Western Union 2011 Annual Report Download - page 82

Download and view the complete annual report

Please find page 82 of the 2011 Western Union 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 169

  • 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
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169

Description Judgments and Uncertainties
Effect if Actual Results Differ from
Assumptions
Income tax contingencies
We recognize the tax benefit from
an uncertain tax position only
when it is more likely than not,
based on the technical merits of the
position, that the tax position will
be sustained upon examination,
including the resolution of any
related appeals or litigation. The
tax benefits recognized in the
consolidated financial statements
from such a position are measured
as the largest benefit that has a
greater than fifty percent
likelihood of being realized upon
ultimate resolution.
We have established contingency
reserves for a variety of material,
known tax exposures. Our reserves
reflect our judgment as to the
resolution of the issues involved if
subject to judicial review. While
we believe our reserves are
adequate to cover reasonably
expected tax risks, there can be no
assurance that, in all instances, an
issue raised by a tax authority will
be resolved at a financial cost that
does not exceed our related
reserve. With respect to these
reserves, our income tax expense
would include (i) any changes in
tax reserves arising from material
changes during the period in the
facts and circumstances (i.e., new
information) surrounding a tax
issue and (ii) any difference from
our tax position as recorded in the
consolidated financial statements
and the final resolution of a tax
issue during the period.
Pursuant to the tax allocation
agreement signed in connection
with the Spin-off from First Data,
we believe we have appropriately
apportioned the taxes between
First Data and us.
Our tax contingency reserves for
our uncertain tax positions as of
December 31, 2011 were $135.0
million, including accrued interest
and penalties, net of related
benefits. While we believe that our
reserves are adequate to cover
reasonably expected tax risks, in
the event that the ultimate
resolution of our uncertain tax
positions differ from our estimates,
we may be exposed to material
increases in income tax expense,
which could materially impact our
financial condition, results of
operations and cash flows.
If we are required to indemnify
First Data for taxes incurred as a
result of the Spin-off being taxable
to First Data, it likely would have a
material adverse effect on our
business, financial condition,
results of operations and cash
flows.
75