Dow Chemical 2014 Annual Report Download - page 152

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128
At December 31, 2014, the total amount of unrecognized tax benefits was $240 million ($266 million at December 31, 2013),
of which $233 million would impact the effective tax rate, if recognized ($257 million at December 31, 2013).
Interest and penalties associated with uncertain tax positions, including the matters that resulted in the adjustment of uncertain
tax positions, are recognized as components of the “Provision for income taxes,” and totaled a charge of $15 million in 2014, a
benefit of $71 million in 2013 and a charge of $92 million in 2012. The Company’s accrual for interest and penalties was
$109 million at December 31, 2014 and $81 million at December 31, 2013.
During 2013, court rulings on two separate tax matters resulted in the adjustment of uncertain tax positions. In February 2013,
the U.S. District Court for the Middle District of Louisiana issued a ruling that disallowed, for tax purposes, transactions and
partnerships associated with Chemtech, a wholly owned subsidiary. In March 2013, the U.S. Supreme Court denied certiorari
in Union Carbide's research tax credit case. Through denial of certiorari, the decision issued by the U.S. Court of Appeals
denying Union Carbide's tax credit claim for supplies used in process-related research and development at its manufacturing
facilities became final. As a result of these rulings, the Company adjusted uncertain tax positions related to these matters,
resulting in a tax charge of $276 million in 2013.
Tax years that remain subject to examination for the Company’s major tax jurisdictions are shown below:
Tax Years Subject to Examination by Major Tax
Jurisdiction at December 31
Earliest Open Year
Jurisdiction 2014 2013
Argentina 2007 2007
Brazil (1) 2008 2009
Canada 2010 2009
France 2012 2011
Germany 2006 2006
Italy 2009 2008
The Netherlands 2013 2012
Spain 2009 2008
Switzerland 2011 2009
United Kingdom 2012 2011
United States:
Federal income tax 2004 2004
State and local income tax 2004 2004
(1) Amended returns filed in 2014 for years 2008 and 2009.
The Company is currently under examination in a number of tax jurisdictions. It is reasonably possible that some of these
examinations may be resolved within twelve months. As a result, it is reasonably possible that the total gross unrecognized tax
benefits of the Company at December 31, 2014 may range from an increase of $60 million to a decrease of $135 million in the
next twelve months as a result of these resolved examinations. The impact on the Company’s results of operations is not
expected to be material.
The reserve for non-income tax contingencies related to issues in the United States and foreign locations was $93 million at
December 31, 2014 and $105 million at December 31, 2013. This is management’s best estimate of the potential liability for
non-income tax contingencies. Inherent uncertainties exist in estimates of tax contingencies due to changes in tax law, both
legislated and concluded through the various jurisdictions’ tax court systems. It is the opinion of the Company’s management
that the possibility is remote that costs in excess of those accrued will have a material impact on the Company’s consolidated
financial statements.