8. INCOME TAXES

We utilize the asset and liability approach to measuring deferred tax assets and liabilities based on temporary differences existing at each balance sheet date using currently enacted tax rates in accordance with FASB’s authoritative guidance for income taxes. Deferred tax assets are reduced by a valuation allowance when we believe it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The total provision for income taxes consist of the following (amounts in millions):


	For the Years Ended December 31,
	2012			2011			2010
Current income tax expense:
Federal	$	8.6		$	15.6		$	43.7
State and local		1.2			3.7			9.6

		9.8			19.3			53.3

Deferred income tax expense/(benefit):
Federal		(25.7	)		(103.1	)		24.2
State and local		(5.5	)		(19.3	)		1.7

		(31.2	)		(122.4	)		25.9

Income tax expense/(benefit)	$	(21.4	)	$	(103.1	)	$	79.2

Net deferred tax assets consist of the following components (amounts in millions):


	As of December 31,
	2012			2011
Current portion of deferred tax assets (liabilities):
Allowance for doubtful accounts	$	8.2		$	6.8
Accrued expenses		1.2			2.0
Workers’ compensation		6.7			6.1
Deferred revenue		(22.0	)		(24.5	)
Other		0.3			(2.1	)

Current portion of deferred tax assets (liabilities)		(5.6	)		(11.7	)
Noncurrent portion of deferred tax assets (liabilities):
Amortization of intangible assets		114.0			92.9
Property and equipment		(32.4	)		(37.0	)
Share-based compensation		5.2			7.6
Other		2.2			1.1
Capital loss carry forward		—			0.1
NOL carry forward, expiring beginning in 2012		4.0			4.7
Less: valuation allowance		(0.2	)		(0.8	)

Noncurrent portion of deferred tax assets (liabilities):		92.8			68.6

Net deferred tax assets (liabilities)	$	87.2		$	56.9

As of December 31, 2012, we have state net operating loss (“NOL”) carry forwards of approximately $99.5 million.

Our recorded valuation allowance above was established against the deferred tax assets to the extent it has been determined it is more likely than not that those deferred tax assets will not be realized. Future changes in the determination of the realizability of these deferred tax assets and related valuation allowance could result in either a decrease or an increase in our provision for income taxes.

We establish our valuation allowance on deferred tax assets when it is more likely than not that some portion or all of our deferred tax assets will not be realized. Our valuation allowance decreased $14.1 million from 2011 primarily due to the expiration of state NOLs.

Our provision for income taxes differs from the amount computed by applying the statutory Federal income tax rate to net (loss) income before income taxes from continuing operations. The sources of the tax effects of the difference are as follows:


	For the Years Ended December 31,
	2012			2011			2010
Income tax expense/(benefit) computed on federal statutory rate		(35.0	)%		(35.0	)%		35.0	%
State income taxes and other, net of federal benefit		(2.4	)		(2.3	)		3.8
Valuation allowance		0.1			(0.5	)		(0.1	)
Tax credits		(2.1	)		—			—
Goodwill impairment		20.9			16.0			—
Nondeductible expenses and other, net		0.5			0.2			0.3

Income tax expense/(benefit)		(18.0	)%		(21.6	)%		39.0	%

For the year ended December 31, 2012, the effective tax rate on pretax (loss) income from continuing operations was a benefit of 18.0 percent. The effective tax rate for the year ended December 31, 2012, attributable to continuing operations differs from the statutory rate primarily due to state taxes, non-deductible expenses, and tax credits.

The effective tax rate on the pre-tax income from continuing operations for the year ended December 31, 2011, differs from the statutory rate primarily due to a goodwill impairment that was non-deductible for tax purposes and state taxes on operations.

The effective tax rate on the pre-tax income from continuing operations for the year ended December 31, 2010, differs from the statutory rate primarily due to state taxes.

Uncertain Tax Positions

We account for uncertain tax positions in accordance with the authoritative guidance for uncertain tax positions. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (amounts in millions):


	For the Years Ended December 31,
	2012		2011
Balance at beginning of period	$	—	$	0.7
Plus: additions for tax positions of prior years		0.4		—
Less: reductions made for tax positions of prior years		—		(0.7	)

Balance at end of period	$	0.4	$	—

As of December 31, 2012, there are $0.4 million of uncertain tax benefits accrued within the financial statements.

To the extent penalties and interest are assessed on any underpayment of income tax, such amounts are accrued and classified as either a component of tax penalties or interest expense in accrued expenses in our consolidated balance sheet. This is an accounting policy election we made that is a continuation of our historical policy and we intend to consistently apply this policy in the future. As of December 31, 2012, there is less than $0.01 million of interest and penalties accrued on the balance sheet related to uncertain income tax positions.

We are subject to income taxes in the United States and in many of the 50 individual states, with significant operations in Louisiana, Alabama, Georgia, and Tennessee. We are open to examination in the United States and in various individual states for tax years ended December 2008 through December 2012. We are also open to examination in various states for the years ended 2001-2012 resulting from net operating losses generated and available for carry forward from those years.