FairPoint Communications 2009 Annual Report Download - page 152

Table of Contents
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Company's financial position or results of operations. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows
(in thousands):
The Company does not expect or anticipate a significant increase or decrease over the next twelve months in the unrecognized tax benefits reported
above. Of the $5.4 million of unrecognized tax benefits at December 31, 2009, $2.0 million would impact the Company's effective tax rate, if
recognized.
The Company recognizes any interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the year ended
December 31, 2009, the Company did not make any payment of interest and penalties. During the year ended December 31, 2008, the Company
recognized $0.2 million (after-tax) for the payment of interest and penalties. The Company had $0.8 million and $1.2 million (after-tax) for the payment
of interest and penalties accrued in the consolidated balance sheet at December 31, 2009 and 2008, respectively.
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and with various state and local governments. The
Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years prior to 2004. During
the quarter ending June 30, 2009, Verizon received notification from the IRS that a tax position taken on their returns for the years 2000 through 2003
relating to FairPoint's acquired business was settled through acceptance of the filing position. During the quarter ending June 30, 2008, Verizon
effectively settled the IRS examination for fiscal years 2000 through 2003. Due to the executed Tax Sharing Agreement, the settlement of the IRS audit
resulted in an amount due to Verizon from FairPoint in the amount of $1.5 million relating to adjustments of temporary differences and $0.1 million of
interest. As of December 31, 2009, the Company does not have any significant additional jurisdictional tax audits.
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Balance as of December 31, 2007 $ 10,393
Additions for tax positions related to the current year —
Additions for tax positions related to acquired companies 985
Additions for tax positions of prior years —
Reductions for tax positions of prior years (27)
Reductions as a result of audit settlements (2,757)
Reductions due to lapse of statute of limitations —
Balance as of December 31, 2008 $ 8,594
Additions for tax positions related to the current year —
Additions for tax positions related to acquired companies —
Additions for tax positions of prior years —
Reductions for tax positions of prior years —
Reductions as a result of audit settlements (3,219)
Reductions due to lapse of statute of limitations —
Balance as of December 31, 2009 $ 5,375