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SEC Filings

10-K
INTERPUBLIC GROUP OF COMPANIES, INC. filed this Form 10-K on 02/22/2016
Entire Document
 
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

to the effect of foreign currency translation and a reduction to the valuation allowance related to the write-down of a corresponding deferred tax asset.
In 2013, amounts charged to costs and expenses primarily related to the increase in valuation allowances in the U.S. and Continental Europe regions for existing and additional deferred tax assets. The amounts charged to gross tax assets and other accounts related primarily to the effect of foreign currency translation.
As of December 31, 2015, there were $1,127.7 of loss carryforwards. These loss carryforwards were all non-U.S. tax loss carryforwards, of which $984.2 have unlimited carryforward periods and $143.5 have expiration periods from 2016 to 2035. As of December 31, 2015, the Company also had $56.7 in deferred tax assets for state net operating loss carryforwards and tax credit carryforwards, which will expire between 2016 and 2035.
As of December 31, 2015 and 2014, we had $2,592.4 and $2,214.2, respectively, of undistributed earnings attributable to foreign subsidiaries. It is our intention to permanently reinvest undistributed earnings of our foreign subsidiaries. We have not provided deferred U.S. income taxes or foreign withholding taxes on temporary differences resulting from earnings for certain foreign subsidiaries which are permanently reinvested outside the U.S. It is not practicable to determine the deferred income tax liability on these undistributed earnings because such liability, if any, is dependent on circumstances that exist if and when a remittance occurs, including the source location and amount of the distribution, the underlying tax rate already paid on the earnings, foreign withholding taxes and the opportunity to use foreign tax credits.
The table below summarizes the activity related to our unrecognized tax benefits.
 
December 31,
 
2015
 
2014
 
2013
Balance at beginning of period
$
238.0

 
$
219.2

 
$
194.6

Increases as a result of tax positions taken during a prior year
5.2

 
29.0

 
8.3

Decreases as a result of tax positions taken during a prior year
(19.7
)
 
(16.3
)
 
(1.9
)
Settlements with taxing authorities
(4.1
)
 
(1.1
)
 
(34.9
)
Lapse of statutes of limitation
(3.8
)
 
(4.1
)
 
(10.6
)
Increases as a result of tax positions taken during the current year
11.3

 
11.3

 
63.7

Balance at end of period
$
226.9

 
$
238.0

 
$
219.2

Included in the total amount of unrecognized tax benefits of $226.9 as of December 31, 2015, is $206.5 of tax benefits that, if recognized, would impact the effective income tax rate. The total amount of accrued interest and penalties as of December 31, 2015 and 2014 is $20.1 and $15.3, respectively, of which a detriment of $4.8 and $5.4 is included in our 2015 and 2014 Consolidated Statements of Operations, respectively. In accordance with our accounting policy, interest and penalties accrued on unrecognized tax benefits are classified as income taxes in our Consolidated Statements of Operations.
We have various tax years under examination by tax authorities in the U.S., in various countries, and in various states, such as New York, in which we have significant business operations. It is not yet known whether these examinations will, in the aggregate, result in our paying additional taxes. We believe our tax reserves are adequate in relation to the potential for additional assessments in each of the jurisdictions in which we are subject to taxation. We regularly assess the likelihood of additional tax assessments in those jurisdictions and, if necessary, adjust our reserves as additional information or events require.
With respect to all tax years open to examination by U.S. federal, various state and local, and non-U.S. tax authorities, we currently anticipate that total unrecognized tax benefits will decrease by an amount between $25.0 and $35.0 in the next twelve months, a portion of which will affect our effective income tax rate, primarily as a result of the settlement of tax examinations and the lapsing of statutes of limitations. This net decrease is related to various items of income and expense, primarily transfer pricing adjustments.
We are effectively settled with respect to U.S. income tax audits for 2010 and years prior to 2009. With limited exceptions, we are no longer subject to state and local income tax audits for years prior to 2004, or non-U.S. income tax audits for years prior to 2006.


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