The Effectiveness of Schedule UTP: A Comparison of Multinational and Domestic Firms
ISBN: 978-1-78973-294-8, eISBN: 978-1-78973-293-1
Publication date: 22 October 2019
Abstract
Schedule UTP requires that firms disclose to the IRS the uncertain tax positions that comprise the federal portion of the tax reserve disclosed on their financial statements. To investigate whether Schedule UTP has been an effective audit tool to the IRS, we use financial statement disclosures of reductions in reserves due to a lapse in the statute of limitations (Lapse). We find that the probability of a Lapse is 3.4 percent lower after Schedule UTP. However, this result is driven by domestic firms; we do not find evidence that Schedule UTP has been effective in the audit of multinational firms.
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Acknowledgements
Acknowledgments
Jeffrey Hoopes, George Plesko, and Terry Shevlin all provided helpful comments on earlier versions of this work. We also thank Erin Towery for her thoughtful remarks as our discussant at the 2016 American Taxation Association Midyear Meeting.
Citation
Howard, J. and Massel, N. (2019), "The Effectiveness of Schedule UTP: A Comparison of Multinational and Domestic Firms", Advances in Taxation (Advances in Taxation, Vol. 26), Emerald Publishing Limited, Leeds, pp. 33-62. https://doi.org/10.1108/S1058-749720190000026003
Publisher
:Emerald Publishing Limited
Copyright © 2019 Emerald Publishing Limited