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ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES

12 Months Ended

Dec. 28, 2024

ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES

ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES

K.ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES

ASC 740, Income Taxes (“ASC 740”) clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. ASC 740 also provides guidance on derecognition, measurement, classification, interest and penalties, and disclosure requirements.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):


	2024		2023		2022
Gross unrecognized tax benefits beginning of year	$	4,771	$	3,217	$	3,603
Increase (decrease) in tax positions for prior years		469		943		(216)
Increase in tax positions for current year		947		1,286		764
Lapse in statute of limitations		(680)		(675)		(934)
Gross unrecognized tax benefits end of year	$	5,507	$	4,771	$	3,217

Our effective tax rate would have been affected by the unrecognized tax benefits had this amount been recognized as a reduction to income tax expense.

We recognized interest and penalties for unrecognized tax benefits in our provision for income taxes. The liability for unrecognized tax benefits included accrued interest and penalties of $0.6 million for the year December 28, 2024, $0.4 million for the year December 30, 2023, and $0.3 million for the year December 31, 2022.

We file income tax returns in the United States and in various state, local and foreign jurisdictions. The federal and a majority of state and foreign jurisdictions are no longer subject to income tax examinations for years before 2020. A number of routine state and local examinations are currently ongoing. Due to the potential for resolution of state examinations, the expiration of various statutes of limitation, and new positions that may be taken, it is reasonably possible that the amount of unrecognized tax benefits that would reverse through the income statement in the next twelve months is $1.3 million.