing a penalty for not adequately filing Schedule UTP. Although a penalty could be obtained through legislation, the IRS could also effectively institute a penalty based on one of the carrot and stick approaches described in this article.

Keywords: Schedule UTP, Transparency, Corporate Disclosures, Corporate Tax Gap, FIN 48

Suggested Citation

Harvey, J. Richard, Schedule UTP - Why So Few Disclosures? (March 1, 2013). Tax Notes, April 1, 2013; Villanova Law/Public Policy Research Paper No. 2013-3014. Available at SSRN:

J. Richard Harvey (Contact Author)

Villanova University School of Law and Graduate Tax Program ( email )

299 N. Spring Mill Road
Villanova, PA 19085
United States
610-519-4474 (Phone)

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