UPS 2015 Annual Report Download - page 126

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
114
The following table summarizes the activity related to our unrecognized tax benefits (in millions):
Tax Interest Penalties
Balance at January 1, 2013 $ 232 $ 53 $ 4
Additions for tax positions of the current year 15 — —
Additions for tax positions of prior years 20 9 2
Reductions for tax positions of prior years for:
Changes based on facts and circumstances (67)(23)(1)
Settlements during the period (8)1—
Lapses of applicable statute of limitations (1)— (1)
Balance at December 31, 2013 191 40 4
Additions for tax positions of the current year 15 — —
Additions for tax positions of prior years 51 13 —
Reductions for tax positions of prior years for:
Changes based on facts and circumstances (74)(8)—
Settlements during the period (10)(2)—
Lapses of applicable statute of limitations (1)(1)(1)
Balance at December 31, 2014 172 42 3
Additions for tax positions of the current year 24 — —
Additions for tax positions of prior years 45 21 3
Reductions for tax positions of prior years for:
Changes based on facts and circumstances (85)(8)—
Settlements during the period (6)(2)—
Lapses of applicable statute of limitations (2)— —
Balance at December 31, 2015 $ 148 $ 53 $ 6
The total amount of gross unrecognized tax benefits as of December 31, 2015, 2014 and 2013 that, if recognized, would
affect the effective tax rate was $147, $166 and $185 million, respectively. We also had gross recognized tax benefits of $73,
$54 and $281 million recorded as of December 31, 2015, 2014 and 2013, respectively, associated with outstanding refund
claims for prior tax years. We had a net payable recorded with respect to prior years’ income tax matters in the accompanying
consolidated balance sheets as of December 31, 2015 and 2014, and a net receivable recorded with respect to prior years’
income tax matters as of December 31, 2013. We have also recognized a receivable for interest of $3, $4 and $25 million for the
recognized tax benefits associated with outstanding refund claims as of December 31, 2015, 2014 and 2013, respectively. Our
continuing policy is to recognize interest and penalties associated with income tax matters as a component of income tax
expense.
We file income tax returns in the U.S. federal jurisdiction, most U.S. state and local jurisdictions, and many non-U.S.
jurisdictions. We have substantially resolved all U.S. federal income tax matters for tax years prior to 2010.
A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the
ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the amount of
unrecognized tax benefits could significantly increase or decrease within the next twelve months. Items that may cause changes
to unrecognized tax benefits include the timing of interest deductions and the allocation of income and expense between tax
jurisdictions. These changes could result from the settlement of ongoing litigation, the completion of ongoing examinations, the
expiration of the statute of limitations or other unforeseen circumstances. At this time, an estimate of the range of the
reasonably possible change cannot be made.