Note 8 - Income Taxes

3 Months Ended

Jun. 24, 2012

Income Tax Disclosure [Text Block]

NOTE H – INCOME TAXES

The income tax provisions for the thirteen-week periods ended June 24, 2012 and June 26, 2011 reflect effective tax rates of 39.4% and 38.4%, respectively, which have been reduced from statutory rates by 1.2% and 2.3%, respectively,  for the differing effects of tax exempt interest income.

The amount of unrecognized tax benefits at June 24, 2012 was $430,000, all of which would impact Nathan’s effective tax rate, if recognized.  As of June 24, 2012, Nathan’s had $370,000 of accrued interest and penalties in connection with unrecognized tax benefits.

During the fiscal year ending March 31, 2013, Nathan’s will seek to settle additional uncertain tax positions with the tax authorities. As a result, it is reasonably possible that the amount of unrecognized tax benefits, including the related accrued interest and penalties, could be reduced by up to $134,000, which would favorably impact Nathan’s effective tax rate, although no assurances can be given in this regard.

Nathan’s estimates that its annual tax rate for the fiscal year ending March 31, 2013 will be in the range of approximately 38.5% to 40.0%.  The final annual tax rate is subject to many variables, including the effect of tax-exempt interest earned, among other factors, and therefore cannot be determined until the end of the fiscal year; therefore, the actual tax rate could differ from our current estimates.

New York City has examined tax years ending March 2008 through March 2010.  The Company is reviewing a NYC proposed adjustment which has previously been accrued in the accompanying consolidated financial statements. Nathan’s has also received notices from the State of Florida and the Commonwealth of Massachusetts that our tax returns for the fiscal years ended March 2008, March 2009 and March 2010 will be reviewed. Additionally, the Commonwealth of Massachusetts has indicated that our tax return for the fiscal year ended March 2011 will also be reviewed.