Income Taxes

6 Months Ended

Jun. 30, 2012

Income Taxes

11:  INCOME TAXES

Presented in the following table is a reconciliation of the statutory U.S. federal income tax rate to the effective income tax rate from continuing operations, excluding noncontrolling interests:

Six Months Ended June 30	2012			2011
CMS Energy, including Consumers
U.S. federal income tax rate		35.0	%		35.0	%
Increase (decrease) in income taxes from:
MCIT law change, net of federal expense		-			(9.9	)
Other state and local income taxes, net of federal benefit		4.7			3.5
Other, net		(0.2	)		(1.4	)
Effective income tax rate		39.5	%		27.2	%
Consumers
U.S. federal income tax rate		35.0	%		35.0	%
Increase (decrease) in income taxes from:
State and local income taxes, net of federal benefit		5.3			3.4
Other, net		(0.3	)		(1.4	)
Effective income tax rate		40.0	%		37.0	%

In May 2012, the Internal Revenue Service completed its audit of CMS Energy and its subsidiaries for 2008 and 2009, as well as its audit of research and development tax credit claims for 2001 through 2009. The audits resulted in a $45 million increase in the net operating loss carryforward. The impact to net income as a result of the completion of the audits was $1 million.

Consumers Energy Company [Member]

Income Taxes

11:  INCOME TAXES

Presented in the following table is a reconciliation of the statutory U.S. federal income tax rate to the effective income tax rate from continuing operations, excluding noncontrolling interests:

Six Months Ended June 30	2012			2011
CMS Energy, including Consumers
U.S. federal income tax rate		35.0	%		35.0	%
Increase (decrease) in income taxes from:
MCIT law change, net of federal expense		-			(9.9	)
Other state and local income taxes, net of federal benefit		4.7			3.5
Other, net		(0.2	)		(1.4	)
Effective income tax rate		39.5	%		27.2	%
Consumers
U.S. federal income tax rate		35.0	%		35.0	%
Increase (decrease) in income taxes from:
State and local income taxes, net of federal benefit		5.3			3.4
Other, net		(0.3	)		(1.4	)
Effective income tax rate		40.0	%		37.0	%

In May 2012, the Internal Revenue Service completed its audit of CMS Energy and its subsidiaries for 2008 and 2009, as well as its audit of research and development tax credit claims for 2001 through 2009. The audits resulted in a $45 million increase in the net operating loss carryforward. The impact to net income as a result of the completion of the audits was $1 million.