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Income Taxes | 3 Months Ended
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Mar. 31, 2019
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] |
| 3. | Income Taxes
The Company recorded a provision for income taxes of ($ 28,000 ) and $ 0.6 million for the three months ended March 31, 2019 and 2018, respectively. Taxes primarily consist of a provision for foreign taxes recorded in accordance with the local tax regulations by our foreign subsidiaries. Effective income tax rates are disproportionate due to the losses incurred by our U.S. entity and our Canadian subsidiaries and a valuation allowance recorded on deferred taxes on these entities and tax effects of foreign operation, including foreign exchange gains and losses. The reconciliation of the U.S. statutory rate with the Company’s effective tax rate for the three-month period ended March 31, 2019 is summarized as below:
|  | March 31, 2019 |
Federal income tax benefit at statutory rate |  |  | 21.0 | %
Effect of: |  |  |  |
Tax effects of FX gains and losses |  |  | 104.2 |
Increase in unrecognized tax benefits (FIN48) |  |  | (36.8 | )
Tax effects of foreign operations |  |  | (34.0 | )
Return to provision true up |  |  | (28.0 | )
Foreign rate differential |  |  | (8.1 | )
Change in valuation allowance |  |  | (7.9 | )
Other |  |  | (4.6 | )
Effective tax rate |  |  | 5.8 | %
Pursuant to the Tax Cuts and Jobs Act of 2017, during the fourth quarter of 2017, the Company recorded a one-time deemed repatriation of foreign earnings and profits (“E&P”) amounting to $25.8 million. No toll charge liability was recorded due to the available net operating loss carryforwards.
As of March 31, 2019, the Company performed a calculation of the Global Intangible Low-Taxed Income (“GILTI”) provisions and concluded that it continues to have no impact on account of the net losses of our foreign subsidiaries. The following presents a roll-forward of the Company’s unrecognized tax benefits and associated interest for the three months ended March 31, 2019 (in thousands):
|  | Unrecognized tax benefits |
Balance - January 1, 2019 |  | $ | 2,424 |
Increase in tax position |  |  | 91 |
Interest accrual |  |  | 46 |
Foreign currency revaluation |  |  | 49 |
Balance - March 31, 2019 |  | $ | 2,610 |
The Company had unrecognized tax benefits of approximately $2.6 million and $2.4 million as of March 31, 2019 and December 31, 2018, respectively. The portion of unrecognized tax benefits relating to an increase in tax positions was approximately $0.1 million while the portion of unrecognized tax benefits relating to interest and penalties was approximately $0.1 million for the three months ended March 31, 2019. The unrecognized tax benefits as of March 31, 2019 and December 31, 2018, if recognized, would have an impact on the Company’s effective tax rate. The Company is subject to Federal income tax, as well as income tax in various states and foreign jurisdictions. The Company has open periods for U.S. Federal and state taxes from 2015 through 2018. Various foreign subsidiaries currently have open tax years from 2003 through 2018. Tax Assessments In September 2015, the Company’s Indian subsidiary was subject to an inquiry by the Service Tax Department in India regarding the classification of services provided by this subsidiary, asserting that the services provided by this subsidiary fall under the category of online information and database access or retrieval services (OID Services), and not under the category of business support services (BS Services) that are exempt from service tax as historically indicated in the subsidiary’s service tax filings. Management disagrees with the Service Tax Department’s position and is vigorously contesting these assertions. In the event the Service Tax Department is successful in proving that the services fall under the category of OID Services, the revenues earned by the Company’s Indian subsidiary for the period July 2012 through November 2016 would be subject to a service tax of between 12.36% and 15%. The revenue of our Indian subsidiary during this period was approximately $67.0 million. In accordance with new rules promulgated by the Service Tax Department, as of December 1, 2016 service tax is no longer applicable to OID or BS Services. Based on the assessment of the Company’s counsel, the Company has not recorded any tax liability for this case. In October 2016, the Company’s Indian subsidiary received notices of appeal from the Indian Service Tax Department in India seeking to reverse service tax refunds of approximately $160,000 previously granted to our Indian subsidiary for three quarters in 2014, asserting that the services provided by this subsidiary fall under the category of OID Services and not BS Services. The appeal was determined in favor of the Service Tax Department. Management disagrees with the basis of this decision and is contesting it vigorously. The Company expects delays in its Indian subsidiary receiving further service tax refunds until this matter is adjudicated with finality, and currently has service tax credits of approximately $1.0 million recorded as a receivable. Based on the assessment of the Company’s counsel, the Company as not recorded any tax liability for this case.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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