Note 16 - Income Taxes

3 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 16.   INCOME TAXES 

During the three months ended June 30, 2013, we recorded an income tax benefit of approximately $9,000. The income tax benefit was primarily due to income tax benefits in certain non-US operations. During the three months ended July 1, 2012, we recorded an income tax expense of approximately $22,000. The income tax expense was primarily due to expenses related to foreign taxable income.

During the three months ended June 30, 2013, the unrecognized tax benefits decreased by $18,000 to $15.4 million. The current unrecognized tax benefit was primarily related to the release of foreign liabilities and interest due to lapse of statute of limitations and R&D credits. If recognized, $12.9 million of these unrecognized tax benefits (net of federal benefit) would be recorded as a reduction of future income tax provision before consideration of changes in the valuation allowance for deferred tax assets.

Estimated interest and penalties related to the income taxes are classified as a component of the provision for income taxes in the condensed consolidated statement of operations. Accrued interest and penalties consisted of the following as of the dates indicated (in thousands):

	June 30, 2013		March 31, 2013
Accrued interest and penalties	$	215	$	228

Our major tax jurisdictions are the United States federal and various states, Canada, China and certain other foreign jurisdictions. The fiscal years 2003 through 2012 remain open and subject to examinations by the appropriate governmental agencies in the United States and certain of our foreign jurisdictions.

On November 6, 2012, California passed Proposition 39, which mandates most taxpayers to apportion their California income by using a single sales factor and requires all taxpayers to use market-based sourcing for sale receipts for tax years beginning or after January 1, 2013. The enacted law will impact Exar during fiscal year 2014.

Per the 2012 Tax Relief Act enacted in January 2013, the federal R&D credit is retroactively extended through 2013. No R&D credit and related reserve is considered in the first quarter of fiscal year 2014 tax provision pending improvement in our future visibility of the incremental R&D expenses.  However, as a full valuation allowance is placed on the deferred tax assets, so there is no impact on the statement of operations.