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INCOME TAXES | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES |
6. | INCOME TAXES
The Tax Cuts and Jobs Act (TCJA) was signed into law by the President on Friday December 22, 2017. The TCJA creates a territorial tax system, which will generally allow companies to repatriate future foreign earnings without incurring additional U.S. taxes. It also includes a reduction in the corporate tax rate from a top rate of 35% to a flat rate of 21%, changes in business deductions, and many international provisions. One of the main provisions of the TCJA requires the Company to compute a tax based on a deemed repatriation of deferred foreign income, whether or not actually distributed. The Company has computed a reasonable estimate of this amount to be $1,102, net of foreign tax credits, and has reflected it as a component of income tax provision in the consolidated statements of income during 2017. The Company has elected to pay the total amount of deemed repatriation tax annually over eight installment periods, and has reflected these payments as noncurrent taxes payable in the consolidated balance sheets as of December 31, 2017. Due to the inherent complexity of the calculation for the deemed repatriation tax, the Company intends to follow the elective guidance outlined in SEC Staff Accounting Bulletin (SAB) 118, which allows for a measurement period to adjust for the financial reporting impacts of the TCJA. While we believe our estimate of the deemed repatriation tax and related liability to be reasonable, the calculation of accumulated income from our foreign subsidiaries, and the precise application and amount of the foreign tax credit are subject to change as new information becomes available. As new information is collected, the initial estimate of the deemed repatriation tax disclosed above might require adjustment. Any such adjustment will be reflected in the same reporting period as the actual adjustment and disclosed in accordance with SAB 118. An additional provision of the TCJA is the implementation of the Global Intangible-Low Taxed Income Tax, or "GILTI". The tax is effective for years beginning after December 31, 2017, and the Company believes it may be subject to the GILTI provisions. The Company has implemented a policy to account for the impact of GILTI in the period in which the tax actually applies to the Company. Accordingly, no direct impacts of the GILTI have been included in the consolidated financial statements for the period ended December 31, 2017. The Company does not expect for such provisions to have a material impact on its consolidated financial statements in 2018. Income before income taxes includes the following components:
|  | 2017 |  |  | 2016 |  |  | 2015 |
United States |  | $ | 22,695 |  |  | $ | 25,038 |  |  | $ | 19,850 |
Foreign |  |  | 7,644 |  |  |  | 6,039 |  |  |  | 5,013 |
Total |  | $ | 30,339 |  |  | $ | 31,077 |  |  | $ | 24,863 |
The provision for income taxes on income consisted of the following in 2017, 2016 and 2015:
|  | 2017 |  |  | 2016 |  |  | 2015 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 4,871 |  |  | $ | 5,016 |  |  | $ | 5,778 |
Federal – Deemed Repatriation |  |  | 1,102 |  |  |  | — |  |  |  | — |
State |  |  | (1,435 | ) |  |  | 955 |  |  |  | 913 |
Foreign |  |  | 3,653 |  |  |  | 1,965 |  |  |  | 1,623 |
|  |  | 8,191 |  |  |  | 7,936 |  |  |  | 8,314 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (919 | ) |  |  | 3,057 |  |  |  | 548 |
State |  |  | 150 |  |  |  | 205 |  |  |  | 47 |
Foreign |  |  | (99 | ) |  |  | (43 | ) |  |  | (22 | )
|  |  | (868 | ) |  |  | 3,219 |  |  |  | 573 |
|  | $ | 7,323 |  |  | $ | 11,155 |  |  | $ | 8,887 |
The principal differences between the federal statutory tax rate and the income tax expense in 2017, 2016 and 2015:
|  | 2017 |  |  | 2016 |  |  | 2015 |
Federal statutory tax rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State taxes, net of federal tax benefit |  |  | 1.0 | % |  |  | 3.8 | % |  |  | 3.0 | %
Excess of (decreases in) foreign tax over US tax on foreign income |  |  | 2.9 | % |  |  | (0.5 | )% |  |  | (1.1 | )%
Remeasurement of deferred taxes under TCJA |  |  | (7.7 | )% |  |  | — | % |  |  | — | %
Deemed repatriation tax |  |  | 3.6 | % |  |  | — | % |  |  | — | %
Domestic tax deductions and credits |  |  | (3.1 | )% |  |  | (2.7 | )% |  |  | (1.2 | )%
Release of unrecognized tax benefit |  |  | (5.8 | )% |  |  | — | % |  |  | — | %
Other |  |  | (1.8 | )% |  |  | 0.2 | % |  |  | — | %
Effective tax rate |  |  | 24.1 | % |  |  | 35.8 | % |  |  | 35.7 | %
Deferred tax assets and liabilities are determined based on the differences between the financial and tax basis of existing assets and liabilities using the currently enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred income tax assets and liabilities reflect the impact of temporary differences between the amounts of assets and liabilities for financial reporting and income tax reporting purposes. Temporary differences and carry forwards which give rise to deferred tax assets and liabilities at December 31, 2017 and 2016 are as follows:
|  | 2017 |  |  | 2016 |
Deferred tax assets: |  |  |  |  |  |  |  |
Allowance for doubtful accounts |  | $ | 181 |  |  | $ | 58 |
Accruals and reserves |  |  | 1,673 |  |  |  | 2,552 |
Other |  |  | 644 |  |  |  | 259 |
Total deferred tax assets |  |  | 2,498 |  |  |  | 2,869 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property, plant, and equipment |  |  | 3,579 |  |  |  | 3,610 |
Investments in foreign subsidiaries |  |  | — |  |  |  | 1,215 |
Total deferred tax liabilities |  |  | 3,579 |  |  |  | 4,825 |
Valuation Allowance |  |  | (44 | ) |  |  | (37 | )
Net deferred tax asset/(liability) |  | $ | (1,125 | ) |  | $ | (1,993 | )
Deferred tax assets represent the future tax benefit of future deductible differences and, if it is more likely than not that a tax asset will not be realized, a valuation allowance is required to reduce the recorded deferred tax assets to net realizable value. The Company has evaluated positive and negative evidence to assess the realizability of its deferred taxes. Based on the evidence, the Company believes it is more likely than not that its deferred tax assets will be realizable. Accordingly, the Company has not included a valuation allowance against its deferred tax assets at this time. The deferred tax liability for undistributed investments in foreign subsidiaries was reversed in 2017 due to the elimination of the tax resulting from the tax provisions passed as part of the TCJA. We plan to repatriate a portion of our undistributed foreign earnings to the United States. However, we are still in the process of determining the timing and the amount of such distributions. As of December 31, 2017, the Company had no federal net operating loss carryforwards, but had a state net operating loss carryforward of $865. Tax positions are evaluated in a two-step process. The Company first determines whether it is more likely than not that a position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold, it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being recognized. A summary of the activity of the unrecognized tax benefits for the years ended December 31, 2017, 2016 and 2015, is presented below:
|  | 2017 |  |  | 2016 |  |  | 2015 |
Unrecognized tax benefits – January 1 |  |  | 1,037 |  |  |  | 792 |  |  |  | 526 |
Gross increases – tax positions in prior period |  |  | 120 |  |  |  | 245 |  |  |  | 266 |
Gross decreases – tax positions in prior period |  |  | (1,157 | ) |  |  | — |  |  |  | — |
Unrecognized tax benefits – December 31 |  | $ | — |  |  | $ | 1,037 |  |  | $ | 792 |
During 2016, the Company accrued interest of $19 and penalties of $198 related to the unrecognized tax benefits in the chart above. The liability in total for the interest and penalties at December 31, 2016 was $217. During 2017, the Company accrued additional interest of $1 and penalties of $61 related to the unrecognized tax benefit, but subsequently released the $1,157 liability for the unrecognized tax benefits in full, including all related interest and penalties, due to changes in judgment resulting from the evaluation of new information not previously available. The tax benefits identified in the chart above would affect our effective tax rate if recognized. The Company is subject to United States federal income taxes, as well as income taxes in various states and foreign jurisdictions. The Company’s 2016 and later tax years remain open to examination by the tax authorities. With few exceptions, as of December 31, 2017, the Company is no longer subject to U.S. federal, state or non-U.S. income tax examinations prior to 2014.

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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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