Vistaprint 2015 Annual Report Download - page 94

86
A reconciliation of the gross beginning and ending amount of unrecognized tax benefits is as follows:
Balance at June 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,682
Additions based on tax positions related to the current tax year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
Additions based on tax positions related to prior tax years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,244
Reductions due to audit settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (334)
Balance at June 30, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,744
Additions based on tax positions related to the current tax year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208
Additions based on tax positions related to prior tax years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Reductions based on tax positions related to prior tax years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,240)
Reductions due to audit settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (75)
Balance at June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,710
For the years ended June 30, 2015 and 2014, the amount of unrecognized tax benefits (exclusive of
interest) that, if recognized, would impact the effective tax rate is $2,383 and $3,061, respectively. We recognize
interest and, if applicable, penalties related to unrecognized tax benefits in income tax expense. The accrued
interest and penalties recognized as of June 30, 2015 and 2014 were $110 and $298, respectively.
It is reasonably possible that a further change in unrecognized tax benefits may occur within the next twelve
months related to the settlement of one or more audits or the lapse of applicable statutes of limitations. However, an
estimated range of the impact on the unrecognized tax benefits cannot be quantified at this time. We believe we
have appropriately provided for all tax uncertainties.
We conduct business in a number of tax jurisdictions and, as such, are required to file income tax returns in
multiple jurisdictions globally. The years 2012 through 2014 remain open for examination by the United States
Internal Revenue Service (“IRS”) and the years 2006 through 2014 remain open for examination in the various
states and non-US tax jurisdictions in which we file tax returns.
We are currently under income tax audit in various jurisdictions globally. One of our subsidiaries, Vistaprint
Limited, had recently been under income tax audit and subsequent administrative appeal by the IRS for the 2007 to
2009 tax years. In November 2014, we received Form 870-AD from the IRS Office of Appeals that presented a
finding of no additional tax owed by Vistaprint Limited. Accordingly, this audit is now closed with no tax adjustments.
Additionally, Cimpress USA Incorporated (formerly known as Vistaprint USA, Incorporated) was under audit by the
IRS for the 2012 and 2013 tax years. This audit was concluded in March 2015 with no material tax adjustments to
the financial statements.
Cimpress USA Incorporated is also currently under income tax audit by the Massachusetts Department of
Revenue ("DOR"). Cimpress USA Incorporated received Notices of Assessment from the DOR for the tax years
2006-2008 and 2010-2011. The Notices contain adjustments to taxable income for these years. The issue in dispute
is whether the DOR has the right to impute royalty income to Cimpress USA Incorporated in the years at issue
associated with the use of certain intangible property by Vistaprint Limited, even though that intangible property was
transferred for a lump-sum payment to Vistaprint Limited in an earlier year that is closed to adjustment by virtue of
the governing statute of limitations. In July 2014, we filed an Application for Abatement with the DOR Office of
Appeals to appeal the DOR’s findings; however, our appeal was denied. In August 2014, we filed a petition to have
our case heard by the Massachusetts Appellate Tax Board. The hearing for our case is set to begin in December
2015. We continue to believe that the DOR’s position has no merit, and we intend to contest these assessments to
the fullest extent possible.
We continuously evaluate our income tax reserves in light of recent developments in our income tax audits
and believe that the positions reported on our tax returns will be sustained on their technical merits. However, final
resolution is uncertain and there is a possibility that the final resolution could have a material impact on our financial
condition, results of operations or cash flows.
15. Noncontrolling Interests
In certain of our strategic investments we have purchased a controlling equity stake, but there remains a
minority portion of the equity that is owned by a third party. The balance sheet and operating activity of these