Addressing and Sustaining Compliance with Uncertain Tax Position (UTP) Requirements

Addressing and Sustaining Compliance with Uncertain Tax Position (UTP) Requirements

By Laura L. Roman

Oil and gas companies face considerable uncertainties. Massive capital investment decisions hinge on projected international price trends. Shifting political climates in the United States and abroad affect the viability of business models. Even with the most sophisticated technology, exploration and production efforts present so many unknowns. Amidst such concerns, oil and gas companies must also be aware of compliance requirements regarding uncertain tax positions (UTPs). The Financial Accounting Standards Board's (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 (FIN 48), requires that public corporations report on UTPs in their financial statements.

The FASB's Accounting Standards Codification Topic 740-10 (ASC 740-10), enacted in 2009, extended those reporting requirements to nonpublic entities, including pass-through entities and tax-exempt not-for-profit entities.

For 2010 and subsequent tax years, the Internal Revenue Service (IRS) also requires many corporate taxpayers to identify such positions in Schedule UTP (Uncertain Tax Positions Statement), which must accompany an income tax return. Complying with FASB and IRS regulations entails being aware of those requirements and then ensuring that proper processes and controls are in place to ensure compliance.

The Financial Accounting Standards Board Interpretation No. 48 (FIN 48) requires public corporations to report on uncertain tax positions in their financial statements. For tax years after 2009, IRS requires many corporate taxpayers to identify such positions in Schedule UTP, which must accompany the income tax return. Complying with FASB and IRS regs means being aware of those requirements and effecting processes that ensure compliance.

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