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Income Taxes | 12 Months Ended
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Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Company recorded income tax provisions for continuing operations of $13.6 million, $52.7 million, and $45.4 million, during the years ended December 31, 2015, 2014 and 2013, respectively. The effective tax rates for the respective periods are shown below:
| Year Ended December 31,
| 2015 |  | 2014 |  | 2013
Federal provision | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State (benefit) provision(1) | (1.2 | )% |  | 8.2 | % |  | 5.8 | %
Federal expense (benefit) of state | 0.4 | % |  | (2.9 | )% |  | (2.0 | )%
Changes in state apportionment(2) | 0.0 | % |  | 0.0 | % |  | (0.2 | )%
International benefit(3) | (12.5 | )% |  | (3.6 | )% |  | (2.2 | )%
Tax reserves(4) | (3.3 | )% |  | 0.0 | % |  | 0.0 | %
Permanent items(5) | 9.6 | % |  | 4.3 | % |  | 2.4 | %
Release of valuation allowance | (9.1 | )% |  | 0.0 | % |  | 0.0 | %
Other(6) | 3.4 | % |  | (6.4 | )% |  | (1.2 | )%
Effective rate | 22.3 | % |  | 34.6 | % |  | 37.6 | %
________________________
(1) | Change from 2014 to 2015 relates primarily to a beneficial settlement with a state tax authority.
(2) | Represents changes in state apportionment methodologies.
(3) | Relates primarily to the lower tax rate on the income attributable to international operations.
(4) | Represents release of reserves taken for a certain tax position.
(5) | Represents a provision for nondeductible items, including the CFPB settlement.
(6) | Includes the effect of discrete items, primarily relates to the recognition of tax benefit as a result of a favorable tax settlement with taxing authorities as discussed below.
Due to a one-time charge resulting from a settlement with the Consumer Finance Protection Bureau (“CFPB”), discussed in detail in Note 13, “Commitments and Contingencies,” the Company incurred a $10.0 million civil monetary penalty related to the CFPB settlement which is not deductible for income tax purposes during the year ended December 31, 2015. The pretax income from continuing operations consisted of the following (in thousands):
| Year Ended December 31,
| 2015 |  | 2014 |  | 2013
Domestic | $ | 22,104 |  |  | $ | 131,434 |  |  | $ | 105,009 |
Foreign | 38,877 |  |  | 21,181 |  |  | 15,859 |
| $ | 60,981 |  |  | $ | 152,615 |  |  | $ | 120,868 |
The provision for income taxes consisted of the following (in thousands):
| Year Ended December 31,
| 2015 |  | 2014 |  | 2013
Current expense: |  |  |  |  |
Federal | $ | 42,459 |  |  | $ | 71,002 |  |  | $ | 50,304 |
State | 567 |  |  | 7,741 |  |  | 7,196 |
Foreign | 7,124 |  |  | 3,752 |  |  | 4,052 |
| 50,150 |  |  | 82,495 |  |  | 61,552 |
Deferred (benefit) expense: |  |  |  |  |
Federal | (35,353 | ) |  | (33,398 | ) |  | (13,134 | )
State | (1,409 | ) |  | 2,710 |  |  | (2,369 | )
Foreign | 209 |  |  | 918 |  |  | (661 | )
| (36,553 | ) |  | (29,770 | ) |  | (16,164 | )
| $ | 13,597 |  |  | $ | 52,725 |  |  | $ | 45,388 |
The components of deferred tax assets and liabilities consisted of the following (in thousands):
| December 31, 2015 |  | December 31, 2014
Deferred tax assets: |  |  |
Stock-based compensation expense | $ | 1,301 |  |  | $ | 7,143 |
Accrued expenses | 7,899 |  |  | 6,701 |
Differences in income recognition related to receivable portfolios | 33,652 |  |  | 31,799 |
State and international operating losses | 15,234 |  |  | 12,917 |
Difference in basis of depreciable assets | 3,069 |  |  | 2,077 |
Capitalized legal fees—international | 4,143 |  |  | 4,365 |
Cumulative translation adjustment | 958 |  |  | 4,036 |
Tax benefit of uncertain tax positions | 1,349 |  |  | 1,247 |
Difference in basis of bond and loan costs | 9,480 |  |  | 10,455 |
Difference in basis of intangible assets | 18,089 |  |  | — |
Other | 2,372 |  |  | 376 |
Valuation allowance | (4,517 | ) |  | (10,047 | )
| 93,029 |  |  | 71,069 |
Deferred tax liabilities: |  |  |
State taxes | (690 | ) |  | (1,643 | )
Deferred court costs | (25,277 | ) |  | (19,550 | )
Difference in basis of amortizable assets | (14,988 | ) |  | (10,682 | )
Difference in basis of depreciable assets | (9,163 | ) |  | (7,868 | )
Differences in income recognition related to receivable portfolios | (17,432 | ) |  | (16,308 | )
Deferred debt cancellation income | (1,957 | ) |  | (2,602 | )
Other | (46 | ) |  | (3,533 | )
| (69,553 | ) |  | (62,186 | )
Net deferred tax asset | $ | 23,476 |  |  | $ | 8,883 |
Valuation allowances are recognized on deferred tax assets if the Company believes that it is more likely than not that some or all of the deferred tax assets will not be realized. The Company believes the majority of the deferred tax assets will be realized due to the reversal of certain significant temporary differences and anticipated future taxable income from operations. The valuation allowance of $4.5 million as of December 31, 2015 had been reduced from $10.0 million as of December 31, 2014, due to the release of a valuation allowance associated with one of the Company’s international subsidiaries. Based on current information, the Company believes that the subsidiary will have sufficient income in the future that will allow the utilization of the net operating loss that gave rise to the deferred tax asset and associated valuation allowance. The differences between the total income tax expense and the income tax expense computed using the applicable federal income tax rate of 35.0% per annum were as follows (in thousands):
| Year Ended December 31,
| 2015 |  | 2014 |  | 2013
Computed “expected” Federal income tax expense | $ | 21,343 |  |  | $ | 53,415 |  |  | $ | 42,304 |
(Decrease) increase in income taxes resulting from: |  |  |  |  |
State income taxes, net | (460 | ) |  | 8,118 |  |  | 3,138 |
Foreign non-taxed income, rate differential | (7,609 | ) |  | (5,453 | ) |  | (2,647 | )
Other adjustments, net | 323 |  |  | (3,355 | ) |  | 2,593 |
| $ | 13,597 |  |  | $ | 52,725 |  |  | $ | 45,388 |
The Company has not provided for U.S. income taxes or foreign withholding taxes on the undistributed earnings from continuing operations of its subsidiaries operating outside of the United States. Undistributed net income of these subsidiaries as of December 31, 2015, were approximately $35.1 million. Such undistributed earnings are considered permanently reinvested. The Company does not provide deferred taxes on translation adjustments on unremitted earnings under the indefinite reversal exception. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable due the complexities of a hypothetical calculation. The Company’s subsidiary in Costa Rica is operating under a 100% tax holiday through December 31, 2018 and a 50% tax holiday for the subsequent four years. The impact of the tax holiday in Costa Rica for the year ended December 31, 2015 was immaterial. A reconciliation of the beginning and ending amount of the Company’s unrecognized tax benefit is as follows (in thousands):
| Amount
Balance at December 31, 2012 | $ | 1,784 |
Decreases related to prior year tax positions | (712 | )
Increases related to current and prior year tax positions | 70,201 |
Balance at December 31, 2013 | 71,273 |
Increases related to prior year tax positions | 33,027 |
Increases related to current year tax positions | 1,329 |
Decreases related to settlements with taxing authorities | (67,204 | )
Balance at December 31, 2014 | 38,425 |
Increases related to prior year tax positions | 5,835 |
Increases related to current year tax positions | 11,882 |
Decreases related to prior year tax positions | (8,193 | )
Balance at December 31, 2015 | $ | 47,949 |
The Company had gross unrecognized tax benefits, inclusive of penalties and interest, of $58.5 million, $44.4 million and $83.0 million at December 31, 2015, 2014, and 2013 respectively. At December 31, 2015, 2014 and 2013, there were $14.9 million, $12.7 million and $13.5 million, respectively, of unrecognized tax benefits that if recognized, would result in a net tax benefit. During the year ended December 31, 2015, the increase in the Company’s gross unrecognized tax benefit was primarily associated with certain business combinations. During the year ended December 31, 2014, the decrease in total gross unrecognized tax benefits was due to a favorable tax settlement in November 2014 with taxing authorities related to a previously uncertain tax position. The result of the settlement was a reduction in the unrecognized tax benefit offset by an increase in current taxes payable and deferred tax liabilities. Additionally, the Company recorded a net tax benefit as a result of the settlement of approximately $6.6 million. The Company anticipates that the unrecognized tax benefits will decrease by approximately $32.0 million in the next twelve months due to a settlement with taxing authorities. The uncertain tax benefit is included in “Other liabilities” in the Company’s consolidated statements of financial condition. The Company recognizes interest and penalties related to unrecognized tax benefits in its tax expense. The Company recognized expense of approximately $0.3 million and $1.3 million in interest and penalties during the years ended December 31, 2015 and 2014, respectively. The Company files U.S. federal, state, and foreign income tax returns in jurisdictions with varying statutes of limitations. The 2012 through 2015 tax years remain subject to examination by federal taxing authorities, 2011 through 2015 tax years generally remain subject to examination by state tax authorities, and the 2012 through 2015 tax years remain subject to examination by foreign tax authorities. Tax years from 2008 forward remain open at certain of the Company’s subsidiaries for adjustment for federal and state tax purposes. Certain of the Company’s foreign subsidiaries have net operating loss carry forwards in the amount of approximately $63.5 million, which can be carried forward indefinitely. One of the Company’s domestic subsidiaries has a net operating loss carry forward in the approximate amount of $1.6 million which will begin to expire in 2024 unless previously utilized.

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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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