IRS to Update Schedule UTP to Require Additional Transparency

By and on October 14, 2022

On October 11, 2022, the Internal Revenue Service (IRS) announced draft changes to Schedule UTP, Uncertain Tax Position Return Statement, and Form 1120, Instructions for Schedule UTP, for the 2022 tax year (processing year 2023). Since the 2010 tax year, Schedule UTP has been used by certain corporations to report uncertain tax positions. Corporations filing Forms 1120, 1120-F, 1120-L or 1120-PC are required to file Schedule UTP if their total assets equal or exceed the applicable asset threshold for the tax year and if the corporation records a liability for unrecognized tax benefits for a US federal income tax position in audited financial statements.

The changes to the form include a new field for the incremental dollar amount of the uncertain tax positions taken. Also, for tax positions reported on Schedule UTP, rather than filing Form 8275, Disclosure Statement, or Form 8275-R, Regulation Disclosure Statement, new columns will identify the rulings or regulation sections that are contrary to positions taken on the tax return. (Proper disclosure on Schedule UTP may allow taxpayers to avoid certain penalties). Finally, the instructions incorporate more relevant examples and provide enhanced guidance on what constitutes an adequate disclosure for the concise description. Comments can be submitted to the IRS regarding the draft changes.

Practice Point: The IRS is continuing its effort of having corporations self-identify uncertain tax positions (although there remain questions on how the IRS actually uses the information disclosed on a Schedule UTP). Requiring the identification of specific IRS guidance that is contrary to the taxpayer’s position is noteworthy given the IRS’s recent position that challenges to regulations will not be resolved at the examination or IRS Appeals levels. Corporations subject to the Schedule UTP reporting requirement will need to review their past practices and ensure that future Schedule UTP filings comply with the draft changes once finalized.

Andrew R. Roberson
Andrew (Andy) R. Roberson focuses his practice on tax controversy and litigation matters. He represents clients before the Internal Revenue Service (IRS) Examination Division and Appeals Office and has been involved in over 75 matters at all levels of the federal court system, including the US Tax Court and Federal District Courts, several US Courts of Appeal and the Supreme Court. Andy has experience settling tax disputes through alternative dispute resolution procedures, including Fast Track Settlement and Post-Appeals Mediation, and in representing clients in Compliance Assurance Process (CAP) audits. In addition to representing corporations and partnerships in tax disputes, he also represents high net-worth individuals and assists taxpayers needing to make voluntary disclosures. Read Andy Roberson's full bio.


Kevin Spencer
Kevin Spencer focuses his practice on tax controversy issues. Kevin represents clients in complicated tax disputes in court and before the Internal Revenue Service (IRS) at the IRS Appeals and Examination divisions. In addition to his tax controversy practice, Kevin has broad experience advising clients on various tax issues, including tax accounting, employment and reasonable compensation, civil and criminal tax penalties, IRS procedures, reportable transactions and tax shelters, renewable energy, state and local tax, and private client matters. After earning his Master of Tax degree, Kevin had the privilege to clerk for the Honorable Robert P. Ruwe on the US Tax Court. Read Kevin Spencer's full bio.

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