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INCOME TAXES | 12 Months Ended
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Dec. 31, 2018
INCOME TAXES |
INCOME TAXES | 9. INCOME TAXES The provision for income taxes is based on income before income taxes as follows (in thousands):
|  | For the year ended
|  | December 31, |  | December 31, |  | December 31,
|  | 2018 |  | 2017 |  | 2016
Domestic |  | $ | 10,894 |  | $ | 8,076 |  | $ | 4,288
Foreign |  |  | 9,787 |  |  | 8,060 |  |  | 8,515
Income before income taxes |  | $ | 20,681 |  | $ | 16,136 |  | $ | 12,803
Components of the total provision for income taxes are as follows (in thousands):
|  | For the year ended
|  | December 31, |  | December 31, |  | December 31,
|  | 2018 |  | 2017 |  | 2016
Current provision |  |  |  |  |  |  |  |  |
Domestic |  | $ | 1,663 |  | $ | 4,750 |  | $ | (70)
Foreign |  |  | 3,169 |  |  | 2,566 |  |  | 2,025
Total current provision |  |  | 4,832 |  |  | 7,316 |  |  | 1,955
Deferred provision |  |  |  |  |  |  |  |  |
Domestic |  |  | 675 |  |  | 925 |  |  | 1,438
Foreign |  |  | (751) |  |  | (141) |  |  | 332
Total deferred provision |  |  | (76) |  |  | 784 |  |  | 1,770
Provision for income taxes |  | $ | 4,756 |  | $ | 8,100 |  | $ | 3,725
The provision for income taxes differs from the amount determined by applying the federal statutory rate as follows:
|  | For the year ended |
|  | December 31, |  | December 31, |  | December 31, |
|  | 2018 |  | 2017 |  | 2016 |
Tax provision, computed at statutory rate |  | 21.0 | % | 35.0 | % | 34.0 | %
State tax, net of federal impact |  | 3.0 | % | 3.6 | % | 4.6 | %
Change in valuation allowance |  | 2.8 | % | 1.9 | % | 0.9 | %
Effect of foreign tax rate differences |  | 3.4 | % | (4.2) | % | (6.5) | %
Permanent items, other |  | 0.8 | % | 0.2 | % | (0.4) | %
R&D Credit |  | (0.8) | % | (2.2) | % | (1.7) | %
Restricted Stock Awards |  | (2.3) | % | (2.6) | % | (2.7) | %
Effect of Tax Cuts and Jobs Act |  | (5.1) | % | 19.4 | % | 0.0 | %
Other |  | 0.2 | % | (0.9) | % | 0.9 | %
Provision for income taxes |  | 23.0 | % | 50.2 | % | 29.1 | %
The Tax Cuts and Jobs Act was enacted on December 22, 2017. The provisions of the Act significantly revised the U.S. corporate income tax rules and, among other things, required companies to record a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and reduced the US federal corporate tax rate from 35% to 21%, resulting in a remeasurement of deferred tax assets and liabilities. In 2017, the Company recorded provisional amounts for certain enactment date effects of the Act by applying the guidance of SEC Staff Accounting Bulletin No. 118 (“SAB 118”) because the enactment date accounting for these effects had not been completed. In 2018, the Company completed its accounting for these provisions and recorded an income tax benefit related to the enactment date effect of the Act. In 2017 the Company recognized a provisional amount of $3,133 for the effects of the one-time transition tax and of the rate reduction on its exiting deferred tax balances. This amount was included as a component of the provision for income taxes. In 2018, the amount was adjusted to $2,898, resulting in a reduction to the 2018 provision for income taxes by $235. The adjustments made to enactment date provisional amounts decreased the effective tax rate in 2018 by 1.1% The one-time transition tax was based on total post-1986 earnings and profits (E&P) which had been previously deferred from US income taxes. In 2017, the Company recorded a provisional amount for the one-time transition tax liability resulting in a transition tax liability of $3,140 at December 31, 2017. Upon further analyses of the Act and notices and regulations issued and proposed by the US Department of Treasury and the Internal Revenue Service (IRS), the Company finalized its calculation of the transition tax liability during 2018. As a result, the amount decreased by $17, which is included as a component of the provision for income taxes. The Company has elected to pay its transition tax liability over the eight-year period provided in the Act. The Company had tax return overpayments that the IRS has indicated will first be applied to the transition tax liability. As of December 31, 2018, the remaining balance of our transition tax obligation is $1,855 which will be paid over the next several years. This amount is included in Other long term liabilities on the consolidated balance sheet. As of December 31, 2017, 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 %. The provisional amount recorded related to the remeasurement of deferred tax balances was $(7). Upon further analysis of certain aspects of the Act and refinement of the Company’s calculations during 2018, the Company decreased this provision amount by $218, which is included as a component of the provision for income taxes. The tax effects of significant temporary differences and credit and operating loss carryforwards that give rise to the net deferred tax assets and tax liabilities are as follows (in thousands):
|  | December 31, |  | December 31,
|  | 2018 |  | 2017
Noncurrent deferred tax assets: |  |  |  |  |  |
Employee benefit plans |  | $ | 1,983 |  | $ | 1,896
Net operating loss and tax credit carryforwards |  |  | 1,507 |  |  | 203
Allowances and other |  |  | 983 |  |  | 640
Other |  |  | 326 |  |  | 370
Total noncurrent deferred tax assets |  |  | 4,799 |  |  | 3,109
Valuation allowance |  |  | (1,003) |  |  | (50)
Net noncurrent deferred tax assets: |  | $ | 3,796 |  | $ | 3,059
Net noncurrent deferred tax liabilities: |  |  |  |  |  |
Property and Equipment |  | $ | 3,708 |  | $ | 3,001
Goodwill and Intangibles |  |  | 3,188 |  |  | 3,398
Other |  |  | 419 |  |  | 255
Total deferred tax liabilities |  | $ | 7,315 |  | $ | 6,654
Net deferred tax asset/(deferred tax liability) |  | $ | (3,519) |  | $ | (3,595)
Realization of the Company’s recorded deferred tax assets is dependent upon the Company generating sufficient taxable income in the appropriate tax jurisdictions in future years to obtain benefit from the reversal of net deductible temporary differences and from utilization of net operating losses and tax credit carryforwards. The Company generated excess foreign tax credits in 2017 due to the one-time transition tax required by enactment of the Tax Cuts and Jobs Act in the amount of $0.9 million. The Company determined it is more likely than not that it will not realize a tax benefit from these credits. Additionally, the Company has incurred net operating losses in certain states that it is more likely than not will not be realized. The tax effect of these losses in $0.1 million. Therefore, the Company recognized a full valuation allowance related to these foreign tax credits and state net operating losses. The Company has foreign operating losses that relate to a foreign subsidiary acquired in 2010. At the time of the acquisition, the Company could not conclude, on a more likely than not basis, that it would ultimately realize tax benefits from these losses and credits, and therefore valued the deferred benefit at zero. At December 31, 2018, the Company believes it is more likely than not it will realize the benefits of its deferred tax assets and has recorded a full reversal of the valuation allowance related to the foreign operating losses. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are changed. The Company believes that it is more likely than not that it will realize the benefits of its deferred tax assets, net of valuation allowances as of December 31, 2018. The Company files income tax returns in various U.S. and foreign taxing jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal and state tax examinations in its major tax jurisdictions for periods before 2015. The Company is no longer subject to tax examinations in The Netherlands or Sweden for periods before 2013, in Germany for periods before 2014 and in Portugal for periods before 2015. In general, it is the practice and intention of the Company to reinvest the earnings of its non-domestic subsidiaries in activities outside the United States. Exceptions may be made on a year-by-year basis to repatriate earnings of certain foreign subsidiaries based on cash needs in the United States. The Company intends to pay a one-time distribution of a portion of foreign income previously taxed in the United States. As of December 31, 2018, foreign withholding taxes of $200 have been provided for unremitted earnings of foreign subsidiaries based on the amount of anticipated distributions. The Company intends that this will be a one-time distribution and intends to continue to indefinitely reinvest its other foreign earnings.

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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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