So you take a position on a tax issue. You don’t really know why or how you got there but your CFO says it’s legit. How does he/she know? “Johnson in the tax department told me.”
Does Johnson understand it? Of course not! It’s an uncertain tax position. It’s a shot in the dark at best.
Naturally, the IRS has gotten all nosy about this sort of thing so you have to formulate something that vaguely resembles an explanation that doesn’t read like Bittker & Eustice.
You can’t simply make it a copy and paste job since we’re guessing the IRS wouldn’t appreciate the bloggy approach. But you’ve got to come up with something. Oh, and try to keep it brief.
Almost half of senior executives polled are most concerned about the prospect of providing a concise description of their uncertain tax positions (UTPs) in order to comply with a new, much-discussed Internal Revenue Service disclosure requirement, according to a survey conducted by KPMG’s Tax Governance Institute (TGI).
This shouldn’t come as much of a surprise since we’re talking about interpreting the INTERNAL REVENUE CODE. But the BSDs out there are worried about explaining why they’re taking a stand on something that don’t understand one iota. Plus, if you’re already pret-tay sure that the IRS is going to call bullshit on you, that warrants an explanation as well [teeth being grit into dust].
According to the survey of 1100 business leaders conducted in early October, 44 percent of respondents said their biggest concern was providing the concise description for a disclosed UTP, defined by the IRS as a federal income tax position for which a taxpayer or related party has recorded a reserve in an audited financial statement (or for which no reserve was recorded because of an expectation to litigate). Other major concerns cited centered on the IRS’s ability to effectively administer the UTP program (20 percent) and on the scope of taxpayers required to file UTPs under the new rule (15 percent).
This could all be avoided if the IRS required companies to use Twitter as a guide for brevity. Just a suggestion.