First Data 2014 Annual Report Download - page 96

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A reconciliation of the unrecognized tax benefits for the years ended December 31, 2012, 2013, and 2014 is as follows:
 
Balance as of January 1, 2012 $ 334.7
Increases for tax positions of prior years 5.5
Decreases for tax positions of prior years (57.7)
Increases for tax positions related to the current period 6.2
Decreases for cash settlements with taxing authorities (0.1)
Decreases due to the lapse of the applicable statute of limitations (2.4)
Balance as of December 31, 2012 286.2
Increases for tax positions of prior years 3.4
Decreases for tax positions of prior years (2.9)
Increases for tax positions related to the current period 4.8
Decreases for cash settlements with taxing authorities (5.9)
Decreases due to the lapse of the applicable statute of limitations (6.1)
Balance as of December 31, 2013 279.5
Increases for tax positions of prior years 2.9
Decreases for tax positions of prior years (29.1)
Increases for tax positions related to the current period 0.9
Decreases for cash settlements with taxing authorities (13.2)
Decreases due to the lapse of the applicable statute of limitations (4.6)
Balance as of December 31, 2014 $ 236.4
Most of the unrecognized tax benefits are included in the “Other long-term liabilities” line of the Consolidated Balance Sheets, net of the federal benefit on
state income taxes (approximately $17 million as of December 31, 2014). However, those unrecognized tax benefits that affect the federal consolidated tax
years ending December 31, 2008 through December 31, 2014 are included in the “Long-term deferred tax liabilities” line of the Consolidated Balance
Sheets, as these items reduce the Company’s net operating loss and credit carryforwards from those periods. The unrecognized tax benefits as of December 31,
2014, 2013, and 2012 included approximately $126 million, $161 million, and $163 million, respectively, of tax positions that, if recognized, would affect
the effective tax rate.
During the year ended December 31, 2014, the Company’s liability for unrecognized tax benefits was reduced by $29 million related to the effective
resolution of certain federal and state audit issues. The reduction in liabilities was recorded through a decrease to tax expense and an increase to deferred tax
liabilities.
During the year ended December 31, 2012, the Company’s liability for unrecognized tax benefits was reduced by $52 million upon closure of the 2003 and
2004 federal tax years and the resolution of certain state audit issues. The reduction in liabilities was recorded through a decrease to tax expense and an
increase to deferred tax liabilities.
The Company recognizes interest and penalties related to unrecognized tax benefits in the “Income tax expense (benefit)” line item of the Consolidated
Statements of Operations. Cumulative accrued interest and penalties (net of related tax benefits) are not included in the ending balances of unrecognized tax
benefits. Cumulative accrued interest and penalties are included in the “Other long-term liabilities” line of the Consolidated Balance Sheets while the related
tax benefits are included in the “Long-term deferred tax liabilities” line of the Consolidated Balance Sheets. The following table presents the approximate
amounts associated with accrued interest expense and the cumulative accrued interest and penalties:
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


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Current year accrued interest expense (net of related tax benefits)
$ 0.7
$ 5.1
$ 3.6
Cumulative accrued interest and penalties (net of related tax benefits)
38.8
45.2
47.2
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