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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | 12. Income Taxes Provision for income taxes consists of the following for the periods presented (in thousands):
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 18,954 |  |  | $ | 13,961 |  |  | $ | 3,325 |
State |  |  | 3,440 |  |  |  | 1,113 |  |  |  | 680 |
Foreign |  |  | 1,692 |  |  |  | 1,172 |  |  |  | 1,832 |
Total current |  |  | 24,086 |  |  |  | 16,246 |  |  |  | 5,837 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (1,573 | ) |  |  | (7,176 | ) |  |  | 27,179 |
State |  |  | 2,509 |  |  |  | (10 | ) |  |  | 4,408 |
Foreign |  |  | 844 |  |  |  | (2,528 | ) |  |  | (215 | )
Total deferred provision |  |  | 1,780 |  |  |  | (9,714 | ) |  |  | 31,372 |
Provision for income taxes |  | $ | 25,866 |  |  | $ | 6,532 |  |  | $ | 37,209 |
A reconciliation of the U.S. federal statutory rate to the effective tax rate is as follows for the periods presented:
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
U.S. federal statutory rate on income before income taxes |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 35.0 | %
Impact of foreign operations |  |  | (15.3 | ) |  |  | 9.5 |  |  |  | (14.1 | )
Impacts of SAB 118 |  |  | — |  |  |  | 6.7 |  |  |  | — |
Effects of statutory rate change |  |  | — |  |  |  | — |  |  |  | (8.5 | )
State income taxes, net of federal tax effect |  |  | 3.3 |  |  |  | (1.4 | ) |  |  | 2.1 |
Permanent differences |  |  | 2.4 |  |  |  | (4.1 | ) |  |  | 1.8 |
Goodwill impairment |  |  | — |  |  |  | (36.6 | ) |  |  | — |
Change in valuation allowance |  |  | 2.9 |  |  |  | (1.4 | ) |  |  | 1.6 |
Unrecognized tax benefit release |  |  | 0.3 |  |  |  | 3.1 |  |  |  | (0.8 | )
Interest disallowance |  |  | 4.2 |  |  |  | (2.2 | ) |  |  | — |
Federal tax credits |  |  | (1.3 | ) |  |  | 1.0 |  |  |  | — |
Other |  |  | 1.5 |  |  |  | 0.5 |  |  |  | (1.4 | )
Effective income tax rate |  |  | 19.0 | % |  |  | (3.9 | )% |  |  | 15.7 | %
The domestic and foreign components of income (loss) before income taxes are as follows (in thousands):
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Foreign |  | $ | 61,921 |  |  | $ | (228,350 | ) |  | $ | 120,905 |
Domestic |  |  | 74,067 |  |  |  | 59,396 |  |  |  | 115,893 |
Total |  | $ | 135,988 |  |  | $ | (168,954 | ) |  | $ | 236,798 |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities of the Company at December 31, 2019 and December 31, 2018 were as follows (in thousands):
|  | December 31, |
|  | 2019 |  |  | 2018 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating losses and tax credit carryforwards – federal and state |  | $ | 25,118 |  |  | $ | 27,294 |
Bad debt allowance |  |  | 996 |  |  |  | 898 |
Accrued compensation and severance |  |  | 14,645 |  |  |  | 15,229 |
Pension reserves |  |  | 724 |  |  |  | 595 |
Insurance reserves |  |  | 16,485 |  |  |  | 13,994 |
Leases |  |  | 3,436 |  |  |  | 5,374 |
Accrued expenses |  |  | 1,496 |  |  |  | 4,231 |
Interest carryforwards |  |  | 59,413 |  |  |  | 32,272 |
Lease liabilities |  |  | 98,419 |  |  |  | — |
Other assets |  |  | 2,562 |  |  |  | 2,284 |
Total gross deferred tax assets |  |  | 223,294 |  |  |  | 102,171 |
Less: valuation allowance |  |  | (28,648 | ) |  |  | (24,079 | )
Deferred tax assets |  |  | 194,646 |  |  |  | 78,092 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Fixed asset basis difference |  |  | (43,992 | ) |  |  | (48,698 | )
Prepaid items |  |  | (2,163 | ) |  |  | (1,728 | )
Intangible assets |  |  | (104,542 | ) |  |  | (87,628 | )
Lease right-of-use assets |  |  | (99,677 | ) |  |  | — |
Other liabilities |  |  | (12,793 | ) |  |  | (16,942 | )
Total deferred tax liabilities |  |  | (263,167 | ) |  |  | (154,996 | )
Total net deferred tax liability |  | $ | (68,521 | ) |  | $ | (76,904 | )
The Company records a valuation allowance to reduce its net deferred tax assets to the amount that is more likely than not to be realized. At December 31, 2019 and 2018, the Company carried a valuation allowance against deferred tax assets of $28.6 million and $24.1 million, respectively. As of December 31, 2019 and 2018, the Company had no domestic net operating loss carryforwards. The foreign net operating loss carryforwards at December 31, 2019 and 2018 are approximately $70.0 million and $81.0 million, respectively, and have no expiration. The Company has state net operating loss carryforwards at December 31, 2019 and 2018 of approximately $220.8 million and $236.0 million, respectively. These net operating loss carryforwards, if not used to offset future taxable income, will expire from 2020 to 2038. In addition, the Company has certain state tax credits of $0.8 million which will begin to expire in 2029 if not utilized. Income taxes receivable was $5.6 million and $2.4 million at December 31, 2019 and 2018, respectively, and was included in other current assets in the consolidated balance sheets. Income taxes payable of $3.0 million at December 31, 2018 was included in other accrued liabilities in the consolidated balance sheets. The Company has recorded income taxes payable related to unrecognized tax benefits of $3.1 million and $0.9 million at December 31, 2019 and 2018, respectively, in other liabilities in the consolidated balance sheets. A reconciliation of the beginning and ending amount of unrecognized income tax benefits net of the federal benefit is as follows (in thousands):
|  | 2019 |  |  | 2018 |
Balance at January 1 |  | $ | 713 |  |  | $ | 6,104 |
Additions based on tax positions related to the current year |  |  | 3,001 |  |  |  | 52 |
Reductions as a result of the lapse of applicable statutes of limitations and settlements with tax authorities |  |  | (1,273 | ) |  |  | (5,443 | )
Balance at December 31 |  | $ | 2,441 |  |  | $ | 713 |
The Company recognizes interest and penalties related to unrecognized tax benefits in its consolidated balance sheets. At December 31, 2019 and 2018, the cumulative amounts recognized were $0.6 million and $0.1 million, respectively. Unrecognized tax benefits of $1.0 million would affect the effective rate if recognized. It is possible the amount of unrecognized tax benefit could change in the next twelve months as a result of a lapse of the statute of limitations and settlements with taxing authorities; however, management does not anticipate the change will have a material impact on the Company’s consolidated financial statements. The Company’s uncertain tax positions are related to tax years that remain subject to examination by the relevant taxing authorities. The Company and its subsidiaries file income tax returns in federal and in many state and local jurisdictions as well as foreign jurisdictions. The Company may be subject to examination by the Internal Revenue Service (“IRS”) for calendar year 2016 through 2018. Additionally, any net operating losses that were generated in prior years and utilized in these years may also be subject to examination by the IRS. The Company is subject to inquiry, for calendar years 2014 through 2018, by foreign taxing authorities within the U. K. While no other foreign jurisdictions are presently under examination, the Company may be subject to examination for calendar years 2015 through 2018. Generally, for state tax purposes, the Company’s 2013 through 2018 tax years remain open for examination by the tax authorities. At the date of this report there were no audits or inquires that had progressed sufficiently to predict their ultimate outcome. One of the Company’s Puerto Rico subsidiaries was granted a tax exemption for which a tax credit of up to 15% of eligible payroll expenses is available to offset up to 50% of the income taxes attributed to that entity. U.S. Tax Reform On December 22, 2017, Public Law 115-97, informally referred to as The Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law. The Tax Act provided for significant changes to the U.S. tax code that has impacted businesses. Effective January 1, 2018, the Tax Act reduced the U.S. federal tax rate for corporations from 35% to 21%, for U.S. taxable income. The Tax Act included other changes, including, but not limited to, a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries, a new provision designed to tax global intangible low-taxed income, a limitation of the deduction for net operating losses, elimination of net operating loss carrybacks, immediate deductions for depreciation expense for certain qualified property, additional limitations on the deductibility of executive compensation and limitations on the deductibility of interest. ASC 740 “Income Taxes” (“ASC 740”) requires the Company to recognize the effect of tax law changes in the period of enactment. However, the SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”) which allowed the Company to record provisional amounts during a measurement period similar to the measurement period used when accounting for business combinations. The Tax Act required a one-time remeasurement of deferred taxes to reflect their value at a lower tax rate of 21% and a one-time transition tax on certain repatriated earnings of foreign subsidiaries that is payable over eight years. At December 31, 2018, the Company has completed its accounting for the tax effects of the enactment of the Tax Act. At December 31, 2018, the Company has recorded a reduction in net deferred taxes of $20.6 million related to the remeasurement of its deferred tax balance. In addition, the Company has recorded a one-time transition tax liability in relation to its foreign subsidiaries of $0.0 million at December 31, 2018. The Company continues to assess the impact of the Tax Act on its business. Deferred Tax Assets and Liabilities The Company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. As a result of the reduction in the corporate income tax rate, the Company was required to revalue its net deferred tax assets and liabilities to account for the future impact of lower corporate tax rates on this deferred amount and record any change in the value of such asset or liability as a one-time non-cash charge or benefit on its income statement. The Company recorded a reduction in net deferred taxes of $20.2 million as of December 31, 2017 and an additional reduction of $0.4 million as of December 31, 2018 for a total reduction in net deferred taxes of $20.6 million related to the remeasurement of its deferred tax balance. U.S. Tax on Foreign Earnings The one-time transition tax is based on total post-1986 earnings and profits that the Company previously deferred from U.S. income taxes. At December 31, 2018, the Company has completed the earnings and profits analysis for its foreign subsidiaries to calculate the effects of the one-time transition tax and has recorded a one-time transition tax liability amount of $0.0 million. As part of the analysis of the Tax Act, the Company made an adjustment regarding the treatment of foreign dividends of $10.9 million during the twelve months ended December 31, 2018. The change in the provisional estimate recorded at December 31, 2017 was recognized under the law that existed prior to December 22, 2017. The Company has continued to analyze the impacts for Global Intangible Low-Taxed Income (“GILTI”), Foreign-Derived Intangible Income, the Base Erosion and Anti-Abuse Tax and any remaining impacts of the foreign income provisions of the Tax Act. At December 31, 2019, the Company has recorded a tax liability amount of $0.0 million relating to such items. The Tax Act subjects a U.S. shareholder to tax on GILTI earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, “Accounting for Global Intangible Low-Taxed Income”, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. The Company elects to account for GILTI in the year the tax is incurred.

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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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