9. INCOME TAXES

The components of pretax income for the quarters ended March 31, 2012 and 2011 are as follows:


	For the Quarters Ended March 31,
	2012		2011
	(Dollars in thousands)
U.S	$	34,611	$	101,461
Foreign		12,253		9,416

Total	$	46,864	$	110,877

The determination of the annual effective tax is based upon a number of significant estimates and judgments, including the estimated annual pretax income in each tax jurisdiction in which we operate and the ongoing development of tax planning strategies during the year. In addition, our provision for income taxes can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

The following is a summary of our income tax provision and effective tax rate for continuing operations:


	For the Quarters Ended March 31,
	2012			2011
	(Dollars in thousands)
Pretax income	$	46,864		$	110,877
Provision for income taxes	$	431		$	40,282
Effective tax rate		0.9	%		36.3	%

The decrease in the effective tax rate from 36.3% for the first quarter of 2011 as compared to 0.9% for the first quarter of 2012 is mainly attributable to an increase in the percentage of operating income that our foreign and not-for-profit institutions will contribute to our consolidated results of operations; both of which reduce the consolidated effective tax rate. Additionally, the rate is also impacted by a reduction in state income taxes due to the mix of earnings among states with different tax rates and various levels of operating income or loss within a given jurisdiction.

We estimate that it is reasonably possible that the liability for unrecognized tax benefits for a variety of uncertain tax positions will decrease by up to $8.7 million in the next twelve months as a result of the completion of various tax audits currently in process and the expiration of the statute of limitations in several jurisdictions. The income tax rate for the quarter ended March 31, 2012 does not take into account the possible reduction of the liability for unrecognized tax benefits. The impact of a reduction to the liability will be treated as a discrete item in the period the reduction occurs. We recognize interest and penalties related to unrecognized tax benefits in tax expense. As of March 31, 2012, we had accrued $4.8 million as an estimate for reasonably possible interest and accrued penalties.

Our tax returns are routinely examined by federal, state and foreign tax authorities and these audits are at various stages of completion at any given time. The Internal Revenue Service completed its examination of our U.S. income tax returns through our tax year ended December 31, 2007.