Vectren 2013 Annual Report Download - page 91

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The components of income tax expense and utilization of investment tax credits follow:
Year Ended December 31,
(In millions) 2013 2012 2011
Current:
Federal $ 12.4 $ (8.2) $ 4.4
State 11.4 6.4 10.3
Total current taxes 23.8 (1.8) 14.7
Deferred:
Federal 43.4 80.3 66.0
State 0.5 4.6 6.4
Total deferred taxes 43.9 84.9 72.4
Amortization of investment tax credits (0.6) (0.6) (0.7)
Total income tax expense $ 67.1 $ 82.5 $ 86.4
Uncertain Tax Positions
Following is a roll forward of unrecognized tax benefits for the three years ended December 31, 2013:
(In millions) 2013 2012 2011
Unrecognized tax benefits at January 1 $ 4.8 $ 12.4 $ 13.3
Gross increases - tax positions in prior periods — 0.2 3.3
Gross decreases - tax positions in prior periods (0.2) (9.4) (4.5)
Gross increases - current period tax positions 1.2 1.9 0.6
Settlements — (0.3) (0.3)
Lapse of statute of limitations 0.1 — —
Unrecognized tax benefits at December 31 $ 5.9 $ 4.8 $ 12.4
Of the change in unrecognized tax benefits during 2013, 2012, and 2011, almost none impacted the effective rate. The amount
of unrecognized tax benefits, which if recognized, that would impact the effective tax rate was $0.7 million at each of
December 31, 2013, 2012 and 2011. As of December 31, 2013, the unrecognized tax benefit relates to tax positions for which
the ultimate deductibility is more likely than not but for which there is uncertainty about the timing of such deductibility. Because
of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period
would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority. Thus, it is not
expected that any changes to these tax positions would have a significant impact on earnings.
The Company recognized income related to a reversal of interest expense previously accrued and net of penalties totaling
approximately $0.1 million in 2013 and $0.7 million in 2012. In 2011, the Company recognized expense related to interest and
penalties totaling approximately $0.4 million . The Company had approximately $0.5 million and $0.6 million for the payment of
interest and penalties accrued as of December 31, 2013 and 2012, respectively.
The net liability on the Consolidated Balance Sheet for unrecognized tax benefits inclusive of interest, penalties and net of
secondary impacts which are a component of the Deferred income taxes and are benefits, totaled $3.8 million and $3.2 million,
respectively, at December 31, 2013 and 2012.
The Company and/or certain of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states. The
Internal Revenue Service (IRS) has concluded examinations of the Company's U.S. federal income tax returns for tax years
through December 31, 2008. The primary focus of the 2008 IRS examination was certain repairs and maintenance deductions,
an area of particular focus by the IRS throughout the utility industry. In 2012, the IRS suspended all examinations related to this
issue generally, resulting in the elimination of the audit risk in this area for the Company through 2012. The Company does not
expect any changes to this liability for unrecognized income tax benefits within the next 12 months that would significantly
impact the Company's results of operations or financial condition. The State of Indiana, the Company's primary state tax