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INCOME TAXES | 9 Months Ended
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Sep. 30, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The effective tax rate for the three months ended September 30, 2018 included a benefit associated with stock-based compensation, a benefit associated with the estimated increase of the one-time 2017 Tax Act provisional tax benefit, a benefit associated with prior year tax positions, an expense from a net increase in the valuation allowance related to deferred tax assets in foreign jurisdictions and a benefit from the remeasurement of deferred taxes due to a decrease in our state effective tax rates. These factors resulted in a net $0.5 million tax benefit. After giving consideration to these items, the effective tax rate for the three months ended September 30, 2018 of 25.6% was higher than the 21% U.S. federal statutory rate, primarily due to state taxes, foreign income taxes and U.S. minimum tax on foreign earnings, partially offset by favorable permanent salt depletion deductions. The effective tax rate for the three months ended September 30, 2017 included a benefit related to the remeasurement of deferred taxes due to a decrease in our state effective tax rates, a benefit associated with prior year tax positions and a benefit associated with stock-based compensation. These factors resulted in a net $6.7 million tax benefit. After giving consideration to these items, the effective tax rate for the three months ended September 30, 2017 of 23.8% was lower than the 35% U.S. federal statutory rate, primarily due to favorable permanent salt depletion deductions. The effective tax rate for the nine months ended September 30, 2018 included a benefit associated with stock-based compensation, a benefit from a change in tax contingencies, a benefit related to a foreign dividend payment, a benefit associated with the estimated increase of the one-time 2017 Tax Act provisional tax benefit, a benefit associated with prior year tax positions, an expense from a net increase in the valuation allowance related to deferred tax assets in foreign jurisdictions and a benefit from the remeasurement of deferred taxes due to a decrease in our state effective tax rates. These factors resulted in a net $2.7 million tax benefit. After giving consideration to these items, the effective tax rate for the nine months ended September 30, 2018 of 25.1% was higher than the 21% U.S. federal statutory rate primarily due to state taxes, foreign income taxes and U.S. minimum tax on foreign earnings, partially offset by favorable permanent salt depletion deductions. The effective tax rate for the nine months ended September 30, 2017 included a benefit related to an agreement reached with the Internal Revenue Service (IRS) for the years 2008 and 2010 to 2012 tax examinations, a benefit related to the remeasurement of deferred taxes due to a decrease in our state effective tax rates, a benefit associated with stock-based compensation and a benefit associated with prior year tax positions. These factors resulted in a net $17.7 million tax benefit. After giving consideration to these items, the effective tax rate for the nine months ended September 30, 2017 of 24.8% was lower than the 35% U.S. federal statutory rate, primarily due to favorable permanent salt depletion deductions. The 2017 Tax Act was enacted on December 22, 2017 and included a broad range of provisions impacting the taxation of businesses. Included within the provisions, the 2017 Tax Act reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on unremitted earnings of foreign subsidiaries that were previously tax deferred and transitions the U.S. from a worldwide tax system to a modified territorial tax system. The SEC Staff issued Accounting Bulletin No. 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act” (SAB 118), which provides guidance on accounting for the tax effects of the 2017 Tax Act. SAB 118 provides a measurement period of up to one year from the 2017 Tax Act’s enactment date for companies to complete the accounting under ASC 740 “Income Taxes” (ASC 740). In accordance with SAB 118, to the extent that a company’s accounting for certain income tax effects of the 2017 Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the 2017 Tax Act. At September 30, 2018, we have not completed our accounting for the tax effects of the 2017 Tax Act. The impact of the 2017 Tax Act is expected to require further adjustments in 2018 due to anticipated additional guidance from the U.S. Department of the Treasury, changes in our assumptions, completion of 2017 foreign tax returns and further information and interpretations that become available. As of September 30, 2018 we have substantially completed our U.S. tax return and accounted for updates to estimates of significant items including: (1) the effects on our existing deferred tax balances, (2) the remeasurement of deferred taxes on foreign unremitted earnings and (3) the one-time transition tax. We will make adjustments to these provisional estimates as new information becomes available during the one year measurement period. Our analyses of the 2017 Tax Act will continue throughout fourth quarter 2018 and will be completed when we file our remaining 2017 tax returns. In connection with our initial analysis of the 2017 Tax Act, we recognized a provisional deferred tax benefit of $437.9 million at December 31, 2017. This benefit included: (1) a provisional $315.8 million deferred tax benefit to reflect the reduction of the U.S. corporate tax rate from 35% to 21% and (2) a provisional $122.1 million deferred tax benefit to reflect an estimated reduction of $162.6 million in our deferred tax liability on unremitted foreign earnings partially offset by an estimate of the one-time transition tax of $40.5 million. We utilized existing U.S. federal net operating loss carryforwards and foreign tax credits to fully offset the cash tax impact of the one-time transition tax liability. For the three and nine months ended September 30, 2018, we decreased the provisional deferred tax benefit by $0.4 million and $0.1 million, respectively, as a result of additional guidance issued by the IRS. For the three and nine months ended September 30, 2018, we increased the provisional deferred tax benefit as a result of the estimated impact of filing the 2017 U.S. and foreign tax returns by $4.6 million and $2.9 million, respectively. A provision of the 2017 Tax Act establishes a minimum tax on certain foreign earnings (i.e. global intangible low-taxed income or GILTI). We have not yet completed our analysis of the GILTI tax rules and are still evaluating whether to make a policy election to treat the GILTI tax as a period expense or to provide U.S. deferred taxes on certain foreign differences between the financial statement and tax basis of foreign assets and liabilities. At September 30, 2018 and December 31, 2017, we did not record a deferred tax liability for these differences. We will continue to analyze the impact of GILTI as more guidance is issued and a decision will be made during 2018 on whether to treat the GILTI as a period cost or a deferred tax item. As of September 30, 2018, we had $33.3 million of gross unrecognized tax benefits, which would have a net $32.4 million impact on the effective tax rate, if recognized. As of September 30, 2017, we had $35.0 million of gross unrecognized tax benefits, of which $33.5 million would have impacted the effective tax rate, if recognized. The amount of unrecognized tax benefits was as follows:
| September 30,
| 2018 |  | 2017
| ($ in millions)
Balance at beginning of year | $ | 36.3 |  |  | $ | 38.4 |
Increases for prior year tax positions | — |  |  | 4.9 |
Decreases for prior year tax positions | (4.6 | ) |  | (9.2 | )
Increases for current year tax positions | 1.6 |  |  | 2.0 |
Settlement with taxing authorities | — |  |  | (1.0 | )
Reductions due to statute of limitations | — |  |  | (0.1 | )
Balance at end of period | $ | 33.3 |  |  | $ | 35.0 |
As of September 30, 2018, we believe it is reasonably possible that our total amount of unrecognized tax benefits will decrease by approximately $6.9 million over the next twelve months. The anticipated reduction primarily relates to settlements with taxing authorities and the expiration of federal, state and foreign statutes of limitation. We operate globally and file income tax returns in numerous jurisdictions. Our tax returns are subject to examination by various federal, state and local tax authorities. None of our U.S. federal income tax returns are currently under examination by the IRS. We believe we have adequately provided for all tax positions; however, amounts asserted by taxing authorities could be greater than our accrued position. For our primary tax jurisdictions, the tax years that remain subject to examination are as follows:
| Tax Years
U.S. federal income tax | 2013 - 2017
U.S. state income tax | 2006 - 2017
Canadian federal income tax | 2012 - 2017
Brazil | 2014 - 2017
Germany | 2015 - 2017
China | 2014 - 2017
The Netherlands | 2014 - 2017

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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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