INCOME TAXES

6 Months Ended

Jun. 30, 2013

INCOME TAXES

INCOME TAXES

International Paper made income tax payments, net of refunds, as follows:

	Six Months Ended June 30,
In millions	2013		2012
Income tax payments, net	$	164	$	(20	)

The following table presents a rollforward of unrecognized tax benefits and related accrued estimated interest and penalties for the six months ended June 30, 2013:

In millions	Unrecognized Tax Benefits			Accrued Estimated Interest and Tax Penalties
Balance at December 31, 2012	$	(972	)	$	(104	)
Activity for three months ended March 31, 2013	99			20
Activity for the three months ended June 30, 2013	6			1
Balance at June 30, 2013	$	(867	)	$	(83	)

The Company currently estimates that, as a result of ongoing discussions, pending tax settlements and expirations of statutes of limitations, the amount of unrecognized tax benefits could be reduced by approximately $750 million during the next 12 months and approximately $680 million of this reduction will positively impact the effective rate.

Included in the Company’s income tax provisions for the six months ended June 30, 2013 and 2012, are $126 million and $79 million of income tax benefits, respectively, related to special items. The components of the net provision related to special items were as follows:

	Six Months Ended June 30,
In millions	2013			2012
Special items	$	(37	)	$	(82	)
Tax-related adjustments:
Temple-Inland acquisition	—			3
IRS audit settlement	(91		)	—
Other	2			—
Income tax provision (benefit) related to special items	$	(126	)	$	(79	)