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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes |
8. | Income Taxes
Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes. Significant components of the net deferred tax assets and net deferred tax liabilities as reflected on the Consolidated Balance Sheets are as follows:
|  | December 31,
|  | 2015 |  | 2014
|  | (in thousands)
Deferred tax liabilities: |  |  |  |
Prepaid assets |  | $ | (3,952 | ) |  | $ | (9,291 | )
Depreciation |  | (1,741 | ) |  | (8,083 | )
Software development costs |  | (2,699 | ) |  | (2,252 | )
Total deferred tax liabilities |  | (8,392 | ) |  | (19,626 | )
Deferred tax assets: |  |  |  |  |  |
Accrued incentive compensation |  | 8,818 |  |  | 7,204 |
Net operating loss carryforward |  | 1,463 |  |  | 1,556 |
Workers’ compensation accruals |  | 7,586 |  |  | 6,308 |
Accrued rent |  | 1,229 |  |  | 1,058 |
Stock-based compensation |  | 4,553 |  |  | 3,615 |
Intangibles |  | 1,159 |  |  | 1,575 |
Minority investment impairment |  | 1,016 |  |  | 1,003 |
Other |  | 564 |  |  | 551 |
Total deferred tax assets |  | 26,388 |  |  | 22,870 |
Valuation allowance |  | (1,020 | ) |  | (1,003 | )
Total net deferred tax assets |  | 25,368 |  |  | 21,867 |
Net deferred tax assets |  | $ | 16,976 |  |  | $ | 2,241 |
In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which requires companies to present deferred income tax assets and deferred income tax liabilities as noncurrent in a classified balance sheet instead of the current requirement to separate deferred income tax liabilities and assets into current and noncurrent amounts. ASU 2015-17 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early application is permitted either prospectively or retrospectively. In December 2015 we adopted ASU No. 2015-17 retrospectively, resulting in a reclassification of a $6.3 million deferred tax asset from current to long term in 2014. The components of income tax expense are as follows:
|  | Year ended December 31,
|  | 2015 |  | 2014 |  | 2013
|  | (in thousands)
Current income tax expense: |  |  |  |  |  |
Federal |  | $ | 35,221 |  |  | $ | 18,034 |  |  | $ | 20,476 |
State |  | 5,741 |  |  | 3,322 |  |  | 3,512 |
Total current income tax expense |  | 40,962 |  |  | 21,356 |  |  | 23,988 |
Deferred income tax (benefit) expense: |  |  |  |  |  |  |  |  |
Federal |  | (13,632 | ) |  | (1,764 | ) |  | (2,258 | )
State |  | (1,101 | ) |  | 31 |  |  | (30 | )
Total deferred income tax benefit |  | (14,733 | ) |  | (1,733 | ) |  | (2,288 | )
Total income tax expense |  | $ | 26,229 |  |  | $ | 19,623 |  |  | $ | 21,700 |
As a result of nonqualified stock option exercises, disqualifying dispositions of certain employee incentive stock options and vesting of restricted stock awards, we had a net income tax benefit of $2.2 million in 2015, $0.5 million in 2014 and $1.3 million in 2013. The excess income tax benefit is reported as a component of additional paid-in capital. The reconciliation of income tax expense computed at U.S. federal statutory tax rates to the reported income tax expense from continuing operations is as follows:
|  | Year ended December 31,
|  | 2015 |  | 2014 |  | 2013
|  | (in thousands)
Expected income tax expense at 35% |  | $ | 22,967 |  |  | $ | 16,670 |  |  | $ | 18,806 |
State income taxes, net of federal benefit |  | 2,696 |  |  | 2,204 |  |  | 2,286 |
Nondeductible expenses |  | 1,669 |  |  | 1,939 |  |  | 1,993 |
Section 199 benefits |  | (627 | ) |  | (592 | ) |  | (2,531 | )
Expense Management non-cash impairment |  | — |  |  | — |  |  | 797 |
Valuation allowance related to TRE impairment |  | — |  |  | — |  |  | 938 |
Research and development credit |  | (530 | ) |  | (455 | ) |  | (534 | )
Other, net |  | 54 |  |  | (143 | ) |  | (55 | )
Reported total income tax expense |  | $ | 26,229 |  |  | $ | 19,623 |  |  | $ | 21,700 |
We have developed customer facing software that is included as a component of the PEO HR Outsourcing solutions. In addition, we market both software products and cloud based offerings. Prior to 2013, we were not certain that these software offerings met the IRS “Qualified Production Activities Deduction” requirements. As a result, no such tax deduction was taken on the annual tax returns filed with the IRS. However, in 2013, we engaged tax specialists to conduct a study of our various software offerings to assess the qualifications with IRS guidelines. Based on this study, we concluded certain of our software offerings met the IRS requirements, resulting in amendments to previously filed open year tax returns. Accordingly, in 2013 we recognized $2.0 million in tax benefits for the years 2009 to 2012, and $0.5 million in tax benefits for the 2013 tax year. At December 31, 2015, we have net operating loss carryforwards totaling approximately $3.9 million that expire from 2022 to 2030 related to our acquisition of ExpensAble. We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2015, 2014 and 2013, we made no provisions for interest or penalties related to uncertain tax positions. The tax years 2012 through 2014 remain open to examination by the Internal Revenue Service of the United States. The tax years 2011 through 2014 remain open to examination by various state tax authorities.

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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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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