On January 17, the Financial Accounting Standards Board voted unanimously not to delay the effective date of FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes (FIN 48). FIN 48, which was designed by the FASB to result in increased relevance and comparability in financial reporting of income taxes, will require companies to evaluate whether tax positions taken or expected to be taken are likely to withstand a challenge by the Internal Revenue Service. Companies will be required to determine whether it is more likely than not that a tax position will be sustained upon examination by the IRS based on the technical merits of the position.

Tax positions that meet the more-likely-than-not threshold must then be measured to determine the amount of benefit to recognize on the company’s financial statements. Such tax positions will be measured at the largest amount of benefit that is greater than 50 percent likely of being realized. In addition to the recognition threshold and measurement attribute for financial statement recognition and measurement of tax positions, FIN 48, which is effective for fiscal years beginning after December 15, 2006, also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

http://www.nytimes.com/2007/01/18/business/18audit.html?pagewanted=print

http://www.fasb.org/pdf/fin%2048.pdf.