Unum 2008 Annual Report Download - page 127

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The cumulative effect of applying the provisions of FIN 48 as of January 1, 2007 resulted in a $22.7 million decrease in our liability for
unrecognized tax benefits, net of associated deferred tax assets. Our consolidated statements of income include the following changes in
unrecognized tax benefits:
December 31
(in millions of dollars)  2007
   $ 67.4
Tax Positions Related to Current Year
Additions  104.6
Subtractions  (4.8)
Tax Positions Related to Prior Years
Additions  4.4
Subtractions   (10.6)
   161.0
Less Tax Attributable to Temporary Items Included Above  (145.8)
    $ 15.2
Included at January 1, 2007 are unrecognized tax benefits of approximately $19.2 million that, if recognized, would impact our effective
tax rate. Included in the balance at December 31, 2008 and 2007 are $134.6 million and $145.8 million, respectively, of unrecognized tax
benefits for tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such
deductibility. Other than potential interest and penalties, the disallowance of the shorter deductibility period would not affect our results of
operations but would accelerate the payment of cash to the taxing authority to an earlier period.
We recognize interest expense and penalties related to unrecognized tax benefits in tax expense net of federal income tax. The
total amounts of accrued interest and penalties in the consolidated balance sheets as of December 31, 2008 and 2007 are $13.4 million
and $7.5 million, respectively. We recognized interest expense and penalties related to unrecognized tax expense in our consolidated
statements of income of $5.9 million and $2.0 million during 2008 and 2007, respectively. We had no changes to uncertain tax positions
as a result of settlements or lapses in statutes of limitations during 2008 or 2007. We do not expect a significant change in our existing
liability for unrecognized tax benefits during the next 12 months.
We file federal and state income tax returns in the United States and in foreign jurisdictions. We are under continuous examination by
the Internal Revenue Service (IRS) with regard to our U.S. federal income tax returns. The current IRS examination covers our tax years 2005
and 2006. During 2008, the IRS completed its examination of tax years 2002 through 2004 and issued its revenue agent’s report (RAR). We
filed a protest to the RAR with respect to all significant adverse proposed adjustments and expect an appeal to be heard by the IRS during
2009 on all outstanding issues for years 1999 through 2004.
Tax years subsequent to 2006 remain subject to examination by tax authorities in the U.S. and in major foreign jurisdictions. We
believe sufficient provision has been made for all proposed and potential adjustments for years that are not closed by the statute of
limitations in all major tax jurisdictions and that any such adjustments would not have a material adverse effect on our financial
position, liquidity, or results of operations. However, it is possible that the resolution of income tax matters could produce quarterly
volatility in our results of operations in future periods.