6. Income Taxes

The U.S. federal statutory tax rate is 35%. The Company’s effective tax rates for the three and nine months ended September 30, 2017 were 44.8% and 45.6%, respectively, of pretax income, compared to the effective tax rates for the three and nine months ended September 30, 2016 of 40.4% and 39.1%, respectively.

The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for the three months ended September 30, 2017 was primarily caused by the inability to utilize losses experienced in certain Canadian operations. The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for the nine months ended September 30, 2017 was caused by the inability to utilize losses experienced in certain Canadian operations, partially offset by excess tax benefits of approximately $1.0 million pertaining to the vesting of stock awards and the exercise of stock options.

The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for the three and nine months ended September 30, 2016 was principally due to state income taxes.

The Company had unrecognized tax benefits of approximately $0.3 million as of September 30, 2017 and December 31, 2016, which were included in other liabilities in the accompanying consolidated balance sheets.

The Company’s policy is to recognize interest and penalties related to income tax liabilities as a component of income tax expense in the consolidated statements of operations. The amount of interest and penalties charged to income tax expense because of the unrecognized tax benefits was not significant for the nine months ended September 30, 2017 and 2016.

The Company is subject to taxation in various jurisdictions. The Company’s tax returns for 2015 and 2016 are subject to examination by U.S. federal authorities. The Company’s tax returns are subject to examination by various state authorities for the years 2012 through 2016.