Annual report pursuant to Section 13 and 15(d)

Income Taxes

v2.4.0.6
Income Taxes
 12 Months Ended
Dec. 31, 2012
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]
Income Taxes
 
The provision for or benefit from income taxes on continuing operations for the years ended December 31, 2012 and 2011 is comprised of the following:

 
2012
 
2011
Current:
 
 
 
Federal
$
—

 
$
(879
)
State
270

 
(39
)
Total current
270

 
(918
)
Deferred:
 
 
 

Federal
(53
)
 
(17
)
State
(9
)
 
(4
)
Total deferred
(62
)
 
(21
)
Provision for income taxes
$
208

 
$
(939
)


The Company performs an analysis each year to determine whether the expected future income will more likely than not be sufficient to realize the deferred tax assets.  The Company's recent operating results and projections of future income weighed heavily in the Company's overall assessment.  As a result of this analysis, the Company continues to maintain a full valuation allowance against its federal and state net deferred tax assets at December 31, 2012 as the Company believes that it is more likely than not that these assets will not be realized. The tax effects of significant items comprising the Company’s deferred tax assets and (liabilities) as of December 31, 2012 and 2011 are as follows:

 
2012
 
2011
Current deferred tax assets (liabilities)
 
 
 
included in other current assets:
 
 
 
Allowances and reserves
$
1,742

 
$
2,953

Compensation
3,382

 
3,564

Valuation allowance on deferred tax assets
(5,124
)
 
(6,517
)
 
—

 
—

Noncurrent deferred tax assets (liabilities)
 
 

included in other long-term assets:
 

 
 

State net operating loss carryforwards
4,103

 
4,366

Federal net operating loss carryforwards
28,615

 
24,743

State taxes
1,123

 
1,134

Self insurance and other reserves
338

 
267

Property, plant and equipment
2,294

 
2,431

Intangible assets
9,249

 
930

Other reserves - restructuring
410

 
667

Compensation
31

 
9

Deferred Revenue
226

 
1,660

Valuation allowance on deferred tax assets
(46,389
)
 
(36,269
)
 
—

 
(62
)
Net deferred tax liability
$
—

 
$
(62
)


The noncurrent net deferred tax liability as of December 31, 2011 relates to tax amortization of the tax basis in trade names associated with the Group DCA acquisition.  The Company determined that this deferred tax liability would not be realizable for an indeterminate time in the future and consequently should not be included in net deferred tax assets for purposes of calculating the valuation allowance in 2011. As a result of the tradename becoming fully impaired during 2012, the deferred tax liability was recognized in the provision for income tax in the consolidated statement of operations and comprehensive loss
 
Federal tax attribute carryforwards at December 31, 2012, consist primarily of approximately $82.3 million of federal net operating losses.  In addition, the Company has approximately $75.6 million of state net operating losses carryforwards.  The utilization of the federal carryforwards as an available offset to future taxable income is subject to limitations under federal income tax laws.  If the federal net operating losses are not utilized, they begin to expire in 2027, and current state net operating losses not utilized begin to expire in 2013.
 
A reconciliation of the difference between the federal statutory tax rates and the Company's effective tax rate from continuing operations is as follows:
 
 
2012
 
2011
Federal statutory rate
35.0
 %
 
35.0
 %
State income tax rate, net
 

 
 

of Federal tax benefit
2.5
 %
 
1.3
 %
Meals and entertainment
—
 %
 
(3.3
)%
Valuation allowance
(38.1
)%
 
(35.0
)%
Other non-deductible
(0.4
)%
 
—
 %
Other taxes
0.2
 %
 
0.4
 %
Net change in Federal and state reserves
—
 %
 
21.5
 %
Effective tax rate
(0.8
)%
 
19.9
 %

 
The following table summarizes the change in uncertain tax benefit reserves for the two years ended December 31, 2012:

 
Unrecognized
 
Tax Benefits
Balance of unrecognized benefits as of January 1, 2011
$
3,936

Additions for tax positions related to the current year
—

Additions for tax positions of prior years
—

Reductions for tax positions of prior years
(2,819
)
Balance as of December 31, 2011
$
1,117

Additions for tax positions related to the current year
—

Additions for tax positions of prior years
—

Reductions for tax positions of prior years
—

Balance as of December 31, 2012
$
1,117



As of December 31, 2012 and 2011, the total amount of gross unrecognized tax benefits was $1.1 million in each year.  The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of December 31, 2012 and 2011 was $1.1 million in each year.
 
The Company recognized interest and penalties of $0.2 million and $0.1 million related to uncertain tax positions in income tax expense during the years ended December 31, 2012 and 2011, respectively.  At December 31, 2012 and 2011, accrued interest and penalties, net were $1.9 million and $1.7 million, respectively.
 
The Company and its subsidiaries file a U.S. Federal consolidated income tax return and consolidated and separate income tax returns in numerous states and local tax jurisdictions.  The following tax years remain subject to examination as of December 31, 2012:
 
Jurisdiction
Tax Years
Federal
2009 - 2012
State and Local
2007 - 2012


To the extent there was a failure to file a tax return in a previous year; the statute of limitation will not begin until the return is filed. In March of 2011, the examination by the Internal Revenue Service of the 2008 net operating loss carry back to the 2003 to 2005 tax years was closed, therefore these years are considered effectively settled in accordance with Accounting Standards Codification 740.  There were no examinations in process by the Internal Revenue Service as of December 31, 2012.