11. PREPAID EXPENSES AND OTHER CURRENT ASSETS AND ACCRUED EXPENSES

12 Months Ended

Dec. 31, 2011

PREPAIDEXPENSESANDOTHERCURRENTASSETSANDACCRUEDEXPENSES

11. PREPAID EXPENSES AND OTHER CURRENT ASSETS AND ACCRUED EXPENSES

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets at December 31, 2011 and 2010 are as follows (in thousands):

	2011		2010
Prepaid expenses	$	2,482	$	5,288
Due from EasyLink		233		3,607
Account receivable, other		433		3,218
Prepaid direct costs		5,060		2,506
Rebates receivable		587		1,721
Prepaid software license		833		870
Prepaid software and hardware maintenance cost		937		828
Other		3,341		1,903
	$	13,906	$	19,941

Accrued Expenses

Accrued expenses at December 31, 2011 and 2010 are as follows (in thousands):

	2011		2010
Accrued wages and wage related taxes	$	9,047	$	9,214
Accrued sales commissions		4,357		4,236
Employee benefits		945		935
Accrued professional fees		1,768		2,343
Deferred revenue		8,218		4,873
Due to EasyLink		457		2,633
Deferred rent		1,497		1,356
Other		2,710		1,995
	$	28,999	$	27,585

Excise and Sales Tax

Some of our solutions may be subject to telecommunications excise tax and sales taxes in states where we have not collected and remitted such taxes from our customers. During the years ended December 31, 2011 and 2010, we paid $0.3 million and $5.6 million, respectively, of tax and interest related to the settlement of these state excise and sales tax contingencies.

We have reserves for certain state excise and sales tax contingencies based on the likelihood of obligation. These contingencies are included in “Accrued taxes, other than income taxes” in our consolidated balance sheets. At December 31, 2011 and December 31, 2010, we had reserved $1.7 million and $1.3 million, respectively, for certain state excise and sales tax contingencies and interest. We believe we have appropriately accrued for these contingencies. In the event that actual results differ from these reserves, we may need to make adjustments, which could materially impact our financial condition and results of operations. In addition, states may disagree with our method of assessing and remitting such taxes or additional states may subject us to inquiries regarding such taxes.