NOTE 11: INCOME TAXES

The provision for income taxes is comprised of the following (in millions):



	2011			2010		2009
Current taxes:
Federal	$	16.3		$	2.0	$	1.2
State	2.9			1.6		1.2
Foreign	0.4			0.4		0.1
Total current taxes	19.6			4.0		2.5
Deferred taxes:
Federal	(1.3		)	3.9		2.4
State	0.1			1.4		0.4
Foreign	0.1			—		—
Total deferred taxes	(1.1		)	5.3		2.8
Provision for income taxes	$	18.5		$	9.3	$	5.3

The items accounting for the difference between income taxes computed at the statutory federal income tax rate and income taxes reported in the Consolidated Statements of Operations are as follows (in millions):



	2011			%		2010			%		2009			%
Income tax expense based on statutory rate	$	17.2		35.0 %		$	10.2		35.0 %		$	4.9		35.0 %
Increase (decrease) resulting from:
State income taxes, net of federal benefit	1.9			3.9 %		1.9			7.0 %		1.3			9.2 %
Tax credits, net	(3.5		)	(7.2	)%	(4.6		)	(16.0	)%	(4.5		)	(31.7	)%
Nondeductible/nontaxable Items	2.9			5.8 %		2.3			8.0 %		3.1			21.6 %
Other, net	—			0.1	%	(0.5		)	(2.0	)%	0.5			3.7 %
Total taxes on income	$	18.5		37.6	%	$	9.3		32.0 %		$	5.3		37.8 %

Our effective income tax rate was 37.6% in 2011, as compared to 32.0% in 2010 and 37.8% in 2009. The principal difference between the statutory federal income tax rate of 35.0% and our 2011 effective income tax rate results from state and foreign income taxes, federal tax credits, and certain non-deductible expenses. Our 2010 effective tax rate of 32.0% was lower than our 2009 rate of 37.8% primarily due to the tax benefit related to the favorable development of a federal income tax matter.

The components of deferred tax assets and liabilities were as follows (in millions):



	December 30, 2011			December 31, 2010
Deferred tax assets:
Allowance for doubtful accounts	$	2.4		$	2.5
Workers’ compensation claims reserve	9.7			7.3
Accounts payable and other accrued expenses	3.5			3.8
Net operating loss carry-forwards	0.5			0.7
Accrued wages and benefits	4.3			3.0
Deferred compensation	1.1			0.4
Other	0.8			—
Total	22.3			17.7
Valuation allowance for net operating loss carry-forwards	(0.5		)	(0.7		)
Total deferred tax asset, net of valuation allowance	$	21.8		$	17.0

Deferred tax liabilities:
Prepaid expenses, deposits and other current assets	$	(1.1	)	$	(0.8	)
Depreciation and amortization	(8.8		)	(6.4		)
Other	(0.8		)	(0.6		)
Total deferred tax liabilities	$	(10.7	)	$	(7.8	)
Net deferred tax asset, end of year	$	11.1		$	9.2
Net deferred tax asset, current	6.3			6.8
Net deferred tax asset, non-current	$	4.8		$	2.4

At December 30, 2011, Spartan Staffing Puerto Rico, LLC had net operating loss carry-forwards of approximately $2.6 million expiring in 2015 through 2021. A valuation allowance has been established against our carry-forward tax benefits based on our history of past losses.

We recognize interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying Consolidated Statements of Operations. Accrued interest and penalties are included within the related tax liability line in the Consolidated Balance Sheets. As of December 30, 2011 our liability for unrecognized tax benefits was $1.7 million, if recognized, $1.1 million would impact our effective tax rate. We do not believe the amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of the year ended December 30, 2011. This liability is recorded in Other non-current liabilities in our Consolidated Balance Sheets. In general, the tax years 2008 through 2010 remain open to examination by the major taxing jurisdictions where we conduct business.

The following table summarizes the activity related to our unrecognized tax benefits (in millions):



	2011			2010			2009
Balance, beginning of fiscal year	$	1.6		$	1.8		$	1.9
Decreases related to settlements	—			(0.5		)	(0.4		)
Increases for tax positions related to the current year	0.3			0.2			0.4
Increases for tax positions related to prior years	—			0.1			—
Decreases for tax positions related to prior years	—			—			(0.1		)
Reductions due to lapsed statute of limitations	(0.2		)	—			—
Balance, end of fiscal year	$	1.7		$	1.6		$	1.8

Related to the unrecognized tax benefits noted above, we accrued de minimis amounts for penalties and interest during 2011 and in total, as of December 30, 2011, have recognized a liability for penalties of $0.2 million and interest of $0.6 million.