Note L - Income Taxes

9 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Text Block]

Note L:                      Income Taxes

The Company’s effective tax rates of 32.7% and 29.8% for the nine-month periods ended September 30, 2012 and 2011, respectively, differ from the statutory federal tax rate of 34% due primarily to state taxes, stock-based compensation, differences between U.S. and foreign tax rates, foreign losses incurred with no related tax benefit, changes in state rate rates, non-deductible meals and entertainment expenses, and the tax benefit recorded in the three-month period ended September 30, 2012 described below.

Fuel Tech had unrecognized tax benefits as of December 31, 2011 in the amount of $667 all of which, if ultimately recognized, will reduce Fuel Tech’s annual effective tax rate.  During the quarter ended September 30, 2012, the Company reduced its accrual for unrecognized tax benefits to $198 and recognized a tax benefit of $369 as a result of no longer being subject to tax examination for the 2008 tax year.  This discrete tax item reduced our effective tax rate by 6% in the quarter ended September 30, 2012.