ADP 2015 Annual Report Download - page 70

Download and view the complete annual report

Please find page 70 of the 2015 ADP annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 112

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

As of June 30, 2016 , 2015 , and 2014 the Company's liabilities for unrecognized tax benefits, which include interest and penalties, were $27.4 million ,
$27.1 million , and $56.5 million respectively. The amount that, if recognized, would impact the effective tax rate is $18.7 million , $16.9 million , and $31.0
million , respectively. The remainder, if recognized, would principally impact deferred taxes.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
2016
2015
2014
Unrecognized tax benefits at beginning of the year
$ 27.1
$ 56.5
$ 67.0
Additions for tax positions
3.8
2.4
3.6
Additions for tax positions of prior periods
3.5
3.1
6.8
Reductions for tax positions of prior periods
(0.1)
(6.5)
(3.7)
Settlement with tax authorities
(1.7)
(12.2)
(4.4)
Expiration of the statute of limitations
(4.9)
(14.0)
(13.7)
Impact of foreign exchange rate fluctuations
(0.3)
(2.2)
0.9
Unrecognized tax benefit at end of year
$ 27.4
$ 27.1
$ 56.5
Interest expense and penalties associated with uncertain tax positions have been recorded in the provision for income taxes on the Statements of
Consolidated Earnings. During the fiscal years 2016 , 2015 , and 2014 , the Company recorded interest expense (benefit) of $1.1 million , $(2.7) million , and
$(3.4) million , respectively. Penalties incurred during fiscal years 2016 , 2015 , and 2014 were no t material.
At June 30, 2016 , the Company had accrued interest of $4.0 million recorded on the Consolidated Balance Sheets, of which $0.1 million was recorded
within income taxes payable, and the remainder was recorded within other liabilities. At June 30, 2015 , the Company had accrued interest of $3.8 million recorded
on the Consolidated Balance Sheets, of which $0.1 million was recorded within income taxes payable, and the remainder was recorded within other liabilities. At
June 30, 2016 , the Company had accrued penalties of $0.2 million recorded on the Consolidated Balance Sheets within other liabilities. At June 30, 2015 , the
Company had accrued penalties of $0.3 million recorded on the Consolidated Balance Sheets within other liabilities.
The Company is routinely examined by the IRS and tax authorities in foreign countries in which it conducts business, as well as tax authorities in states in
which it has significant business operations. The tax years currently under examination vary by jurisdiction. Examinations in progress in which the Company has
significant business operations are as follows:
Taxing Jurisdiction
Fiscal Years under Examination
U.S. (IRS)
2015-2016
Arizona
2010-2013
California
2012-2014
Illinois
2007-2014
New York
2010-2014
New Jersey
2011-2014
Canada
2012-2014
India
2004-2011, 2013-2015
The Company regularly considers the likelihood of assessments resulting from examinations in each of the jurisdictions. The resolution of tax matters is
not expected to have a material effect on the consolidated financial condition of the Company, although a resolution could have a material impact on the
Company's Statements of Consolidated Earnings for a particular future period and on the Company's effective tax rate.
If certain pending tax matters settle within the next twelve months, the total amount of unrecognized tax benefits may
67