Western Union 2011 Annual Report Download - page 81

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Our critical accounting policies and estimates, described below, are very important to the portrayal of our
financial condition and our results of operations and applying them requires our management to make difficult,
subjective and complex judgments. We believe that the understanding of these key accounting policies and
estimates is essential in achieving more insight into our operating results and financial condition.
Description Judgments and Uncertainties
Effect if Actual Results Differ from
Assumptions
Income Taxes
Reinvestment of foreign earnings
Income taxes, as reported in our
consolidated financial statements,
represent the net amount of income
taxes we expect to pay to various
taxing jurisdictions in connection
with our operations. We provide
for income taxes based on amounts
that we believe we will ultimately
owe after applying the required
analyses and judgments.
With respect to earnings in certain
foreign jurisdictions, we have
provided for income taxes on such
earnings at a more favorable
income tax rate than the combined
United States federal and state
income tax rates because we
expect to reinvest these earnings
outside of the United States
indefinitely.
No provision has been made for
United States federal and state
income taxes on certain of our
outside tax basis differences,
which primarily relate to
accumulated foreign earnings of
approximately $3.7 billion as of
December 31, 2011, which we
expect to reinvest outside the
United States indefinitely.
Upon distribution of these earnings
to the United States in the form of
actual or constructive dividends,
we would be subject to United
States income taxes (subject to an
adjustment for foreign tax credits),
state income taxes and possible
withholding taxes payable to
various foreign countries which
could result in a material impact to
our financial condition, results of
operations and cash flows in the
period such distribution occurred.
Determination of the amount of
unrecognized deferred United
States tax liability is not
practicable because of the
complexities associated with its
hypothetical calculation.
74