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Income Taxes (Notes)
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9 Months Ended |
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Mar. 31, 2015
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| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes Income tax expense was $1,576 and $7,658 for the three and nine months ended March 31, 2015, respectively, as compared to $999 and $7,819 for the same prior year periods. The changes are primarily attributable to an increase in consolidated pre-tax income for both the three and nine months ended March 31, 2015 as compared to the same prior year periods, offset by tax benefits resulting from changes to our corporate entity operating structure that became effective on October 1, 2013. We made the changes to our corporate entity operating structure, which included transferring our intellectual property among certain of our subsidiaries, primarily to align our corporate entities with our evolving operations and business model. Additionally, our tax expense for the nine months ended March 31, 2015 was further reduced due to a reduction in our net liability for unrecognized tax benefits that we recognized during the three months ended December 31, 2014. Our consolidated annual effective tax rate is primarily impacted by changes in the amount and geographical mix of consolidated pre-tax income. For fiscal 2015, we are forecasting a lower consolidated annual effective tax rate as compared to fiscal 2014, primarily as a result of an increase to and more favorable geographical mix of consolidated pre-tax earnings and greater tax benefits recognized as a result of the changes to our corporate entity operating structure described above. We expect our cash paid for income taxes for fiscal 2015 to be higher than our income tax expense as a result of non-cash tax benefits relating to tax losses for which the cash benefit is expected to occur in a future period. As of March 31, 2015, we had a net liability for unrecognized tax benefits included in the balance sheet of approximately $4,984, including accrued interest of $90. We recognize interest and, if applicable, penalties related to unrecognized tax benefits in the provision for income taxes. Of the total amount of unrecognized tax benefits, approximately $2,282 will reduce the effective tax rate if recognized. It is reasonably possible that a further change in the 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. One of our U.S. subsidiaries, Cimpress USA Incorporated (formerly known as Vistaprint USA, Incorporated) has received Notices of Assessment from the Massachusetts Department of Revenue ("DOR") related to the tax years 2006 to 2008 and 2010 to 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 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. The matter was recently under review by the DOR Office of Appeals. In July 2014, we received a Letter of Determination from the Office of Appeals rejecting our Application for Abatement and upholding the DOR’s original assessments. In August 2014, we filed a petition to have our case heard by the Massachusetts Appellate Tax Board. At this time, the hearing for our case has not yet been set. We continue to believe that the DOR’s position has no merit, and we intend to contest these assessments to the fullest extent possible. Additionally, Cimpress USA has been under audit by the IRS for the 2012 and 2013 tax years. This audit was concluded in March 2015 with no material tax adjustments. We believe that our income tax reserves associated with these matters are adequate and that the positions reported on our tax returns will be sustained on their technical merits. However, the 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. |