Who Reports What? Some Data About Uncertain Tax Positions

The Internal Revenue Service keeps statistics based on the data it receives and gathers related to the filing of tax returns. Of course, current statistics are only up to date for the tax year two years prior to the present tax year. In this case, the latest statistics released by the IRS are for the tax year, 2014. In late 2016, the IRS released Schedule UTP, “Uncertain Tax Position Statement” filing statistics for the tax year ended Dec. 31, 2014, showing figures that are consistent with those from past filing years.

For the 2014 tax year, the IRS reported that there were 2,747 Schedule UTP filers, which is an increase from 2013 when it reported 2,469 Schedule UTP filers. While the IRS reported 80% repeat filers in 2013, it only reported 71% in 2014. It is interesting that 50% of the 2014 filers were public companies, also a decrease from 2013 when 57% were public companies. This evidences the fact that more private companies are reporting their uncertain tax positions and filing Schedules UTP.

These numbers are not all that surprising since Schedule UTP filing transition rules have decreased the reporting threshold for each year since the 2012 tax year. In 2017, a corporation with assets of $10 million or more must file Schedule UTP if it has taken a tax position for the current year or a prior year, and the taxpayer or a related party has recorded a reserve in this position for purposes of its financial statement, or, in the alternative, it has not recorded a reserve and expects to litigate its tax position.

The most common uncertain tax position reported, for the fourth straight year, was related to the § 41 research credit, in second place was § 482 transfer pricing positions. These two issues combined accounted for more than half of all uncertain tax positions reported to the IRS.

Taxpayer Information: TY
Sch. UTP filers 2,747 2,469
Percent of Repeat filers (filed Sch. UTP in multiple years) 71% 80%
Percent of UTP filers that are Publicly Traded 50% 57%
Percent of UTP Filers reporting only one Tax Position 49% 46%
Tax Position Information: TY
Total Uncertain Tax Positions reported 6,302 6,229
% of Uncertain Tax Positions reported on Part II (Prior Year Positions) 35% 32%
Average Uncertain Tax Position per Taxpayer 2.3 2.5
Most common Uncertain Tax Positions IRCs % of total:
  1) Research Credit – IRC 41 36% 31%
  2) Transfer Pricing – IRC 482 20% 20%
  3) Dom. Prod. Act. – IRC 199 4% 5%
  4) Capitalization – IRC 263 3% 4%
  5) Trade/Bus. Exp. – IRC 162 3% 3%

It is wise for taxpayers, whether an individual or business located in the New York or Tri-State area, to consult with a tax professional to help assess their current tax situation, looking ahead to the future. If you have any question about taxes, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation call 212-490-0704.Who Reports What? Some Data About Uncertain Tax Positions

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