8. INCOME TAXES

The provision for income taxes for interim periods is based on the current estimate of the annual effective tax rate expected to be applicable for the full fiscal year and the impact of discrete items, if any, and is adjusted as necessary for quarterly events. The effective income tax rate was approximately 29.9% and 37.3% for the three months ended September 30, 2013 and 2012, respectively. The decrease in the effective income tax rate for the three months ended September 30, 2013 compared to 2012 is primarily attributable to discrete items related to the IRS settlement discussed below.

The IRS commenced examination of the Company’s United States federal income tax returns for 2006 through 2009 during fiscal year 2011. The IRS completed its field examination of the open tax years and issued a Revenue Agent’s Report in January 2012. The Company filed a formal protest regarding certain unagreed adjustments in March 2012 and the case was assigned to the IRS Appeals Office in Laguna Niguel, California. In June 2013, the Company agreed to settle all remaining issues with the IRS. Formal closure of the case occurred in July 2013 and the Company received a refund from the IRS of $7.7 million, including $0.6 million in interest. As a result, the Company recognized a reduction to unrecognized tax benefits and a corresponding reduction of income tax provisions of approximately $3.6 million in the three months ended September 30, 2013.

As of September 30, 2013, the Company has $9.1 million related to uncertain tax positions, excluding related accrued interest and penalties, $9.1 million of which, if recognized, would impact the effective tax rate. As of September 30, 2013, the Company has $0.5 million accrued for the payment of interest and penalties.

Changes to the balance of uncertain tax positions are as follows:

	September 30,
	2013
	(in 000s)

Balance, beginning of period	$	15,578
Additions based on tax provisions related to current year	397
Additions for tax positions of prior years	367
Reductions for tax positions of prior years	(3,456		)
Settlements	(3,742		)
Lapse of statute of limitations	—
Foreign currency translation adjustment	1
Balance, end of period	$	9,145

It is reasonably possible that the Company’s amount of unrecognized tax benefits may decrease within the next twelve months by a range up to $1.1 million.

The Company files numerous consolidated and separate income tax returns in the United States and various state and foreign jurisdictions. The Company is currently under examination in certain states and foreign jurisdictions. With few exceptions, the Company is no longer subject to United States federal, state and local, or foreign income tax examinations for years before fiscal 2010.