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Note 6 - Income Taxes
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6 Months Ended |
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Dec. 31, 2011
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| Note 6 - Income Taxes Disclosure | |
| Note 6 - Income Taxes |
6.
Income Taxes
During
the three months ended December 31, 2011 and 2010, our effective
tax rates were 36.2% and 44.7%, respectively. During
the six months ended December 31, 2011 and 2010, our effective
tax rates were 38.9% and 43.4%, respectively. Income
tax expense varies from the amount computed by applying the
statutory federal tax rate to income before income taxes
primarily due to state income taxes, net of federal income tax
effect, adjusted for permanent differences, the most significant
of which is the effect of the per diem pay structure for
drivers. Drivers may elect to receive non-taxable per
diem pay in lieu of a portion of their taxable
wages. This per diem program increases our
drivers’ net pay per mile, after taxes, while decreasing
gross pay, before taxes. As a result, salaries, wages
and employee benefits are slightly lower, and our effective
income tax rate is higher than the statutory
rate. Generally, as pre-tax income increases, the
impact of the driver per diem program on our effective tax rate
decreases because aggregate per diem pay becomes smaller in
relation to pre-tax income. Due to the partially
nondeductible effect of per diem pay, our tax rate will fluctuate
in future periods based on fluctuations in earnings and in the
number of drivers who elect to receive this pay structure.
We
account for any uncertainty in income taxes by determining
whether it is more likely than not that a tax position taken or
expected to be taken in a tax return will be sustained upon
examination by the appropriate taxing authority based on the
technical merits of the position. In that regard, we have
analyzed filing positions in our federal and applicable state tax
returns as well as in all open tax years. The only periods
subject to examination for our federal returns are the 2007
through 2010 tax years. We believe that our income tax
filing positions and deductions will be sustained on audit and do
not anticipate any adjustments that will result in a material
change to our consolidated financial position, results of
operations and cash flows. As of December 31,
2011, the Company recorded a $0.4 million liability for
unrecognized tax benefits, a portion of which represents
penalties and interest.
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