Dollar General 2013 Annual Report Download - page 143

DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. Income taxes
The provision (benefit) for income taxes consists of the following:
(In thousands) 2013 2012 2011
Current:
Federal ............................... $530,728 $457,370 $385,277
Foreign ............................... 1,324 1,209 1,449
State ................................ 101,174 78,025 56,272
633,226 536,604 442,998
Deferred:
Federal ............................... (16,132) 9,734 8,313
State ................................ (13,880) (1,606) 7,293
(30,012) 8,128 15,606
$603,214 $544,732 $458,604
A reconciliation between actual income taxes and amounts computed by applying the federal
statutory rate to income before income taxes is summarized as follows:
(Dollars in thousands) 2013 2012 2011
U.S. federal statutory rate on earnings before
income taxes ......................... $569,916 35.0% $524,088 35.0% $428,851 35.0%
State income taxes, net of federal income tax
benefit ............................. 56,822 3.5 52,713 3.5 42,774 3.5
Jobs credits, net of federal income taxes ...... (19,348) (1.2) (16,062) (1.1) (15,153) (1.2)
Reduction in valuation allowances ........... (437) — (3,050) (0.2) (2,202) (0.2)
Reduction in income tax reserves ........... (6,391) (0.4) (13,676) (0.9) — —
Other, net ............................ 2,652 0.1 719 0.1 4,334 0.3
$603,214 37.0% $544,732 36.4% $458,604 37.4%
The 2013 effective tax rate was an expense of 37.0%. The 2013 effective income tax rate increased
from 2012 due to the favorable resolution of income tax examinations during 2012 that did not reoccur,
to the same extent, in 2013. This rate increase was partially offset by the recording of an income tax
benefit in 2013 associated with the expiration of the assessment period during which the taxing
authorities could have assessed additional income tax associated with the Company’s 2009 tax year. In
addition, the 2013 amounts reflect larger income tax benefits associated with federal jobs credits. The
Company receives a significant income tax benefit related to salaries paid to certain newly hired
employees that qualify for federal jobs credits (principally the Work Opportunity Tax Credit or
‘‘WOTC’’). The federal law authorizing the WOTC credit expired for employees hired after
December 31, 2013. Whether these credits will be available for employees hired after December 31,
2013 depends upon a change in the tax law that extends the expiration date of these credit provisions,
the certainty and timing of which are currently unclear.
The 2012 effective tax rate was an expense of 36.4%. This expense was greater than the federal
statutory tax rate of 35% due primarily to the inclusion of state income taxes in the total effective tax
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10-K