Joe the Plumber can breathe a sigh of relief about uncertain tax positions. The small-business icon, who rose to national prominence during the final Obama-McCain debate, will not have to comply with the accounting rule known as FIN 48 this year.

The Financial Accounting Standards Board voted on Wednesday to defer the rule’s private-company compliance requirement — for the second time in two years — setting the new effective date for fiscal years beginning after December 15, 2008.

FASB is issuing a proposed staff position on the deferral, which will have a 30-day comment period. Originally, the second deferral was to apply only to so-called pass-through entities — company structures that are not responsible for tax liabilities. Pass-through entities are generally partnerships, limited liability companies, and S corporations (an Internal Revenue Service designation for private companies with fewer than 500 investors), which require individual owners to pay taxes, rather than the business entity.

FIN 48 went into effect for public companies at the end of 2006, but the board has been debating since then how to roll out the provisions to private companies. The financial-reporting requirements of FIN 48 are time-consuming for large companies and often a “reporting nightmare” for smaller private companies, says Bill Smith, director of the national tax office at CBIZ MHM, an accounting firm that caters to small and midsize companies.

FIN 48 dictates how companies should account for uncertain tax positions. It requires that corporations disclose how much they have kept in reserve to cover the possibility that the IRS or state tax officials might disallow certain tax treatments, such as a company’s claim for credits and deductions, exclusions of certain revenue from taxable income, or the decision that a merger or other transaction is tax-free.

It’s a tricky calculation. Companies must start by assuming their tax positions will be audited — a departure from typical accounting philosophy. They then must try, with the help of attorneys and accountants, to handicap the likelihood that their tax decisions would survive an audit.

Prior to FIN 48, companies kept the opinions, assumptions, and estimates related to the reserves under wraps for fear of tipping off the IRS or competitors. Exposing a possible weakness in a tax position or tax shelter could even put a company at a disadvantage in a court case, as the opposing side would be able to prove that the company had reservations. The big fear, however, has been that FIN 48 would provide the IRS with clues about what to look for.

FASB postponed the private-company deadline mainly because pass-through entities — a key component of many private-business structures — have not been adequately defined. Similar to a corporate subsidiary structure, there can be multiple layers of pass-through entities stacked up within a partnership or LLC, and figuring out which entity is responsible for taxes can be complicated. “My sense is that there are some gray areas surrounding pass-through entities and how to treat them [from an accounting perspective],” says Smith. In addition, he says there was some confusion about training private-company accountants and tax managers to apply FIN 48 correctly.

Smith says the general feeling among industry observers is that FASB was hoping to rely on the American Institute of Certified Public Accountants to provide training on the subject, while the AICPA argued that it was not its responsibility to interpret murky rules or put them into effect. In the end, FASB decided that in light of a sagging economy — that has currently bogged down many corporate finance departments — and the lack of clear definitions and proper training, it would defer the application of FIN 48 for all private companies.

The effects of the deferral on financial-statement users is probably limited to investors and lenders, says Smith. The rule applies to all financial statements prepared using generally accepted accounting principles. In many cases, private companies don’t use GAAP unless it is at the request of a lender. So it is reasonable to assume, says Smith, that the FIN 48 estimates and disclosures will provide investors and banks with better information than in the past.

However, tax expert Robert Willens, of the eponymous consultancy, says the deferral won’t make much of a difference to financial-statement users because current FIN 48 disclosures have been “disappointing.” He tells CFO.com that “it’s virtually impossible” to make an informed judgment about the nature of the uncertain tax positions taken by companies: “Even an experienced tax professional would have no way of judging the likelihood of the tax deduction, credit, or income exclusion holding up to IRS scrutiny.”

Other than giving investors an idea of the aggregate amount of the uncertain tax positions the company has adopted, “the disclosures have not been particularly illuminating,” asserts Willens. However, “on the positive side of the ledger, the IRS would have a difficult time using the FIN 48 disclosures as any sort of ‘roadmap’ for its audits.”