May 21, 2010Internal Revenue ServiceCC: PA: LPD: PR (Announcement 2010-9), Room 5203P.O. Box 7604Ben Franklin Station, N.W.Washington D.C. 20044By e-mail: [email protected]: IRS Announcement 2010-9 Uncertain Tax PositionsThe New York State Society of Certified Public Accountants, representing 28,000CPAs in public practice, industry, government and education, welcomes the opportunity tocomment on the above captioned announcement.The NYSSCPA’s Closely Held & S Corporations Committee deliberated theproposed approach to reporting uncertain tax positions and prepared the attachedcomments. If you would like additional discussion with us, please contact Stewart Berger,Chair of the Closely Held & S Corporations Committee at (212) 303-1881, or Ernest J.Markezin, NYSSCPA staff, at (212) 719-8303.Sincerely,David J. MoynihanPresidentAttachment


NYSSCPA 2009 – 2010 Board of DirectorsDavid J. Moynihan,PresidentMargaret A. Wood,President-electJoseph M. Falbo Jr.,Secretary/TreasurerElliot A. Lesser,Vice PresidentMark L. Meinberg,Vice PresidentC. Daniel Stubbs, Jr.,Vice PresidentLiren Wei,Vice PresidentJoanne S. Barry, ex officioScott M. AdairCynthia D. BarryJohn BaroneSusan M. BarossiS. David BelskyIan J. BenjaminAnthony CassellaSherry L. DelleBoviAdrian P. FitzsimonsRobert L. GoecksDavid R. HermanJohn B. Huttlinger, Jr.Martha A. JaeckleSuzanne M. JensenRobert KawaGail M. KinsellaNancy A. KirbyJ. Michael KirklandMark G. LeedsHeather LosiAnthony J. MalteseBarbara A. MarinoAvery E. NeumarkJoel C. QuallIta M. RahillyErin ScanlonThomas M. VanHattenGeorge I. VictorCharles J. WeintraubJesse J. WheelerNYSSCPA 2009 – 2010 Tax Division Oversight CommitteeAlan D. Kahn, ChairScott M. Cheslowitz, Vice ChairRobert L. GoldsteinAdam LambertCharles N. MorrowDavid SandsSusan R. SchoenfeldP. Gerard SokolskiNeil H. TipographStephen P. ValentiCristina N. WolffNYSSCPA 2009 – 2010 Closely Held & S Corporations CommitteeStewart Berger, ChairEdwin B. Morris, Vice ChairRobert S. BarnettMatthew BobmanJoseph L. CharlesEmanuel ChiricoEmmanuel T. ChiricoPatrick J. DalyAnthony F. DannibleAnthony J. DattomaCarey S. DoboshGary S. EisenkraftGennevieve FineganPaul FineganVicki M. ForteIra D. FoxAlan T. FrankelDavid S. GibsonRobert R. GilbertRichard L. GoldsteinEfthimios HatzispirouIsidor HefterJonathan HefterDavid R. HermanLily HuiKamcheung T. IpMark O. IsraelRobert M. JellinekRonald D. KranzlerZev LandauCharlene B. MetzNorman R. MilefskyNYSSCPA StaffErnest J. MarkezinWilliam R. LalliChun Yee W. MiotThomas R. RendanoJoseph R. RicchezzaRandy A. SchwartzmanMark ShayneMichael L. SpechtRobert E. SpiererHoward B. SteinbergJung H. SungKenya M. SykesSydney S. TraumCharles A. TrevisoCarroll L. ValachovicMichael E. WilliamsSteven G. WinchesterJeffrey M. Wolf

New York State Society of Certified Public AccountantsClosely Held & S Corporations CommitteeComments onIRS Announcement 2010-9 Uncertain Tax PositionsThe New York State Society of Certified Public Accountants welcomes the opportunity tocomment on the Internal Revenue Service proposed approach to reporting uncertain tax positions.We applaud the efforts that the Internal Revenue Service is making to reduce the amount of timeneeded to conduct examinations of tax returns, and hope that this can be done without creating aduplication of efforts on behalf of taxpayers to complete various forms disclosing the sameinformation.We have the following comments and concerns about the draft form, designated as Schedule UTP,and the draft instructions.PaperworkOur first concern is the additional paperwork required by having separate forms for many of thesame items. While the instructions indicate that a complete and accurate disclosure of a taxposition on the appropriate year’s Schedule UTP will be treated as if the corporation had filed aForm 8275, Disclosure Statement, or Form 8275-R, Regulation Disclosure Statement, regardingthe tax position, there are other forms that should also be coordinated with the new form. Thus, acorporation filing the Schedule UTP should not be required to file a Form 1120, Schedule M-3, NetIncome (Loss) Reconciliation for Corporations With Total Assets of 10 Million or More.Similarly, the corporation filing the Schedule UTP should not be required to report the sametransaction on a Form 8886, Reportable Transaction Disclosure Statement, involving listedtransactions. The reduction of paperwork will save both the Service and taxpayers time andmoney.Privileged InformationOur second concern is that descriptions of the tax positions taken may violate the work-productprivilege if litigation is anticipated and an attorney is involved in the determination of the chancesof prevailing if a certain tax position is taken. Page 4 of the instructions requires reporting evenwhen no reserve is recorded if the taxpayer determines that possibility of IRS settlement is lessthan 50%. This applies even when the chances of prevailing exceed 50%. We think, that when inthe opinion of management, no reserve for an uncertain tax position is required, no disclosureshould be made in the tax return when the chances of prevailing exceed 50%.De Minimus AmountsIn addition, a de minimus rule should be added. Many of the examples refer to items of 100 or, insome circumstances, less. While it is true that these are only for illustrative purposes, someguidance should be inserted as to when items are too small to disclose. In instances in which anitem is too small to establish a reserve, the draft instructions still require reporting that item1

because they require reporting any item for which a reserve has been considered. The de minimusrule should relate to a specific dollar amount and/or a specific percentage of assets’ values.Realistic ExamplesFinally, the examples should be redrafted to include larger amounts and to be realistic as theypertain to dates. In “Example 1,” the corporation recorded a reserve on September 30, 2010 withrespect to a tax position to be taken on its 2010 tax return, which would not be due at the earliestuntil March 15, 2011. The timing is unrealistic. Moreover, the chart that illustrates when and howto report tax positions on Schedule UTP appearing immediately before the “Specific Instructions”for “Part I,” should be moved and inserted under a new caption, “When to File,” immediately priorto the “Definitions” and just after the section on “Who Must File.”2

Robert L. Goldstein Susan R. Schoenfeld Cristina N. Wolff . Paul Finegan Zev Landau Michael E. Williams Vicki M. Forte Charlene B. Metz Steven G. Winchester . privilege if litigation is anticipated and an attorney