Orbitz 2009 Annual Report Download - page 98

The table below shows the changes in this liability during the years ended December 31, 2008 and
December 31, 2007:
Amount
(in millions)
Balance as of January 1, 2007 . ........................................... $2
Increase in unrecognized tax benefits as a result of tax positions
taken during the current year ........................................... 2
Decrease in unrecognized tax benefits as a result of tax positions
taken during prior years............................................... (1)
Settlements .......................................................... (1)
Balance as of December 31, 2007 ......................................... 2
Increase in unrecognized tax benefits as a result of tax positions
taken during the prior year . ........................................... 6
Decrease in unrecognized tax benefits as a result of tax positions
taken during the prior year . ........................................... (1)
Impact of foreign currency translation ...................................... (1)
Balance as of December 31, 2008 ......................................... $6
The total amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate was
$1 million as of December 31, 2008 and $2 million as of December 31, 2007. We do not expect to make any
cash tax payments nor do we expect any statutes of limitations to lapse related to this liability within the next
twelve months.
We recognize interest and penalties related to unrecognized tax benefits in income tax expense. During
each of the years ended December 31, 2008 and December 31, 2007, we recognized interest and penalties of
almost nil. Accrued interest and penalties were almost nil as of December 31, 2008 and December 31, 2007.
We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. A
number of years may elapse before an uncertain tax position, for which we have unrecognized tax benefits, is
audited and finally resolved. We adjust these unrecognized tax benefits, as well as the related interest and
penalties, in light of changing facts and circumstances. Settlement of any particular position could require the
use of cash. Favorable resolution could be recognized as a reduction to our effective income tax rate in the
period of resolution.
The number of years with open tax audits varies depending on the tax jurisdiction. Our major taxing
jurisdictions include the U.S. (federal and state), the U.K. and Australia. With limited exceptions, we are no
longer subject to U.S. federal, state and local income tax examinations by tax authorities for the years before
2004. We are no longer subject to U.K. federal income tax examinations for years before 2007. We are no
longer subject to Australian federal income tax examinations for the years before 2004.
For purposes of FIN 48, with respect to periods prior to the Blackstone Acquisition, we are only required
to take into account income tax returns for which we or one of our subsidiaries is the primary taxpaying entity,
namely separate state returns and non-U.S. returns. Uncertain tax positions related to U.S. federal and state
combined and unitary income tax returns filed are only applicable in the post-acquisition accounting period.
We and our domestic subsidiaries currently file a consolidated income tax return for U.S. federal income tax
purposes.
In connection with our IPO, on July 25, 2007, the Company entered into a tax sharing agreement with
Travelport, pursuant to which the Company and Travelport agreed to split, on a 29%/71% basis, all:
• taxes attributable to certain restructuring transactions undertaken in contemplation of the IPO;
98
ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)