Note 12 - Accounting for Uncertainty in Income Taxes

6 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Text Block]

Note 12 – Accounting for Uncertainty in Income Taxes

Uncertain tax positions may arise where tax laws may allow for alternative interpretations or where the timing of recognition of income is subject to judgment.  We believe we have made adequate provision for unrecognized tax benefits related to uncertain tax positions.  However, because of uncertainty of interpretation by various tax authorities and the possibility that there are issues that have not been recognized by management, we cannot guarantee we have accurately estimated our tax liabilities.  We believe that our liabilities reflect the anticipated outcome of known uncertain tax positions in conformity with ASC Topic 740, Income Taxes.  Our liabilities for unrecognized tax benefits are presented in the consolidated balance sheets within Other Noncurrent Liabilities.

At June 30, 2012, we had $14,140,000 of unrecognized tax benefits, composed of $9,683,000 of deferred tax assets and $4,457,000 of permanent differences.  Accrued interest and penalties of $2,447,000 relate to unrecognized tax benefits at June 30, 2012.  Unrecognized tax benefits of $4,457,000, net of federal benefit, at June 30, 2012, attributable to permanent differences, would favorably impact our effective tax rate if recognized.  Accrued interest and penalties of $1,873,000 relate to these permanent differences at June 30, 2012.  We do not expect to recognize significant increases or decreases in unrecognized tax benefits within twelve months beginning June 30, 2012, except for the effect of decreases related to the lapse of statute of limitations estimated at $4,309,000, composed of temporary differences of $1,999,000, and permanent tax differences of $2,310,000.  Interest and penalties of $925,000 relate to these temporary and permanent difference changes within 12 months beginning June 30, 2012.

Interest and penalties expense related to U.S. federal and state income tax returns are included within income tax expense.

The Company is no longer subject to U.S. federal and state examinations by tax authorities for years before 2008 (with certain state exceptions). Currently, there are no U.S. federal or state returns under examination.

Our deferred tax assets have been evaluated for realization based on historical taxable income, tax planning strategies, the expected timing of reversals of existing temporary differences and future taxable income anticipated.  Our deferred tax assets are more likely than not to be realized in full due to the existence of sufficient taxable income of the appropriate character under the tax law.  As such, there is no need for a valuation allowance.