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Income Taxes
6 Months Ended
Jun. 30, 2014
Income Tax Disclosure [Abstract]  
Income Taxes
INCOME TAXES:

The effective tax rate on continuing operations for the six months ended June 30, 2014 and 2013 was 9.1% and 85.6%, respectively.

The effective rate for the six months ended June 30, 2014 differs from the U.S. federal statutory rate of 35% primarily due to a $20,480 income tax benefit for excess depletion, $8,820 discrete income tax benefit related to the completion of the Internal Revenue Service audit of tax years 2008 and 2009, and $7,395 discrete income tax benefit as a result of changes in estimates of excess percentage depletion and Domestic Production Activities Deduction related to the prior-year tax provision.

For the six months ended June 30, 2014, CONSOL Energy recognized certain tax benefits as a result of changes in estimates related to a prior-year tax provision. The tax benefit of $8,351 related to increased percentage depletion deductions offset by $956 of tax expense related to changes in the Domestic Production Activities Deduction and various other estimates.

The rate for the six months ended June 30, 2013 differs from the U.S. federal statutory rate of 35% primarily due to a $25,471 income tax charge for excess depletion, $8,269 discrete income tax charge related to the gain on sale of the Potomac coal reserves and a $1,585 income tax benefit due to a refund claim related to prior year Commonwealth of Pennsylvania taxes.

The total amounts of uncertain tax positions at June 30, 2014 and December 31, 2013 were $2,540 and $22,770, respectively. If these uncertain tax positions were recognized, approximately $1,651 and $2,071, respectively, would affect CONSOL Energy’s effective tax rate. There were no additions to the liability for unrecognized tax benefits during the six months ended June 30, 2014 and 2013. The reduction in uncertain tax positions was due to the completion of the Internal Revenue Service audit of the 2008 and 2009 tax years.
CONSOL Energy recognizes interest accrued related to uncertain tax positions in its interest expense. As of June 30, 2014 and December 31, 2013, the Company reported an accrued interest liability relating to uncertain tax positions of $1,302 and $6,200, respectively. The accrued interest liability includes $4,898 of interest income and $675 of interest expense that is reflected in the Company’s Consolidated Statements of Income for the six months ended June 30, 2014 and 2013, respectively.
CONSOL Energy recognizes penalties accrued related to uncertain tax positions in its income tax expense. As of June 30, 2014 and December 31, 2013, CONSOL Energy had no accrued liability for tax penalties.
CONSOL Energy and its subsidiaries file federal income tax returns with the United States and returns within various states and Canadian jurisdictions. With few exceptions, the Company is no longer subject to United States federal, state, local, or non-U.S. income tax examinations by tax authorities for the years before 2010. The Internal Revenue Service has issued its audit report related to the examination of CONSOL Energy’s 2008 and 2009 U.S. income tax returns during the six months ended June 30, 2014. As a result of these findings, CONSOL Energy paid federal income tax deficiencies of $4,464 and $1,001, respectively. The deficiencies were the result of changes in the timing of certain tax deductions. The changes in timing of these tax deductions increased the tax benefit of percentage depletion by $2,925 and $4,493 in tax years 2008 and 2009, respectively. The Company also recognized additional tax benefits of $1,402 primarily related to an increase in the Domestic Production Activities Deduction for the audited periods. Also, as a result of closing the IRS audit, CONSOL was required to file amended state income tax returns for the changes. In the quarter ended June 30, 2014, the Company filed the required amended returns and realized a discrete state income tax charge of $5,144 which was offset by a federal income tax benefit of $1,800.