In spite of a slew of letters lobbying for a delay (mostly short form letters following a template proposed by the Tax Executives Institute), the financial accounting standards board (FASB) voted on January 17th not to defer implementation of the new guidelines for reporting tax uncertainty set forth in FIN 48. The new guidance will be effective for fiscal years beginning after December 15, 2006, and is expected to result in an increase in financial reports of tax-related liabilities. According to the BNA Corporate Accountability Report at 64 (vol. 5, No.3, Jan 19, 2007), FASB chair Robert Herz noted the importance of beginning implementation because "Taxes are a very important part of reported earnings,... an important part of the balance sheet, and there was a lot of concern that this was, for a large area, one that has been extremely opaque and a little mystical."
FASB did agree to try to provide some clarification. Tax positions reported are to be measured by the benefit that is more likely than not to be realized on "ultimate settlement," a term for which tax executives have sought explanation.
The first year of implementation of the new guidance will be especially interesting for the IRS, as it receives some clues to aggressive tax positions undertaken by corporations but not easily tracked in the financial statements and perhaps not reported previously to the IRS. Robert Willens, a prominent tax commentator, has noted that "There is a lot of fear the IRS will use this disclosure to tailor and fine-tune their audits," said Willens. See this article about the upcoming FASB meeting by Helen Shaw, FASB Weighs One-Year Delay (CFO.com).
The podcast of the FASB meeting is available at this link.