Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes

Income Taxes

4. Income Taxes

        The effective income tax rate for the three months ended June 30, 2011 and 2010 was 38.6% and 38.1%, respectively. The increase in the effective income tax rate in the three months ended June 30, 2011 compared to the of the three months ended June 30, 2010 is primarily due to the income tax effect of nondeductible stock compensation expense in the three months ended June 30, 2011.

        The effective income tax rate for the six months ended June 30, 2011 and 2010 was 37.0% and 37.9%, respectively. The decrease in the effective income tax rate in the six months ended June 30, 2011 compared to the six months ended June 30, 2010 is primarily due to a change in state deferred income taxes as a result of acquisitions, which change the mix of state apportionments. The Company's estimated annual effective income tax rate varies from the 35% federal statutory rate due to the effects of state income taxes and estimated permanent differences (i.e. differences between book earnings and tax earning that are not expected to reverse in future periods).

        As of June 30, 2011, the Company had a gross liability for uncertain income tax benefits of $5.3 million, which if recognized would affect the effective income tax rate. There have been no significant changes to the calculation of uncertain income tax benefits during 2011. The Company recognized potential accrued interest and penalties related to unrecognized income tax benefits in income tax expense during the three months ended June 30, 2011, which is consistent with the recognition of these items in prior periods. The Company has accrued approximately $0.9 million and $0.8 million of interest related to its uncertain income tax positions as of June 30, 2011 and December 31, 2010, respectively. The Company estimates that it is reasonably possible that the balance of unrecognized income tax benefits as of June 30, 2011 could decrease by a maximum of $1.9 million in the next 12 months due to the expiration of statutes of limitation and audit settlements.