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Income Taxes | 12 Months Ended
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Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | 11. Income Taxes Income before the provision for income taxes is attributable to the following jurisdictions (in thousands) for years ended December 31:
|  | 2015 |  |  | 2014 |  |  | 2013 |
United States |  | $ | 304,743 |  |  | $ | 233,933 |  |  | $ | 205,033 |
Foreign |  |  | 231,261 |  |  |  | 279,010 |  |  |  | 198,536 |
Total |  | $ | 536,004 |  |  | $ | 512,943 |  |  | $ | 403,569 |
The provision for income taxes for the years ended December 31 consists of the following (in thousands):
|  | 2015 |  |  | 2014 |  |  | 2013 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 82,926 |  |  | $ | 39,168 |  |  | $ | 72,909 |
State |  |  | 8,051 |  |  |  | 8,208 |  |  |  | 7,369 |
Foreign |  |  | 51,970 |  |  |  | 55,144 |  |  |  | 46,026 |
Total current |  |  | 142,947 |  |  |  | 102,520 |  |  |  | 126,304 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 36,723 |  |  |  | 41,814 |  |  |  | (1,287 | )
State |  |  | 1,525 |  |  |  | (596 | ) |  |  | 130 |
Foreign |  |  | (7,622 | ) |  |  | 498 |  |  |  | (6,079 | )
Total deferred |  |  | 30,626 |  |  |  | 41,716 |  |  |  | (7,236 | )
Total provision |  | $ | 173,573 |  |  | $ | 144,236 |  |  | $ | 119,068 |
The provision for income taxes differs from amounts computed by applying the U.S. federal tax rate of 35% to income before income taxes for the years ended December 31 due to the following (in thousands):
|  | 2015 |  |  | 2014 |  |  | 2013 |
Computed “expected” tax expense |  | $ | 187,601 |  |  |  | 35.0 | % |  | $ | 179,530 |  |  |  | 35.0 | % |  | $ | 141,249 |  |  |  | 35.0 | %
Changes resulting from: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Change in valuation allowance |  |  | 20,243 |  |  |  | 3.8 |  |  |  | (53 | ) |  |  | — |  |  |  | (222 | ) |  |  | — |
Foreign income tax differential |  |  | (23,718 | ) |  |  | (4.4 | ) |  |  | (24,972 | ) |  |  | (4.9 | ) |  |  | (16,021 | ) |  |  | (4.0 | )
State taxes net of federal benefits |  |  | 6,711 |  |  |  | 1.2 |  |  |  | 4,492 |  |  |  | 0.9 |  |  |  | 4,744 |  |  |  | 1.2 |
Foreign-sourced nontaxable income |  |  | (10,573 | ) |  |  | (2.0 | ) |  |  | (8,128 | ) |  |  | (1.6 | ) |  |  | (11,967 | ) |  |  | (3.0 | )
IRC Section 199 deduction |  |  | (10,221 | ) |  |  | (1.9 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other |  |  | 3,530 |  |  |  | 0.7 |  |  |  | (6,633 | ) |  |  | (1.3 | ) |  |  | 1,285 |  |  |  | 0.3 |
Provision for income taxes |  | $ | 173,573 |  |  |  | 32.4 | % |  | $ | 144,236 |  |  |  | 28.1 | % |  | $ | 119,068 |  |  |  | 29.5 | %
The Company recorded tax adjustments related to U.S. planning initiatives that were implemented during the third quarter of 2015. The impact of those adjustments, which involved amending tax returns for several prior years, was a decrease of tax expense of approximately $7.9 million. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31 are as follows (in thousands):
|  | 2015 |  |  | 2014 |
Deferred tax assets: |  |  |  |  |  |  |  |
Accounts receivable, principally due to the allowance for doubtful accounts |  | $ | 6,277 |  |  | $ | 7,434 |
Accrued expenses not currently deductible for tax |  |  | 5,797 |  |  |  | 5,610 |
Stock based compensation |  |  | 35,066 |  |  |  | 16,405 |
Income tax credits |  |  | 3,830 |  |  |  | 3,830 |
Net operating loss carry forwards |  |  | 39,970 |  |  |  | 127,487 |
Equity investment |  |  | 38,760 |  |  |  | 3,262 |
Accrued escheat |  |  | 13,497 |  |  |  | 12,058 |
Fixed assets, intangibles and other |  |  | 14,191 |  |  |  | 12,868 |
Deferred tax assets before valuation allowance |  |  | 157,388 |  |  |  | 188,954 |
Valuation allowance |  |  | (62,605 | ) |  |  | (27,082 | )
Deferred tax assets, net |  |  | 94,783 |  |  |  | 161,872 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Intangibles—including goodwill(1) |  |  | (732,017 | ) |  |  | (818,680 | )
Basis difference in investment in foreign subsidiaries |  |  | (47,737 | ) |  |  | (23,128 | )
Property and equipment, principally due to differences between book and tax depreciation, and other |  |  | (19,544 | ) |  |  | (18,552 | )
Deferred tax liabilities(1) |  |  | (799,298 | ) |  |  | (860,360 | )
Net deferred tax liabilities(1) |  | $ | (704,515 | ) |  | $ | (698,488 | )
(1) | Deferred tax liabilities related to intangibles—including goodwill at December 31, 2014 have been adjusted due to revision of financial statements as discussed in the summary of significant accounting policies footnote.
The Company’s deferred tax balances are classified in its balance sheets as of December 31 as follows (in thousands):
|  | 2015 |  |  | 2014 |
Current deferred tax assets and liabilities: |  |  |  |  |  |  |  |
Current deferred tax assets |  | $ | 9,585 |  |  | $ | 101,451 |
Current deferred tax liabilities |  |  | (672 | ) |  |  | — |
Net current deferred taxes |  |  | 8,913 |  |  |  | 101,451 |
Long term deferred tax assets and liabilities: |  |  |  |  |  |  |  |
Long term deferred tax assets |  |  | 1,639 |  |  |  | 60,421 |
Long term deferred tax liabilities(1) |  |  | (715,067 | ) |  |  | (860,360 | )
Net long term deferred taxes(1) |  |  | (713,428 | ) |  |  | (799,939 | )
Net deferred tax liabilities(1) |  | $ | (704,515 | ) |  | $ | (698,488 | )
(1) | Long term deferred tax liabilities at December 31, 2014 have been adjusted due to revision of financial statements as discussed in the summary of significant accounting policies footnote.
We reduce federal and state income taxes payable by the tax benefits associated with the exercise of certain stock options. To the extent realized tax deductions for options exceed the amount previously recognized as deferred tax benefits related to share-based compensation for these option awards, we record an excess tax benefit in stockholders’ equity. We recorded excess tax benefits of $26.4 million, $56.8 million and $32.5 million in the years ended 2015, 2014 and 2013, respectively. At December 31, 2015, U.S. taxes were not provided on earnings of the Company’s foreign subsidiaries. The Company’s intent is for such earnings to be reinvested by the subsidiaries or to be repatriated only when it would be tax effective through the utilization of foreign tax credits. If in the future these earnings are repatriated to the U.S, or if the Company determines that the earnings will be remitted in the foreseeable future, an additional tax provision and related liability may be required. If such earnings were distributed, U.S. income taxes would be partially reduced by available credits for taxes paid to the jurisdictions in which the income was earned. Cumulative undistributed earnings of non-U.S. subsidiaries for which U.S. taxes have not been provided are included in consolidated retained earnings in the amount of approximately $1,097.1 million at December 31, 2015. Because of the availability of United States foreign tax credits, it is not practicable to determine the domestic federal income tax liability that would be payable if such earnings were not reinvested indefinitely. The valuation allowance for deferred tax assets at December 31, 2015 and 2014 was $62.6 million and $27.1 million, respectively. The valuation allowance relates to foreign and state net operating loss carry forwards, basis differences related to an equity method investment and foreign tax credit carry forwards. The net change in the total valuation allowance for the years ended December 31, 2015 and 2014 was an increase of $35.5 million and $25.6 million, respectively. The increase in 2015 was primarily due to changes in our deferred tax asset related to basis differences in an equity method investment. The increase in 2014 was primarily due to the state net operating loss carry forwards and foreign tax credit carry forwards acquired with Comdata in 2014. As of December 31, 2015, the Company had a net operating loss carryforward for state income tax purposes of approximately $776.6 million that is available to offset future state taxable income through 2027. Additionally, the Company had $11.8 million net operating loss carryforwards for foreign income tax purposes that are available to offset future foreign taxable income. The foreign net operating loss carryforwards will not expire in future years. The Company recognizes interest and penalties on unrecognized tax benefits (including interest and penalties calculated on uncertain tax positions on which the Company believes it will ultimately prevail) within the provision for income taxes on continuing operations in the consolidated financial statements. During 2015 and 2014, the Company had recorded accrued interest and penalties related to the unrecognized tax benefits of $5.4 million and $7.4 million, respectively. A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits including interest for the years ended December 31, 2015, 2014 and 2013 is as follows (in thousands):
Unrecognized tax benefits at December 31, 2012 |  | $ | 7,077 |
Additions based on tax provisions related to the current year |  |  | 1,337 |
Additions based on tax provisions related to the prior year |  |  | 15,249 |
Deductions based on settlement/expiration of prior year tax positions |  |  | (2,062 | )
Unrecognized tax benefits at December 31, 2013 |  |  | 21,601 |
Additions based on tax provisions related to the current year |  |  | 1,676 |
Deductions based on settlement/expiration of prior year tax positions |  |  | (4,636 | )
Unrecognized tax benefits at December 31, 2014 |  | $ | 18,641 |
Additions based on tax provisions related to the current year |  |  | 9,079 |
Additions based on tax provisions related to the prior year |  |  | 477 |
Deductions based on settlement/expiration of prior year tax positions |  |  | (6,363 | )
Unrecognized tax benefits at December 31, 2015 |  | $ | 21,834 |
As of December 31, 2015, the Company had total unrecognized tax benefits of $21.8 million of which $15.0 million, if recognized, would affect its effective tax rate. It is not anticipated that there are any unrecognized tax benefits that will significantly increase or decrease within the next twelve months. The Company files numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The statute of limitations for the Company’s U.S. federal income tax returns has expired for years prior to 2012. The statute of limitations for the Company’s U.K. income tax returns has expired for years prior to 2013. The statute of limitations has expired for years prior to 2012 for the Company’s Czech Republic income tax returns, 2012 for the Company’s Russian income tax returns, 2010 for the Company’s Mexican income tax returns, 2010 for the Company’s Brazilian income tax returns, 2010 for the Company’s Luxembourg income tax returns, 2011 for the Company’s New Zealand income tax returns, and 2013 for the Company’s Australian income tax returns.

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