When are taxpayers in the CAP Program required to file Schedule UTP with their tax return

Taxpayers in the Compliance Assurance Process (CAP) Program are required to file Schedule UTP (Uncertain Tax Position Statement) with their tax return if they have uncertain tax positions at the time of their tax return filing. This requirement is consistent with the general rules for filing Schedule UTP, which mandate that corporations must file the schedule if they meet the following conditions:

1. The corporation files Form 1120, U.S. Corporation Income Tax Return; Form 1120-F, U.S. Income Tax Return of a Foreign Corporation; Form 1120-L, U.S. Life Insurance Company Income Tax Return; or Form 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return.
2. The corporation has assets that equal or exceed $10 million.
3. The corporation or a related party issued audited financial statements reporting all or a portion of the corporation’s operations for all or a portion of the corporation’s tax year.
4. The corporation has one or more tax positions that must be reported on Schedule UTP.

If a CAP taxpayer meets these criteria and has uncertain tax positions, they must include Schedule UTP with their tax return. If they do not have any uncertain tax positions that meet the reporting requirements, they should not file a blank Schedule UTP.

Sources:
Notice 2010-62
Instructions for Form 1120 (2023)
Instructions for Schedule UTP (Form 1120) (12/2022)
IRM Part 4. Examining Process. Chapter 46. LB&I Examination Process. Section 3. Planning the Examination