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Income Taxes
9 Months Ended
Sep. 30, 2011
Income Taxes [Abstract] 
Income Tax Disclosure [Text Block]
Income Taxes
We are subject to income tax in numerous jurisdictions and the use of estimates is required in determining our provision for income taxes. For the three and nine months ended September 30, 2011 we recorded an income tax provision of $2.1 million and $4.5 million, respectively. The income tax provision (benefit) is based on the estimated annual effective tax rate for the year applied to “ordinary” income (loss). Ordinary income (loss) is pre-tax income (loss) excluding unusual or infrequently occurring discrete items. The overall estimated annual effective tax rate calculation excludes jurisdictions reporting losses for which no tax benefit is expected to be recognized during the year. A separate estimated annual effective tax rate was calculated for the jurisdictions reporting losses for which no tax benefit can be recognized. The effective income tax rate for the three and nine months ended September 30, 2011 was (17.5) percent and (15.4) percent, respectively, compared with 28.1 percent and 38.8 percent in the same periods last year. The effective rate changes were primarily due to the full valuation allowance on U.S. deferred tax assets and the mix of taxable income/loss by country.
The effective income tax rate for the three and nine month periods ended September 30, 2011 differs from the U.S. federal statutory rate of 35 percent primarily due to the full valuation allowance on U.S. deferred tax assets and the effects of foreign tax rate differential.
We conduct business globally. As a result, we file income tax returns and are subject to examination by taxing authorities in various jurisdictions throughout the world. Our U.S. federal income tax returns for 2006 through 2010 remain subject to examination by the Internal Revenue Service (IRS). The IRS completed its field work for the 2006 through 2008 examination in the second quarter of 2010 and has proposed adjustments. The matter is currently in IRS appeal. Due to a valuation allowance against our U.S. deferred tax assets, if issues under appeal were lost, we expect the impact to our Consolidated Statements of Operations would only be interest in excess of the amounts already accrued. The years 2004 through 2010 remain subject to examination by foreign tax jurisdictions as well as state and city tax jurisdictions. In the event that we have determined not to file tax returns with a particular state or city, all years remain subject to examination by that tax jurisdiction.
We accrue for the effects of uncertain tax positions and the related potential penalties and interest. There were no material adjustments to our recorded unrecognized tax benefits during the nine months ended September 30, 2011. Our liability related to uncertain tax positions was $17.5 million as of each September 30, 2011 and December 31, 2010. It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain of our unrecognized tax positions will increase or decrease during the next twelve months.
Taxes collected from customers that were included in revenue for the three months ended September 30, 2011 and 2010 were $4.9 million and $5.4 million, respectively. Taxes collected from customers that were included in revenue for the nine months ended September 30, 2011 and 2010 were $15.1 million and $21.2 million, respectively.