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Income Taxes
3 Months Ended
Feb. 28, 2013
Text Block [Abstract]  
Income Taxes
Income Taxes
As of February 28, 2013, in accordance with ASC 740, “Income Taxes,” the Company has a total liability of approximately $2.3 million for uncertain tax positions, inclusive of tax, interest, and penalties. Of this amount, approximately $1.9 million represents income tax liability for uncertain tax positions related to various state income tax matters. If the accrued liability was de-recognized, approximately $1.2 million of taxes would impact the Company’s consolidated statement of operations as a reduction to its effective tax rate. Included in the balance sheet at February 28, 2013 are approximately $0.7 million of items of which, under existing tax laws, the ultimate deductibility is certain but for which the timing of the deduction is uncertain. Because of the impact of deferred income tax accounting, a deduction in a subsequent period would result in a deferred tax asset. Accordingly, upon de-recognition, the tax benefits associated with the reversal of these timing differences would have no impact, except for related interest and penalties, on the Company’s effective income tax rate.
The Company recognizes interest and penalties related to uncertain tax positions as part of its provision for federal and state income taxes. As of February 28, 2013, the total amounts for accrued interest were approximately $0.4 million and there were no amounts related to penalties. If the accrued interest was de-recognized, approximately $0.3 million would impact the Company’s consolidated statement of operations as a reduction to its effective tax rate. The Company believes that it has provided adequate reserves related to these various state matters including interest charges through February 28, 2013.
The de-recognition of potential tax and interest associated with certain state items accrued are the principal cause of the decreased effective income tax rate for the three months ended February 29, 2012. As a result of these items, the Company's effective income tax rate decreased from the statutory rate to approximately 36.1 percent for the three months ended February 29, 2012. The Company's effective income tax rate for the three months ended February 28, 2013, approximated the statutory income tax rate.