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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | Note 7. Income Taxes For financial reporting purposes, income from continuing operations before income taxes includes the following components (in thousands):
|  | 2017 |  |  | 2016 |  |  | 2015 |
United States |  | $ | 74,151 |  |  | $ | 66,848 |  |  | $ | 57,665 |
Foreign (Canada) |  |  | 169 |  |  |  | 158 |  |  |  | 167 |
Total |  | $ | 74,320 |  |  | $ | 67,006 |  |  | $ | 57,832 |
Income tax expense (benefit) included in the accompanying Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015 was as follows (in thousands):
|  | 2017 |  |  | 2016 |  |  | 2015 |
Continuing operations : |  |  |  |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 21,086 |  |  | $ | 18,816 |  |  | $ | 18,079 |
Foreign |  |  | 45 |  |  |  | 42 |  |  |  | 43 |
State and local |  |  | 2,475 |  |  |  | 2,681 |  |  |  | 2,694 |
Total |  |  | 23,606 |  |  |  | 21,539 |  |  |  | 20,816 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (1,086 | ) |  |  | 4,148 |  |  |  | 1,060 |
State and local |  |  | 768 |  |  |  | 712 |  |  |  | 953 |
Total |  |  | (318 | ) |  |  | 4,860 |  |  |  | 2,013 |
Total income tax expense from continuing operations |  |  | 23,288 |  |  |  | 26,399 |  |  |  | 22,829 |
Discontinued operations : |  |  |  |  |  |  |  |  |  |  |  |
Operations of discontinued operations: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | (418 | ) |  |  | (365 | ) |  |  | (1,263 | )
Deferred |  |  | (19 | ) |  |  | (10 | ) |  |  | 68 |
Total |  |  | (437 | ) |  |  | (375 | ) |  |  | (1,195 | )
Gain on disposal of discontinued operations: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | — |  |  |  | — |  |  |  | 427 |
Deferred |  |  | — |  |  |  | — |  |  |  | (344 | )
Total |  |  | — |  |  |  | — |  |  |  | 83 |
Total income tax expense from discontinued operations |  |  | (437 | ) |  |  | (375 | ) |  |  | (1,112 | )
Total income tax expense |  | $ | 22,851 |  |  | $ | 26,024 |  |  | $ | 21,717 |
The provision for income taxes attributable to income from continuing operations differed from the amount obtained by applying the federal statutory income tax rate to income from continuing operations before income taxes, as follows (in thousands, except percentages):
|  | 2017 |  |  | 2016 |  |  | 2015 |
Tax at statutory rate (35%) |  | $ | 26,012 |  |  | $ | 23,452 |  |  | $ | 20,241 |
State taxes (net of federal benefit) |  |  | 2,945 |  |  |  | 2,643 |  |  |  | 2,899 |
Business meals and entertainment — non-deductible |  |  | 820 |  |  |  | 784 |  |  |  | 779 |
Reserves for uncertain tax positions |  |  | (35 | ) |  |  | (87 | ) |  |  | (324 | )
Share-based compensation |  |  | (3,837 | ) |  |  | — |  |  |  | — |
Impact of the Tax Cuts and Jobs Act of 2017 |  |  | (2,487 | ) |  |  | — |  |  |  | — |
Net change in state tax rate |  |  | 95 |  |  |  | (64 | ) |  |  | (1,046 | )
Other, net |  |  | (225 | ) |  |  | (329 | ) |  |  | 280 |
Provision for income taxes from continuing operations |  | $ | 23,288 |  |  | $ | 26,399 |  |  | $ | 22,829 |
Effective income tax rate |  |  | 31.3 | % |  |  | 39.4 | % |  |  | 39.5 | %
ASU 2016-09 – Stock Compensation On January 1, 2017, we adopted ASU 2016-09 and recognized an excess tax benefit of $3.8 million (resulting from an increase in the fair value of an award from grant date to the vesting or exercise date, as applicable), as a reduction to “Income tax expense” in the accompanying Consolidated Statements of Comprehensive Income. Prior to ASU 2016-09, the income tax benefit of $1.1 million in 2016 and $0.9 million in 2015 from share-based compensation was recorded in “Additional paid-in-capital” in the accompanying Consolidated Balance Sheets. Refer to Note 1, Basis of Presentation and Significant Accounting Policies to the accompanying consolidated financial statements for further discussion on new accounting pronouncement adoptions. Tax Cuts and Jobs Act of 2017 (the “Tax Act”) On December 22, 2017, the Tax Act was signed into law, which permanently reduces the corporate income tax rate from 35% to 21% beginning in 2018. We recognized an income tax benefit of $2.5 million in 2017, due to the revaluation of our deferred tax liabilities. Our effective tax rate was 31.3% in 2017, compared to 39.4% in 2016. Collectively, ASU 2016-09 and the Tax Act reduced our 2017 effective tax rate by 8.5%. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2017 and 2016, were as follows (in thousands):
|  | 2017 |  |  | 2016 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 1,229 |  |  | $ | 884 |
Allowance for doubtful accounts |  |  | 3,022 |  |  |  | 4,486 |
Employee benefits and compensation |  |  | 21,155 |  |  |  | 29,166 |
Lease costs |  |  | 3,611 |  |  |  | 2,772 |
State tax credit carryforwards |  |  | 1,385 |  |  |  | 1,489 |
Other deferred tax assets |  |  | 1,161 |  |  |  | 2,951 |
Total gross deferred tax assets |  |  | 31,563 |  |  |  | 41,748 |
Less: valuation allowance |  |  | (1,657 | ) |  |  | (1,314 | )
Total deferred tax assets, net |  | $ | 29,906 |  |  | $ | 40,434 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Accrued interest |  | $ | 819 |  |  | $ | 2,494 |
Client list intangible assets |  |  | 1,513 |  |  |  | 2,717 |
Goodwill and other intangibles |  |  | 30,913 |  |  |  | 38,646 |
Other deferred tax liabilities |  |  | - |  |  |  | 122 |
Total gross deferred tax liabilities |  | $ | 33,245 |  |  | $ | 43,979 |
Net deferred tax liability |  | $ | (3,339 | ) |  | $ | (3,545 | )
We have established valuation allowances for deferred tax assets related to certain employee benefits and compensation, state net operating loss (“NOL”) carryforwards and state income tax credit carryforwards at December 31, 2017 and certain NOL carryforwards and state income tax credit carryforwards at December 31, 2016. The net increase in the valuation allowance of $0.3 million for the year ended December 31, 2017 primarily related to changes in the valuation allowance as a result of the Tax Act. The net decrease in the valuation allowance of $0.1 million for the year ended December 31, 2016 related to changes in the valuation allowance for NOL’s. In assessing the realization of deferred tax assets, management considers all available positive and negative evidence, including projected future taxable income, scheduled reversal of deferred tax liabilities, historical financial operations and tax planning strategies. Based upon review of these items, management believes it is more-likely-than-not that the Company will realize the benefits of these deferred tax assets, net of the existing valuation allowances. We file income tax returns in the United States, Canada, and most state jurisdictions. In March 2016, the Internal Revenue Service completed its audit of our 2013 and 2014 federal income tax returns. We paid $0.5 million in settlement of this audit which had no impact on the 2016 income tax expense. With limited exceptions, our state and local income tax returns and non-U.S. income tax returns are no longer subject to tax authority examinations for years ending prior to January 1, 2013 and January 1, 2012, respectively. The availability of NOL’s and state tax credits are reported as deferred tax assets, net of applicable valuation allowances, in the accompanying Consolidated Balance Sheets. At December 31, 2017, we had state net operating loss carryforwards of $28 million and state tax credit carryforwards of $1.4 million. The state net operating loss carryforwards expire on various dates between 2018 and 2037 and the state tax credit carryforwards expire on various dates between 2018 and 2028. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
|  | 2017 |  |  | 2016 |  |  | 2015 |
Balance at January 1 |  | $ | 4,090 |  |  | $ | 4,287 |  |  | $ | 4,591 |
Additions for tax positions of the current year |  |  | 123 |  |  |  | 110 |  |  |  | 126 |
Settlements of prior year positions |  |  | — |  |  |  | (11 | ) |  |  | (94 | )
Lapse of statutes of limitation |  |  | (331 | ) |  |  | (296 | ) |  |  | (336 | )
Balance at December 31 |  |  | 3,882 |  |  |  | 4,090 |  |  |  | 4,287 |
Included in the balance of unrecognized tax benefits at December 31, 2017 are $2.9 million of unrecognized tax benefits that, if recognized, would affect the effective tax rate. We believe it is reasonably possible that certain of these unrecognized tax benefits could change in the next twelve months. We expect reductions in the liability for unrecognized tax benefits of approximately $1.2 million within the next twelve months due to expiration of statutes of limitation. Given the number of years that are currently subject to examination, we are unable to estimate the range of potential adjustments to the remaining balance of unrecognized tax benefits at this time. We recognize interest expense, and penalties related to unrecognized tax benefits as a component of income tax expense. During 2017, we accrued interest expense of $0.2 million and, as of December 31, 2017, had recognized a liability for interest expense and penalties of $0.6 million and $0.3 million, respectively, relating to unrecognized tax benefits. During 2016, we accrued interest expense of $0.2 million and, as of December 31, 2016, had recognized a liability for interest expense and penalties of $0.4 million and $0.3 million, respectively, relating to unrecognized tax benefits.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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