The IRS has released their statistics on Uncertain Tax Position (UTP) filingsby taxpayers for the 2011 tax year.
The Schedule UTP asks for information about tax positions that affect the U.S. federal income tax liabilities of certain corporations that issue or are included in audited financial statements and have assets that equal or exceed $50 million.
The Schedule UTP requires the reporting of each U.S. federal income tax position taken by an applicable corporation on its U.S. federal income tax return for which two conditions are satisfied:
1. The corporation has taken a tax position on its U.S. federal income tax return for the current tax year or for a prior tax year.
2. Either the corporation or a related party has recorded a reserve with respect to that tax position for U.S. federal income tax in audited financial statements, or the corporation or related party did not record a reserve for that tax position because the corporation expects to litigate the position.
A tax position for which a reserve was recorded (or for which no reserve was recorded because of an expectation to litigate) must be reported regardless of whether the audited financial statements are prepared.
The statistics show that:
Schedule UTP TY2011 Filing Statistics (as of December 2012)
- 1,783 taxpayers filed Schedule UTP for TY2011. (This compares to 1,761 taxpayers at the same time last year. Total returns filed and number of issues disclosed will increase as late year filters and other returns are filed)
- 83% of all returns filed with Schedule UTP were filed by IC taxpayers.
- 4,120 tax positions have been disclosed on Schedule UTPs for TY 2011.
- Returns filed by CIC taxpayers with a Schedule UTP averaged 3.8 uncertain tax positions per Schedule, while returns filed by IC taxpayers with a Schedule UTP averaged 2.0 positions per Schedule.
- Note that beginning with TY2011, corporations are required to report tax positions taken in the prior year on Part II of Schedule UTP if that position was not reported on the prior year Schedule. As such, we expect a slight increase in the average number of total positions reported per taxpayer. We will at a later date begin to break out the total number of positions reported between current year and prior year positions.
- 47% of all Schedule UTP returns filed included only one uncertain tax position.
- IRS is still compiling the data regarding the top code sections reported with the TY2011 filings, although we do not expect much variation from TY2010. That information will be posted as soon as it becomes available.
- 2,356 taxpayers filed Schedule UTP for TY2010.
- 79% of all returns filed with Schedule UTP were filed by IC taxpayers.
- 4,712 tax positions were disclosed on Schedule UTPs for TY 2010.
- Returns filed by CIC taxpayers with a Schedule UTP averaged 3.1 uncertain tax positions per Schedule, while returns filed by IC taxpayers with a Schedule UTP averaged 1.9 positions per Schedule.
- 49% of all Schedule UTP returns filed included only one uncertain tax position.
- The top three code sections reported by UTP filers are IRC 41, 482 and 162. Analysis of UTP filers’ concise descriptions revealed that the third highest primary IRC section is actually IRC 263 capitalization.
- Transfer Pricing and Research Credit comprise 43% of all disclosed uncertain tax positions.
Have and Uncertain Tax Possission?
Not Sure if you Have to Report it?
Contact the Tax Lawyers at
Marini & Associates, P.A.