The IRS issued proposed regulations on September 7, 2010, amending section 6012, which requires affected corporate taxpayers to file Schedule UTP with their corporate tax returns, effective for tax years beginning after December 15, 2009, and ending after the date the proposed regulations become final. A hearing on the regulations is scheduled for October 15, 2010, which would permit the final regulations to be issued prior to the end of 2010. Finalization before the end of 2010 would mean that Schedule UTP would need to be filed with 2010 calendar year returns as previously announced by the IRS.
While the proposed regulations add authority to the Schedule UTP filing requirement, the question of penalties for failure to file Schedule UTP remains. In Announcement 2010-9, the IRS stated that it was evaluating additional options for penalties or sanctions to be imposed when there was inadequate disclosure of information concerning uncertain tax positions, with one option being a request for legislation to impose a penalty.
Surprisingly, the question of what penalties may be imposed for a failure to file a schedule with a return is not clear. Although section 6103(a) defines a return as including information returns, that provision is limited by its terms to section 6103 disclosures. Interestly, Heather Malloy, Commissioner of LMSB, has been quoted as saying at the April 22 New York TEI Chapter meeting that the consequences for not filing Schedule UTP are the same as not filing any other form attached to a return schedule. What those consequences are is not clear.
On October 1, 2010, LMSB will be replaced by LM&I, which will have a Director of International Business Compliance (IBC) who will report directly to the Deputy Commissioner of LM&I. The Director of IBC will undoubtedly be involved in matters involving the Schedule UTP.