Note 21—Income Taxes

The components of the provision for income taxes are as follows:

	2012			2011			2010
Current provision (benefit)
Federal	$	27,524		$	24,791		$	18,491
State	7,125			5,697			4,663
Foreign	67			621			1,081
	$	34,716		$	31,109		$	24,235

Deferred provision (benefit)
Federal	(451		)	6,488			(1,951		)
State	(366		)	849			(189		)
Foreign	(62		)	(122		)	(36		)
	(879		)	7,215			(2,176		)
Change in valuation allowance	—			(150		)	—
Total	$	33,837		$	38,174		$	22,059

A reconciliation of income tax expense compared to the amount of income tax expense that would result by applying the U.S. federal statutory income tax rate to pre-tax income is as follows:

	2012		2011		2010
U.S. federal statutory income tax rate	35.00	%	35.00	%	35.00	%
State taxes, net of federal income tax impact	4.87	%	4.33	%	4.52	%
Foreign tax credit	(0.01	)%	(0.52	)%	(1.88	)%
Canadian income tax	0.01	%	0.52	%	1.88	%
Domestic production activities deduction	(2.97	)%	(2.79	)%	(3.30	)%
Other items	0.45	%	2.92	%	3.40	%
Effective tax rate on income before provision for income taxes excluding income attributable to noncontrolling interests	37.35	%	39.46	%	39.62	%
Impact of income from noncontrolling interests on effective tax rate	(0.61	)%	—		—
Effective tax rate on income before provision for income taxes and noncontrolling interests	36.74	%	39.46	%	39.62	%

Deferred income taxes are recognized for temporary differences between the financial reporting basis of the assets and liabilities and their respective tax basis and operating losses, capital losses and tax credit carry-forwards based on enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies.

During 2009, the Company recognized a capital loss related to the sale of its equity interest in ARB Avenal. A valuation allowance of $344 has been provided against the Company’s deferred tax for its capital loss carryforward as the Company believes that it is more likely than not that this capital loss will not be realized. The Company’s determination that it will not fully realize this deferred tax asset is based upon the Company’s future unlikelihood of generating sufficient capital gains. No valuation allowance has been provided to the Company’s remaining deferred tax assets as the Company believes it is more likely than not that these deferred tax assets will be realized.

The tax effect of temporary differences that give rise to deferred income taxes for the year ended December 31, 2012 and 2011 are as follows:

	2012			2011
Deferred tax assets:
Accrued workers compensation	$	4,973		$	4,023
Insurance reserves	1,114			2,657
Other accrued liabilities	10,434			6,604
State income taxes	1,537			1,605
Capital loss carryforward	344			344
Foreign tax credit	662			644
Valuation allowance	(344		)	(344		)
Total deferred tax assets	18,720			15,533
Deferred tax liabilities
Depreciation and amortization	(26,661		)	(24,659		)
Prepaid expenses and other	(1,600		)	(1,294		)
Total deferred tax liabilities	(28,261		)	(25,953		)
Total	$	(9,541	)	$	(10,420	)

The Company recognizes accrued interest and penalties related to uncertain tax positions, if any, as a component of income tax expense.

At December 31, 2012 and 2011, there were no material unrecognized tax benefits and the Company does not anticipate that there will be a material change in the balance of the unrecognized tax benefits within the next 12 months.

In the third quarter of 2012, the Internal Revenue Service (“IRS”) concluded an examination of our federal income tax returns for 2008 and 2009. The conclusion of these examinations did not have a material impact on the financial statements. The tax years 2010 through 2011 remain open to examination by the IRS. The statute of limitations of state and foreign jurisdictions vary generally between 3 to 5 years. Accordingly, the tax years 2007 through 2011 generally remain open to examination by the other major taxing jurisdictions in which the Company operates.