PR - APAC Announces Favorable Resolution of IRS Appeal

APAC Customer Services, Inc. (NASDAQ: APAC), a leading provider of customer care services and solutions, yesterday announced the successful resolution of its pending appeal to the Internal Revenue Service. On August 30, 2007, the company received written notification from the IRS that it had concluded its audit of the Company’s tax returns for the fiscal years 1997, 2000, 2002, 2003 and 2004 and that its 2002 worthless stock deduction relating to its remaining investment in ITI Holdings, Inc. would be allowed in full.

In 2002, APAC received an $11.6 million cash tax refund associated with the write-off for tax purposes of its remaining investment in ITI Holdings, Inc. Following an audit, the IRS disallowed the deduction, which the company then appealed. During the first quarter of 2007, the company was advised by the IRS appeals officer that the IRS was recommending to the Joint Committee on Taxation that the full deduction taken by the company be allowed. As a result, the company reversed the previously accrued liability and ceased accruing interest on this matter, resulting in a $17.6 million income tax benefit as of April 1, 2007. The Joint Committee on Taxation subsequently approved the IRS’s recommendation and, on August 30, 2007, the company received a closing letter from the IRS notifying it of the favorable conclusion of the audit.