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INCOME TAXES | 12 Months Ended
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Dec. 25, 2015
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The provision for income taxes is comprised of the following (in thousands):
| 2015 |  | 2014 |  | 2013
Current taxes: |  |  |  |  |
Federal | $ | 12,665 |  |  | $ | (161 | ) |  | $ | 14,174 |
State | 5,611 |  |  | 2,614 |  |  | 5,196 |
Foreign | 1,882 |  |  | 951 |  |  | 488 |
Total current taxes | 20,158 |  |  | 3,404 |  |  | 19,858 |
Deferred taxes: |  |  |  |  |
Federal | 4,963 |  |  | 10,198 |  |  | (2,819 | )
State | 81 |  |  | 2,481 |  |  | (1,026 | )
Foreign | (2 | ) |  | 86 |  |  | — |
Total deferred taxes | 5,042 |  |  | 12,765 |  |  | (3,845 | )
Provision for income taxes | $ | 25,200 |  |  | $ | 16,169 |  |  | $ | 16,013 |
The items accounting for the difference between income taxes computed at the statutory federal income tax rate and income taxes reported in the Consolidated Statements of Operations and Comprehensive Income are as follows (in thousands except percentages):
| 2015 |  | % |  | 2014 |  | % |  | 2013 |  | %
Income tax expense based on statutory rate | $ | 33,745 |  |  | 35.0 | % |  | $ | 28,641 |  |  | 35.0 | % |  | $ | 21,328 |  |  | 35.0 | %
Increase (decrease) resulting from: |  |  |  |  |  |  |  |  |  |  |
State income taxes, net of federal benefit | 4,175 |  |  | 4.3 |  |  | 3,213 |  |  | 3.9 |  |  | 2,536 |  |  | 4.2 |
Tax credits, net | (14,483 | ) |  | (15.0 | ) |  | (18,564 | ) |  | (22.6 | ) |  | (10,790 | ) |  | (17.7 | )
Non-deductible/non-taxable items | 2,456 |  |  | 2.5 |  |  | 1,983 |  |  | 2.4 |  |  | 2,124 |  |  | 3.5 |
Foreign taxes | (933 | ) |  | (1.0 | ) |  | 1,037 |  |  | 1.3 |  |  | 488 |  |  | 0.8 |
Other, net | 240 |  |  | 0.3 |  |  | (141 | ) |  | (0.2 | ) |  | 327 |  |  | 0.5 |
Total taxes on income | $ | 25,200 |  |  | 26.1 | % |  | $ | 16,169 |  |  | 19.8 | % |  | $ | 16,013 |  |  | 26.3 | %
Our effective tax rate on earnings for fiscal 2015 was 26.1%. The comparability of taxes on income for fiscal 2015, to the same period in 2014, was impacted primarily by the Work Opportunity Tax Credit ("WOTC"). This tax credit is designed to encourage employers to hire workers from certain targeted groups with higher than average unemployment rates. The Protecting Americans from Tax Hikes Act of 2015 was signed into law on December 18, 2015, retroactively restoring the WOTC for 2015 through 2019. During fiscal 2015, we also generated approximately $4.8 million of discrete tax benefits from prior year federal and state hiring credits. These hiring credits include the federal WOTC and the California Enterprise Zone Tax Credit (“EZTC”). Our effective tax rate on earnings for fiscal 2014 was 19.8%. The comparability of taxes on income for fiscal 2014, to the same period in 2013, was impacted primarily by the WOTC. The Tax Increase Protection Act of 2014 was signed into law on December 19, 2014, retroactively restoring the WOTC for 2014. During fiscal 2014, we also generated approximately $8.7 million of credit benefit from prior year wages because more veterans with higher credits were certified than expected, our qualified workers worked longer generating more credits than expected, and many states processed a backlog of credit applications with higher than expected certification rates. The components of deferred tax assets and liabilities were as follows (in thousands):
| 2015 |  | 2014
Deferred tax assets: |  |  |
Allowance for doubtful accounts | $ | 2,295 |  |  | $ | 2,255 |
Workers’ compensation | — |  |  | 1,135 |
Accounts payable and other accrued expenses | 4,896 |  |  | 2,641 |
Net operating loss carryforwards | 2,385 |  |  | 7,277 |
Tax credit carryforwards | 8,315 |  |  | 7,343 |
Accrued wages and benefits | 10,791 |  |  | 7,918 |
Foreign currency translation adjustment | — |  |  | 86 |
Deferred compensation | 5,156 |  |  | 2,991 |
Other | 1,057 |  |  | 1,577 |
Total | 34,895 |  |  | 33,223 |
Valuation allowance | (3,227 | ) |  | (2,844 | )
Total deferred tax asset, net of valuation allowance | 31,668 |  |  | 30,379 |
Deferred tax liabilities: |  |  |
Prepaid expenses, deposits and other current assets | (3,141 | ) |  | (2,888 | )
Depreciation and amortization | (44,383 | ) |  | (40,804 | )
Workers’ compensation | (3,643 | ) |  | — |
Taxes on undistributed foreign earnings | — |  |  | (1,011 | )
Total deferred tax liabilities | (51,167 | ) |  | (44,703 | )
Net deferred tax (liabilities) asset, end of year | (19,499 | ) |  | (14,324 | )
Net deferred tax asset, current | 7,393 |  |  | 5,444 |
Net deferred tax (liabilities) asset, non-current | $ | (26,892 | ) |  | $ | (19,768 | )
Deferred taxes related to our foreign currency translation were de minimis for 2015, 2014, and 2013. The following table summarizes our net operating losses (“NOLs”) and credit carryforwards along with their respective valuation allowance as of December 25, 2015 (in thousands):
| Carryover Tax Benefit |  | Valuation Allowance |  | Expected Benefit |  | Year Expiration Begins
Year end tax attributes: |  |  |  |  |  |  |
Seaton federal WOTCs | $ | 6,408 |  |  | $ | — |  |  | $ | 6,408 |  |  | 2024
Seaton state NOLs | 1,385 |  |  | (1,385 | ) |  | — |  |  | Various
Seaton foreign NOLs | 510 |  |  | (498 | ) |  | 12 |  |  | Various
Puerto Rico NOLs | 488 |  |  | (488 | ) |  | — |  |  | 2016
California zone credits (1) | 1,554 |  |  | (855 | ) |  | 699 |  |  | 2023
Foreign tax credits | 355 |  |  | — |  |  | 355 |  |  | 2024
Total | $ | 10,700 |  |  | $ | (3,226 | ) |  | $ | 7,474 |  |  |
(1) | The California Zone Credits fully expire in 2023.
Our ability to utilize WOTC that carryforward from the Seaton acquisition is limited by Sec. 382 of the Internal Revenue Code. However, pursuant to Notice 2003-65, 2003-40 IRB 747, this limit is increased in the five post-acquisition years by Seaton’s net unrealized built-in gains. The amount of tax we may offset with Seaton carryover tax attributes is approximately $5.0 million annually. Pre-tax income from operations outside the U.S. was $7.1 million, $3.1 million, and $1.3 million in 2015, 2014, and 2013, respectively. We have not provided for deferred U.S. income taxes relating to undistributed foreign earnings of $13.2 million as we consider those earning to be permanently invested. Determination of the unrecognized deferred tax liability that would be incurred if such amounts were repatriated is not practicable. As of December 25, 2015, our liability for unrecognized tax benefits was $2.2 million. If recognized, $1.4 million would impact our effective tax rate. We do not believe the amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of the year ended December 25, 2015. This liability is recorded in Other non-current liabilities on our Consolidated Balance Sheets. In general, the tax years 2012 through 2014 remain open to examination by the major taxing jurisdictions where we conduct business. The following table summarizes the activity related to our unrecognized tax benefits (in thousands):
| 2015 |  | 2014 |  | 2013
Balance, beginning of fiscal year | $ | 2,039 |  |  | $ | 2,035 |  |  | $ | 1,884 |
Increases for tax positions related to the current year | 436 |  |  | 389 |  |  | 402 |
Reductions due to lapsed statute of limitations | (280 | ) |  | (385 | ) |  | (251 | )
Balance, end of fiscal year | $ | 2,195 |  |  | $ | 2,039 |  |  | $ | 2,035 |
We recognize interest and penalties related to unrecognized tax benefits within Income tax expense on the accompanying Consolidated Statements of Operations and Comprehensive Income. Accrued interest and penalties are included within Other long-term liabilities on the Consolidated Balance Sheets. Related to the unrecognized tax benefits noted above, we accrued a de minimis amount for interest and penalties during fiscal 2015 and, in total, as of December 25, 2015, have recognized a liability for penalties of $0.2 million and interest of $0.8 million.

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