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Income Taxes
9 Months Ended
Sep. 29, 2012
Income Taxes

G. Income Taxes

As of September 29, 2012 and December 31, 2011, the Company had approximately $1.4 million and $1.9 million, respectively, of unrecognized income tax benefits. A decrease of $0.5 million in unrecognized tax benefits was recorded for the thirty-nine weeks ended September 29, 2012.

The Company’s practice is to classify interest and penalties related to income tax matters in income tax expense. As of September 29, 2012 and December 31, 2011, the Company had $0.7 million and $1.0 million, respectively, accrued for interest and penalties.

In September 2011, the Internal Revenue Service (the “IRS”) commenced an examination of the Company’s 2007 and 2008 amended consolidated corporate income tax returns and the related loss carry back claim to 2006. In addition, in October 2011, the IRS expanded the original examination to include the 2009 corporate income tax return. The examination was in progress as of September 29, 2012. The Company is also being audited by two states as of September 29, 2012.

 

The Company’s state income tax returns remain subject to examination for three or four years depending on the state’s statute of limitations. In addition, the Company is generally obligated to report changes in taxable income arising from federal income tax audits.