Uncertain Tax Position


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Uncertain Tax Position

In accounting, a situation in which a taxpayer believes its interpretation of earnings recognition is less strong than what the interpretation of the IRS is likely to be. While the FASB does not allow companies to report uncertain tax positions on financial reports, they may take these positions on their tax returns in hope that the IRS will not conduct audits.
References in periodicals archive ?
SCHEDULE UTP DISCLOSURE REQUIREMENTS AND REPORTING OF UNCERTAIN TAX POSITIONS 682 A.
companies may be required to implement new international standards for income tax accounting, particularly when accounting for uncertain tax positions.
The FASB's stated goal with FIN 48 was to reduce diversity in practice, and to that end it prescribes a specific model for recognizing and measuring uncertain tax positions.
In the recognition phase, any intercompany transaction that could lead to an adjustment of income by the IRS or a foreign tax authority is considered to be an uncertain tax position.
If the taxpayer's FIN 48 workpapers demonstrate that the taxpayer believed that a particular uncertain tax position was likely to be sustained, then this fact would represent positive evidence that the taxpayer did in fact believe that its position was correct.
Based on those principles, the IRS designed schedule UTP to report basic information regarding a corporation's uncertain tax positions on a self-assessment tax system.
Additionally, in connection with the reversal of the accounting for the Uncertain Tax Position Reserve liability as previously recorded, the Company expects that based on federal income tax returns as filed, an additional $24.
The schedule must also include a concise description of the uncertain tax position.
By refusing to define an uncertain tax position and instead requiring all issuers to document every tax position at a MLTN standard, FIN 48 is clearly more demanding, prescriptive, and burdensome for issuers than FAS 5.
1) In January 2010, the IRS announced a proposal to require large corporations to report uncertain tax positions on the new Schedule UTP, Uncertain Tax Position Statement, to be filed with their annual tax returns.
In a nutshell, 2010-9 would require a concise description of each uncertain tax position for which the taxpayer has recorded a reserve in its financial statements under the Financial Accounting Standards Board's FIN 48 interpretation.
Note: On April 22, 2011, the Institute submitted comments and recommendations for additional guidance about the reporting requirements for uncertain tax positions on Schedule UTP, Uncertain Tax Position Statement.