9. TAXES

We are subject to tax examinations in various taxing jurisdictions. The earliest exam years open for examination are as follows:


		Earliest Exam Year
Taxing Authority Jurisdiction:
U.S. Federal		2014
Various U.S. States		2013
Puerto Rico (U.S. Territory)		2012
Canada		2012

Our policy is to accrue interest and penalties on any uncertain tax position as a component of income tax expense. No such expenses were recognized during the three and nine months ended September 30, 2018. We do not believe there will be any material changes in our uncertain tax positions over the next 12 months.

Accounting for uncertainty in income taxes requires financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise’s financial statements. Under this guidance, income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of the standard. We did not have any unrecognized tax benefits and there was no effect on its financial condition or results of operations.

In the third quarter of this year, we recognized a tax benefit of approximately $561,000 as we adjusted the amount of transition tax we need to pay on earnings from our Dominican Republic subsidiary that were brought back to the U.S. following last year’s tax reform. Our original estimate, which was based on initial guidelines, proved to be too high once more specific rules were published midway through 2018. Due to this one-time adjustment, our effective tax rate was 10.5% and 16.2% for the three and nine months ended September 30, 2018, respectively. Excluding this adjustment, we estimate our 2018 effective tax rate to be 20.5%. Our effective tax rate was 34.0% for the three and nine months ended September 30, 2017.