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INCOME TAXES | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES C.H. Robinson Worldwide, Inc. and its 80 percent (or more) owned U.S. subsidiaries file a consolidated federal income tax return. We file unitary or separate state returns based on state filing requirements. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including but not limited to, reducing the U.S. federal corporate tax rate from 35 percent to 21 percent and requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries and adding new rules for Global Intangible Low-tax Income (“GILTI”) and Foreign Derived Intangible Income. We have elected to treat tax on GILTI as a period cost and therefore have included it in our annual effective tax rate. The SEC staff issued Staff Accounting Bulletin (“SAB”) 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under Accounting Standards Codification (“ASC”) 740. In connection with our initial analysis of the impact of the Tax Act, we recorded a discrete net tax benefit of $12.1 million in the year ended December 31, 2017. During 2018, we completed our accounting for the income tax effects of the Tax Act. We recorded an additional net tax expense of $4.0 million related to an increase in 2017 transition taxes and recorded additional net tax benefits of $0.6 million, resulting in a revised tax benefit of $8.7 million. In 2018, our indefinite reinvestment strategy, with respect to unremitted earnings of our foreign subsidiaries provided an approximate $3.4 million benefit to our provision for income taxes related to current year earnings. If we repatriated all foreign earnings, the estimated effect on income taxes payable would be an increase of approximately $14.8 million as of December 31, 2018. With few exceptions, we are no longer subject to audits of U.S. federal, state and local, or non-U.S. income tax returns before 2010. Income before provision for income taxes consisted of (in thousands):
|  | 2018 |  | 2017 |  | 2016
Domestic |  | $ | 738,927 |  |  | $ | 638,718 |  |  | $ | 710,931 |
Foreign |  | 141,346 |  |  | 89,745 |  |  | 101,019 |
Total |  | $ | 880,273 |  |  | $ | 728,463 |  |  | $ | 811,950 |
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands):
| 2018 |  | 2017 |  | 2016
Unrecognized tax benefits, beginning of period | $ | 31,806 |  |  | $ | 12,268 |  |  | $ | 13,271 |
Additions based on tax positions related to the current year | — |  |  | 4,014 |  |  | — |
Additions for tax positions of prior years | 1,662 |  |  | 16,713 |  |  | 55 |
Reductions for tax positions of prior years | (263 | ) |  | — |  |  | (211 | )
Lapse in statute of limitations | (1,394 | ) |  | (1,189 | ) |  | (847 | )
Settlements | (296 | ) |  | — |  |  | — |
Unrecognized tax benefits, end of the period | $ | 31,515 |  |  | $ | 31,806 |  |  | $ | 12,268 |
As of December 31, 2018, we had $38.0 million of unrecognized tax benefits and related interest and penalties, all of which would affect our effective tax rate if recognized. We are not aware of any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefit will significantly increase or decrease in the next 12 months. The total liability for unrecognized tax benefits is expected to decrease by approximately $2.1 million in the next 12 months due to lapsing of statutes. Income tax expense considers amounts which may be needed to cover exposures for open tax years. We do not expect any material impact related to open tax years; however, actual settlements may differ from amounts accrued. We recognize interest and penalties related to uncertain tax positions in the provision for income taxes. During the years ended December 31, 2018, 2017, and 2016, we recognized approximately $1.0 million, $0.7 million, and $0.9 million in interest and penalties. We had approximately $6.5 million and $6.8 million for the payment of interest and penalties accrued within noncurrent income taxes payable as of December 31, 2018 and 2017. These amounts are not included in the reconciliation above. The components of the provision for income taxes consist of the following for the years ended December 31 (in thousands):
| 2018 |  | 2017 |  | 2016
Tax provision: |  |  |  |  |
Federal | $ | 152,627 |  |  | $ | 189,708 |  |  | $ | 222,685 |
State | 38,626 |  |  | 29,320 |  |  | 31,786 |
Foreign | 39,830 |  |  | 32,638 |  |  | 29,086 |
| 231,083 |  |  | 251,666 |  |  | 283,557 |
Deferred provision (benefit): |  |  |  |  |
Federal | (11,969 | ) |  | (21,389 | ) |  | 13,936 |
State | (3,176 | ) |  | (3,048 | ) |  | 1,986 |
Foreign | (170 | ) |  | (3,659 | ) |  | (913 | )
| (15,315 | ) |  | (28,096 | ) |  | 15,009 |
Total provision | $ | 215,768 |  |  | $ | 223,570 |  |  | $ | 298,566 |
A reconciliation of the provision for income taxes using the statutory federal income tax rate to our effective income tax rate for the years ended December 31, is as follows:
| 2018 |  | 2017 |  | 2016
Federal statutory rate | 21.0 | % |  | 35.0 | % |  | 35.0 | %
State income taxes, net of federal benefit | 3.3 |  |  | 2.6 |  |  | 2.7 |
Tax Act impact | 0.4 |  |  | (1.7 | ) |  | — |
Section 199 deduction | — |  |  | (2.8 | ) |  | — |
Share-based payment awards | (0.7 | ) |  | (1.9 | ) |  | — |
Other | 0.5 |  |  | (0.5 | ) |  | (0.9 | )
Effective income tax rate | 24.5 | % |  | 30.7 | % |  | 36.8 | %
Deferred tax assets (liabilities) are comprised of the following at December 31 (in thousands):
| 2018 |  | 2017
Deferred tax assets: |  |  |
Compensation | $ | 57,666 |  |  | $ | 52,538 |
Accrued expenses | 27,683 |  |  | 3,155 |
Receivables | 8,093 |  |  | 8,819 |
Other | 6,004 |  |  | 4,737 |
Deferred tax liabilities: |  |  |
Intangible assets | (77,059 | ) |  | (81,932 | )
Accrued revenue | (19,571 | ) |  | — |
Prepaid assets | (5,798 | ) |  | (8,247 | )
Long-lived assets | (15,615 | ) |  | (15,465 | )
Other | (7,167 | ) |  | (2,090 | )
Net deferred tax liabilities | $ | (25,764 | ) |  | $ | (38,485 | )
We had foreign net operating loss carryforwards with a tax effect of $8.1 million as of December 31, 2018, and $10.9 million as of December 31, 2017. The net operating loss carryforwards will expire at various dates from 2019 to 2025, with certain jurisdictions having indefinite carryforward terms. We continually monitor and review the foreign net operating loss carryforwards to determine the ability to realize the deferred tax assets associated with the foreign net operating loss carryforwards. As of December 31, 2017, a full valuation allowance was established for the foreign net operating loss carryforwards due to the uncertainty of the use of the tax benefit in future periods. During 2018, we determined that a portion of the foreign net operating loss carryforwards would be able to be utilized and as such have reduced the valuation allowance recorded against the deferred tax asset related to the foreign operating loss carryforwards in the amount of $1.7 million.

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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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