Note 11 — Taxes:

For the three months ended March 31, 2015 and 2014, the Company recorded an income tax provision of $ 2,660 and $ 1,329, respectively, which represents an effective tax rate of 6% and 10%, respectively.

As of March 31, 2015 and December 31, 2014, the Company had a reserve for uncertain tax positions of $42,635 and $34,520, respectively, after taking into consideration tax attributes, such as net operating loss carryforwards, and interest of $672 and $534, respectively. Taxes otherwise payable on current year taxable income earned by the Company’s domestic subsidiaries are recorded as an unrecognized tax benefit based on the anticipated use of net operating loss carryforwards (recorded as a deferred tax asset) previously offset in full by unrecognized tax benefits. Such increase in unrecognized tax benefits is offset by a reduction in deferred tax liabilities.

The Company’s application for a Pre-Filing Agreement with the IRS with respect to OSG’s payments as guarantor made during 2014 has been accepted by the IRS and the examination of the Company’s position by the IRS has commenced. As a result, the Company believes that it is reasonably possible that a decrease of up to $179,151 in unrecognized tax benefits may occur within the next twelve months. Such decrease could result in an increase in the Company’s deferred tax assets for net operating loss carryforwards or an increase in its tax basis in foreign subsidiaries.