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Income Taxes
9 Months Ended
Oct. 03, 2015
Income Tax Disclosure [Abstract]  
Income Taxes
INCOME TAXES
As of October 3, 2015, the Company had $364 million accrued for uncertain tax positions, all of which would affect the Company’s effective tax rate if recognized. Additionally, the Company had $50 million accrued for gross interest and penalties as of October 3, 2015. At January 3, 2015, the liability for uncertain tax positions was $328 million and the accrual for gross interest and penalties was $44 million.
The Company is subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. The Company has substantially concluded all material U.S. federal, state, foreign and local income tax matters for all tax years through 2004. In April 2015, the U.S. Internal Revenue Service (IRS) completed an audit of the Company’s 2010 and 2011 tax returns and proposed adjustments in an audit report. In February 2014, the IRS completed an audit of the Company’s 2008 and 2009 tax returns and also proposed adjustments in an audit report. The Company has begun and intends to vigorously defend certain positions and has initiated defense of these adjustments at the IRS appellate level. An unfavorable outcome could have a material negative impact on the Company's effective income tax rate in future periods. The Company does not expect its uncertain tax positions to change significantly over the next 12 months.

The Company's effective income tax rate was 17.6% and 7.2% for the third quarter of 2015 and 2014, respectively, and 12.7% and 11.5% for the nine months ended during 2015 and 2014, respectively. The Company’s effective income tax rate differs from the U.S. federal statutory rate each year due to certain operations that are subject to tax incentives, state and local taxes and foreign taxes that are different than the U.S. federal statutory rate. In addition, the effective tax rate can be impacted each period by discrete income tax factors and events. Special charges, acquisition-related costs, including contingent consideration fair value adjustments, and discrete income tax items recognized during the third quarter of 2015 unfavorably impacted the effective rate by 1.6 percentage points and favorably impacted the effective rate by 4.2 percentage points during the first nine months of 2015. Special charges, acquisition-related costs, including contingent consideration fair value adjustments, and discrete tax items recognized during the third quarter and first nine months of 2014 favorably impacted the effective tax rate by 12.0 percentage points and 7.7 percentage points, respectively. Additionally, the effective income tax rate decreased during the third quarter and first nine months of 2015 compared to the same prior year periods as a result of changes in the mix of income before income taxes between U.S. and foreign countries.