Letter to FASB on meaning of "effectively settled" (FIN 48-a): on March 28, 2007, TEI President David L. Bernard submitted comments on behalf of Tax Executives Institute to the Financial Accounting Standards Board, relating to the FASB Staff Position No. FIN 48-a. The FSP amends FIN 48 on accounting for uncertainty in income taxes.

On February 27, 2007, the Financial Accounting Standards Board issued for public comment a proposed amendment to FIN 48 on Accounting for Uncertainty in Income Taxes. The proposed FASB Staff Position No. FIN 48-a would provide guidance on how an enterprise should determine whether a tax position is effectively settled for purposes of recognizing a previously unrecognized tax benefit. On behalf of Tax Executives Institute, I am pleased to submit the following comments.

Tax Executives Institute is the preeminent association of corporate tax executives in the world. Our more than 6,900 members are accountants, attorneys, and other business professionals employed by approximately 3,000 of the leading companies in the United States, Canada, Europe, and Asia. TEI represents a cross-section of the business community, and is dedicated to the development and implementation of sound tax policy and to promoting the uniform and equitable enforcement of the tax laws. The Institute is proud of its record of working with congressional committees, government agencies, and other policy-making bodies (including the Financial Accounting Standard Board and Public Company Accounting Oversight Board) to minimize the cost and burden of tax administration and compliance to the mutual benefit of the government, business, and ultimately the public. TEI supports efforts to ensure that companies fairly present their financial position in financial statements prepared for investors and in documents filed with the Securities and Exchange Commission.

TEI members are responsible for conducting the tax affairs of their companies, ensuring compliance with the tax laws, and properly reporting the effect of tax positions on their financial statements. Thus, members deal with the tax code in all its complexity, as well as with the Internal Revenue Service and other tax administrators, on a daily basis. Nearly all of the companies represented by our members issue financial statements that are governed by the FASB's pronouncements and most are SEC registrants. In addition, they are subject to scrutiny by the IRS and various other agencies in the United States and foreign jurisdictions on a continual basis.

Background

The FASB staff received inquiries on whether it is appropriate for an enterprise to recognize a previously unrecognized tax benefit when the only factor that has changed since determining that no benefit should be recognized is the completion of an examination by a taxing authority. On February 27, 2007, the Board directed the FASB staff to issue for public comment Proposed FASB Staff Position No. FIN 48-a, which would amend Interpretation 48 to clarify that a tax position can be effectively settled upon examination by a taxing authority. The principal changes to FIN 48 are an amendment to Paragraph 10, especially the addition of paragraphs 10A-10C, and the addition of illustrative examples of effective settlement in new paragraph A 34. Other amendments conform FIN 48's language with the proposed FSP. The changes are proposed to be effective upon the initial adoption of Interpretation 48. FIN 48 is effective for financial statements issued for fiscal years beginning after December 15, 2006.

1. Paragraph 5 of the FSP and Amended

   Paragraph 10A of Interpretation 48 Under Paragraph 5 of the FSP and Paragraph 10A of the Amendments to Interpretation 48, a...