Calendar year-end companies preparing to close the books should be digging deep into tax documents today to comply with a new tax-reporting rule that effectively goes into force with the end of fiscal 2007, according to recent professional accounting guidance blessed by the Securities and Exchange Commission.
Financial Interpretation No. 48, which becomes effective in the first fiscal year beginning after Dec. 15, 2006, requires companies to take a closer look at all their unresolved tax positions with tax authorities and report them on their financial statements with a new level of candor. Companies must assess each outstanding tax position as it proceeds through reporting to tax authorities and, for any position less than 51 percent likely to be approved, to establish a percentage of likelihood that the position will survive any challenge mounted by tax authorities.
