8. Income Taxes

For the three months ended March 31, 2013, our effective tax rate was 10.3% compared to 44.7% for the three months ended March 31, 2012. The effective tax rates for each period differ from the expected federal statutory rate of 35.0% as a result of state and foreign income taxes, federal and foreign tax credits, certain non-deductible expenses and an adjustment for an uncertain tax position.

We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more-likely-than not sustain the position following an audit. For tax positions meeting the more-likely-than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. During the three months ended March 31, 2013, we recognized a liability for an uncertain tax position in the amount of $0.8 million related to an income tax position. Interest and penalties related to uncertain tax positions are recognized in income tax expense. For the three months ended March 31, 2013, we recognized $0.2 million of interest or penalties related to uncertain tax positions in our financial statements compared to zero for the three months ended March 31, 2012.

The changes in uncertain tax positions for the three months ended March 31, 2013 and 2012 were as follows (in thousands):

	Three Months Ended March 31,
	2013		2012
Balance at beginning of period	$	3,797	$	100
Additions for tax positions related to prior periods	835		—
Balance at end of period	$	4,632	$	100

If we reduced our reserve for uncertain tax positions it would result in us recognizing a tax benefit.

As of March 31, 2013, we had net operating loss (“NOL”) carryforwards with a tax-effected carrying value of approximately $32.2 million and $5.3 million for federal and state purposes, respectively, available to offset future taxable income. As of March 31, 2013, we provided a valuation allowance against substantially all of these NOL carryforwards as ultimate realization of the NOLs was not determined to be more-likely-than not. Accordingly, we have NOL carryforwards available to us (should we have sufficient future taxable income to utilize them) that are not reflected in our unaudited consolidated balance sheet.

We are subject to U.S. federal income tax, income tax from multiple foreign jurisdictions including Israel and the United Kingdom, and income taxes of multiple state jurisdictions. U.S. federal, state and local income tax returns for 2009 through 2012 remain open to examination. Israeli and United Kingdom income tax returns remain open to examination for 2007 through 2011, and 2006 through 2011, respectively.