Exempt Organizations Advisory - Senator Levin Comments on Reporting of Uncertain Tax Positions

Catherine W. Wilkinson (cwilkinson@steptoe.com)
Suzanne Ross McDowell (smcdowell@steptoe.com)

On May 21, 2010, Senator Carl Levin sent comments to the IRS in support of Announcements 2010-9 and 2010-17 regarding the reporting of uncertain tax positions on Schedule UTP. In these comments, Senator Levin urged the IRS to cover more taxpayers including “all corporations, pass-through entities, and tax-exempt organizations, which have uncertain tax positions, assets of $10 million or more, and audited financial statements.” For 2010, the IRS proposal only applies to corporations with assets exceeding $10 million that file Form 1120, 1120L, 1120 PC, or 1120 F. The IRS requested comments regarding application of the proposal to tax-exempt entities and accepted comments through June 1, 2010. Senator Levin also supports using the Section 6651 penalties for failure to file which would impose a 5% penalty for every month that the schedule is past due with a maximum penalty of 25%. Given Senator Levin’s comments, we believe it is unlikely that the IRS will exclude exempt organizations from filing Schedule UTP.

Senator Levin’s letter is available here.

An earlier report of the disclosure requirement is available here.