Quarterly report pursuant to Section 13 or 15(d)

14. Accrued liabilities

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14. Accrued liabilities
6 Months Ended
Jun. 30, 2018
Payables and Accruals [Abstract]  
Accrued liabilities

Note 14:          Accrued liabilities

 

Accrued liabilities as of June 30, 2018, and December 30, 2017, consist of the following:

 

    June 30, 2018     December 30, 2017  
Sales tax estimates, including interest   $ 4,925     $ 4,563  
Compensation and benefits     612       1,061  
Deferred revenue           300  
Accrued incentive and rebate checks     53       285  
Accrued rent           77  
Accrued interest           115  
Accrued payables           129  
Other     10       31  
    $ 5,600     $ 6,561  

 

Sales and Use Tax Assessment

 

We operate in twenty-three states in the U.S. and in various provinces in Canada. From time to time, we are subject to sales and use tax audits that could result in additional taxes, penalties and interest owed to various taxing authorities.

 

As previously disclosed, the California Board of Equalization (“BOE”) conducted a sales and use tax examination covering the Company’s California operations for 2011, 2012 and 2013. The Company believed it was exempt from collecting sales taxes under service agreements with utility customers that included appliance replacement programs. During the fourth quarter of 2014, the Company received communication from the BOE indicating they were not in agreement with the Company’s interpretation of the law. As a result, the Company applied for and, as of February 9, 2015, received approval to participate in the California Board of Equalization’s Managed Audit Program. The period covered under this program included 2011, 2012, 2013 and extended through the nine-month period ended September 30, 2014.

 

On April 13, 2017 the Company received the formal BOE assessment for sales tax for tax years 2011, 2012 and 2013 in the amount of $4.1 million plus applicable interest of $0.5 million related to the appliance replacement programs that we administered on behalf of our customers on which we did not assess, collect or remit sales tax. The Company intends to appeal this assessment and continue to engage the services of our existing retained sales tax experts throughout the appeal process. The BOE tax assessment is subject to protest and appeal, and would not need to be funded until the matter has been fully resolved through the appeal process. The Company anticipates that resolution of the BOE assessment could take up to two years.