The Hartford 2012 Annual Report Download - page 219

Table of Contents
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
The Company or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The
Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years prior to 2007. The audit of the years 2007-2009
commenced during 2010 and is expected to conclude by the end of 2013, with no material impact on the consolidated financial condition or results of
operations. The 2010-2011 audit commenced in the 4th quarter of 2012 and is expected to conclude by the end of 2014. In addition, in the second quarter of
2011 the Company recorded a tax benefit of $52 as a result of a resolution of a tax matter with the IRS for the computation of the dividends-received deduction
(“DRD”) for years 1998, 2000 and 2001. Management believes that adequate provision has been made in the financial statements for any potential
assessments that may result from tax examinations and other tax-related matters for all open tax years.
The Company’s unrecognized tax benefits were unchanged during 2012 and 2011, remaining at $48 as of December 31, 2012, 2011 and 2010. This entire
amount, if it were recognized, would affect the effective tax rate in the period it is released.
The Company classifies interest and penalties (if applicable) as income tax expense in the financial statements. The Company recognized interest income
(expense) of $0, $5, and $(2) during the years ended December 31, 2012, 2011and 2010, respectively. The Company had approximately $1 and $6 of
interest receivable accrued at December 31, 2012 and 2011, respectively. The Company does not believe it would be subject to any penalties in any open tax
years and, therefore, has not booked any accrual for penalties.
A reconciliation of the tax provision at the U.S. Federal statutory rate to the provision for income taxes is as follows:

  
Tax provision (benefit) at U.S. Federal statutory rate $(184) $ 105 $ 795
Tax-exempt interest (141)(148) (152)
Dividends received deduction (145)(206)(154)
Valuation allowance (25) (82) 78
Other 1 6 5
     
F-77