Pre Paid Legal Services, Inc. (Ada, Oklahoma) an at home legal services company that also offers identity theft restoration, reported this week that they had an 11 percent drop in their net income during the fourth quarter due to a charge stemming from unpaid income taxes.
The company revealed that a clerical error has shown that for several years, the company failed to pay some state income taxes. During the fourth quarter, Pre-Paid said, it found and corrected a clerical error in the net operating loss that was reported in a 2003 state income tax return. This error resulted in unpaid income taxes in a certain state for several years. Pre-Paid took a $2.9 million charge in the fourth quarter to pay the unpaid income taxes. This charge was made up of $2 million for 2006 and prior years and $900,000 for the first three quarters of last year.In total, the mistake cost the company $2.9 million dollars.
Despite the loss, the price of Pre-Paid stock continues to have some support but is till pretty volatile. Over the last nine years, Pre-Paid has spent over $360 Million dollars retiring more than half of its outstanding shares. Although shares dropped a little over 9 percent on word of the error, the stock closed at $46.67 on Friday. Membership revenue is also on the rise. In 2007 membership revenue rose 4 percent to $427.4 million, marking the 15th consecutive year of increased membership revenue.
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