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INCOME TAXES (TABLES) | 12 Months Ended
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Dec. 31, 2017
INCOME TAXES [ABSTRACT] |
Sources of Pre-Tax Accounting Income | The sources of pre-tax operating income are as follows (in thousands):
|  | Year Ended December 31, |
|  | 2017 |  | 2016 |  | 2015 |
Domestic |  | $ | 10,909 |  | $ | (6,216) |  | $ | 25,402 |
Foreign |  |  | 77,978 |  |  | 56,514 |  |  | 60,487 |
Total |  | $ | 88,887 |  | $ | 50,298 |  | $ | 85,889 |
Components of Income Tax Expense (Benefit) | The United States recently enacted comprehensive tax reform legislation known as the Tax Cuts and Jobs Act (the "2017 Tax Act") that, among other things, reduces the U.S. federal corporate income tax rate from 35% to 21% and implements a territorial tax system, but imposes an alternative “base erosion and anti-abuse tax” (“BEAT”), and an incremental tax on global intangible low taxed foreign income (“GILTI”) effective January 1, 2018. In addition, the law imposes a one-time mandatory repatriation tax on accumulated foreign earnings on domestic corporations effective for the 2017 tax year. In response, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Act and allows the registrant to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. The Company has not completed its final analysis of the full impact of the 2017 Act on its tax provisions. However, the Company has recognized the provisional impacts related to the one-time transition tax and revaluation of deferred tax balances and included these estimates in our consolidated financial statements for the year ended December 31, 2017. The significant components of this expense include (i) the remeasurement of net deferred tax assets at the lower enacted U.S. federal corporate tax rate, which resulted in a net $1.1 million increase in income tax expense; and (ii) the deemed repatriation tax on unremitted non-U.S. earnings and profits that were previously tax deferred and other tax impacts of the 2017 Tax Act, which resulted in a $62.4 million increase in income tax expense, net of deductions and credits. No amount was booked related to withholding taxes on the changes in indefinite reinvestment assertion on the potential repatriation of foreign earnings as it is the Company’s determination that there would be no material additional amount of tax if the related foreign cash was repatriated to the United States. The Company has not completed its analysis in regard to the full tax impact related to a change in indefinite reinvestment reassertion as the computation is complex and impacted by the provisional calculations outlined above. No additional income taxes have been provided for any remaining outside basis difference inherent in our foreign subsidiaries as these amounts continue to be indefinitely reinvested in foreign operations. Determination of any unrecognized deferred tax liability related to the outside basis difference in investments in foreign subsidiaries is not practicable due to the inherent complexity of the multi-national tax environment in which we operate. The ultimate impact of the 2017 Tax Act may materially differ from the provisional amounts recorded, due to, among other things, additional analysis, changes in interpretations and assumptions we have made, additional regulatory guidance that may be issued, and actions we may take as a result of the Tax Act. In addition, foreign and state governments may enact tax laws in response to the Tax Act that could result in further changes to global taxation and materially affect our financial position and results of operations. Our selection of an accounting policy with respect to the new GILTI rules will depend in part on analyzing our global income to determine whether we expect to have future U.S. inclusions in taxable income related to GILTI, and if so, what the impact is expected to be. We have not yet computed a reasonable estimate of the effect of this provision, and therefore, we have not made a policy decision regarding whether to record deferred taxes related to GILTI nor have we made any adjustments related to GILTI tax in our year-end financial statements. We expect to complete our analysis of the impacts of the 2017 Tax Act within the measurement period in accordance with SAB 118. The components of the Company’s Provision for (benefit from) income taxes are as follows (in thousands):
|  | Year Ended December 31, |
|  | 2017 |  | 2016 |  | 2015 |
Current provision for (benefit from) |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 48,556 |  | $ | (373) |  | $ | 4,094 |
State |  |  | 99 |  |  | 372 |  |  | 1,829 |
Foreign |  |  | 12,643 |  |  | 14,447 |  |  | 4,764 |
Total current provision for (benefit from) |  |  | 61,298 |  |  | 14,446 |  |  | 10,687 |
Deferred provision for (benefit from) |  |  |  |  |  |  |  |  |  |
Federal |  |  | 14,441 |  |  | (2,390) |  |  | (1,895) |
State |  |  | 707 |  |  | 103 |  |  | 1,085 |
Foreign |  |  | 1,629 |  |  | 704 |  |  | 10,127 |
Total deferred provision for (benefit from) |  |  | 16,777 |  |  | (1,583) |  |  | 9,317 |
Total provision for (benefit from) income taxes |  | $ | 78,075 |  | $ | 12,863 |  | $ | 20,004 |
Effective Income Tax Rate Reconciliation Table | The following reconciles the Company’s effective tax rate to the federal statutory rate (in thousands):
|  | Year Ended December 31, |
|  | 2017 |  | 2016 |  | 2015 |
Income tax per U.S. federal statutory rate (35%) |  | $ | 31,110 |  | $ | 17,605 |  | $ | 30,062 |
State income taxes, net of federal deduction |  |  | 460 |  |  | (158) |  |  | 1,603 |
Change in valuation allowances |  |  | (924) |  |  | (129) |  |  | 3,923 |
Foreign income taxes at different rates than the U.S. |  |  | (14,417) |  |  | (10,206) |  |  | (14,490) |
Foreign withholding taxes |  |  | 323 |  |  | 590 |  |  | 958 |
Losses in international markets without tax benefits |  |  | 1,098 |  |  | 2,474 |  |  | 1,999 |
Nondeductible compensation under Section 162(m) |  |  | 647 |  |  | 104 |  |  | 512 |
Liabilities for uncertain tax positions |  |  | 1,607 |  |  | (133) |  |  | 1,756 |
Permanent difference related to foreign exchange gains |  |  | 142 |  |  | 388 |  |  | 162 |
(Income) losses of foreign branch operations |  |  | (824) |  |  | (635) |  |  | (517) |
Non-taxable earnings of noncontrolling interest |  |  | (1,030) |  |  | (1,128) |  |  | (1,349) |
Foreign dividend less foreign tax credits |  |  | (4,798) |  |  | (4,646) |  |  | (4,425) |
Increase in deferred tax liability - branch losses in UK |  |  | — |  |  | — |  |  | (2,530) |
Decrease (increase) to deferred tax asset - change in tax rate |  |  | 1,101 |  |  | 443 |  |  | (526) |
State income tax credits |  |  | 207 |  |  | 100 |  |  | (1,477) |
Foreign earnings taxed currently in U.S. |  |  | 3,143 |  |  | 3,673 |  |  | 2,839 |
Taxes related to prior year filings |  |  | (865) |  |  | 2,554 |  |  | 344 |
Taxes related to US tax reform |  |  | 61,569 |  |  | — |  |  | — |
Other |  |  | (474) |  |  | 1,967 |  |  | 1,160 |
Income tax per effective tax rate |  | $ | 78,075 |  | $ | 12,863 |  | $ | 20,004 |
Schedule of Deferred Tax Assets and Liabilities | The Company’s deferred income tax assets and liabilities are summarized as follows (in thousands):
|  | Year Ended December 31, |
|  | 2017 |  | 2016 |
Deferred tax assets, gross |  |  |  |  |  |  |
Accrued workers compensation, deferred compensation and employee benefits |  | $ | 8,597 |  | $ | 11,212 |
Allowance for doubtful accounts, insurance and other accruals |  |  | 2,197 |  |  | 3,348 |
Amortization of deferred rent liabilities |  |  | 2,352 |  |  | 3,362 |
Net operating losses |  |  | 17,887 |  |  | 20,253 |
Equity compensation |  |  | 1,481 |  |  | 2,489 |
Customer acquisition and deferred revenue accruals |  |  | 7,026 |  |  | 11,739 |
Federal and state tax credits, net |  |  | 50 |  |  | 7,439 |
Depreciation and amortization |  |  | — |  |  | 4,671 |
Unrealized losses on derivatives |  |  | 3,137 |  |  | 13,815 |
Contract acquisition costs |  |  | — |  |  | 1,044 |
Other |  |  | 1,557 |  |  | 2,331 |
Total deferred tax assets, gross |  |  | 44,284 |  |  | 81,703 |
Valuation allowances |  |  | (9,526) |  |  | (9,949) |
Total deferred tax assets, net |  |  | 34,758 |  |  | 71,754 |
Deferred tax liabilities |  |  |  |  |  |  |
Depreciation and amortization |  |  | (12,850) |  |  | — |
Contract acquisition costs |  |  | (5,331) |  |  | — |
Intangible assets |  |  | (15,405) |  |  | (17,971) |
Other |  |  | (446) |  |  | (357) |
Total deferred tax liabilities |  |  | (34,032) |  |  | (18,328) |
Net deferred tax assets |  | $ | 726 |  | $ | 53,426 |
Valuation Allowance Rollforward | Activity in the Company’s valuation allowance accounts consists of the following (in thousands):
|  | Year Ended December 31, |
|  | 2017 |  | 2016 |  | 2015 |
Beginning balance |  | $ | 9,949 |  | $ | 10,139 |  | $ | 10,721 |
Additions of deferred income tax expense |  |  | 2,044 |  |  | 1,914 |  |  | 4,300 |
Reductions of deferred income tax expense |  |  | (2,467) |  |  | (2,104) |  |  | (4,882) |
Ending balance |  | $ | 9,526 |  | $ | 9,949 |  | $ | 10,139 |
Expiration of Net Operating Loss Carryforwards | As of December 31, 2017, after consideration of all tax loss and tax credit carry back opportunities, the Company had tax affected tax loss carry forwards worldwide expiring as follows (in thousands):
2018 |  | $ | 98
2019 |  |  | 205
2020 |  |  | 319
2021 |  |  | 160
After 2021 |  |  | 9,687
No expiration |  |  | 5,282
Total |  | $ | 15,751
Reserve for Uncertain Tax Positions Rollforward | The tabular reconciliation of the reserve for uncertain tax benefits on a gross basis without interest for the three years ended December 31, 2017 is presented below (in thousands):
Balance as of December 31, 2014 |  | $ | 1,661
Additions for current year tax positions |  |  | 1,048
Reductions in prior year tax positions |  |  | —
Balance as of December 31, 2015 |  |  | 2,709
Additions for current year tax positions |  |  | 826
Reductions in prior year tax positions |  |  | (1,153)
Balance as of December 31, 2016 |  |  | 2,382
Additions for current year tax positions |  |  | 916
Reductions in prior year tax positions |  |  | —
Balance as of December 31, 2017 |  | $ | 3,298
Jurisdictions Open to Income Tax Examination | The following table presents the major tax jurisdictions and tax years that are open as of December 31, 2017 and subject to examination by the respective tax authorities:
Tax Jurisdiction |  | Tax Year Ended
United States |  | 2014 to present
Australia |  | 2013 to present
Brazil |  | 2012 to present
Canada |  | 2009 to present
Mexico |  | 2012 to present
Philippines |  | 2015 to present

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