4.Income Taxes

The following table presents the Company’s provision for income taxes and effective income tax rate for the periods below:


	Three months ended						Nine months ended
	May 31,						May 31,
	2014			2013			2014			2013
Provision for income taxes	$	8,689		$	8,184		$	14,576		$	12,389
Effective income tax rate		34.1	%		35.6	%		33.4	%		33.6	%

The lower effective income tax rate during the third quarter of fiscal year 2014 was primarily attributable to a favorable annual return to provision adjustment. The effective tax rate for the first nine months of fiscal year 2014 decreased slightly compared to the prior year primarily due to the tax benefit resulting from the IRS’ acceptance of a federal tax method change during the first quarter of fiscal year 2014 combined with the favorable return to provision adjustment from the third quarter of fiscal year 2014.

As of May 31, 2014, the Company had $2.2 million of unrecognized tax benefits, including $0.3 million of interest and penalties. During the first nine months of fiscal year 2014, the liability for unrecognized tax benefits decreased $0.4 million. The decrease was primarily related to the IRS’ acceptance of a federal tax method change that impacted the Company’s tax rate. The Company recognizes estimated interest and penalties as a component of its income tax expense, net of federal benefit. If recognized, the entire amount of unrecognized tax benefits would favorably impact the effective tax rate.

The Company or one of its subsidiaries is subject to U.S. federal income tax and income tax in multiple U.S. state jurisdictions. The Company is currently undergoing examinations or appeals by various state and federal authorities. The Company anticipates that the finalization of these examinations or appeals, combined with the expiration of applicable statutes of limitations and the additional accrual of interest related to unrecognized benefits on various return positions taken in years still open for examination, could result in a change to the liability for unrecognized tax benefits during the next 12 months ranging from a decrease of $1.6 million to an increase of $0.1 million depending on the timing and terms of the examination resolutions.