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INCOME TAXES | 12 Months Ended
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Jan. 01, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The provision for income taxes is comprised of the following (in thousands):
| 2016 |  | 2015 |  | 2014
Current taxes: |  |  |  |  |
Federal | $ | 12,082 |  |  | $ | 12,665 |  |  | $ | (161 | )
State | 5,448 |  |  | 5,611 |  |  | 2,614 |
Foreign | 2,677 |  |  | 1,882 |  |  | 951 |
Total current taxes | 20,207 |  |  | 20,158 |  |  | 3,404 |
Deferred taxes: |  |  |  |  |
Federal | (20,693 | ) |  | 4,963 |  |  | 10,198 |
State | (4,064 | ) |  | 81 |  |  | 2,481 |
Foreign | (539 | ) |  | (2 | ) |  | 86 |
Total deferred taxes | (25,296 | ) |  | 5,042 |  |  | 12,765 |
Provision for income taxes | $ | (5,089 | ) |  | $ | 25,200 |  |  | $ | 16,169 |
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 (Loss) are as follows (in thousands, except percentages):
| 2016 |  | % |  | 2015 |  | % |  | 2014 |  | %
Income tax expense (benefit) based on statutory rate | $ | (7,119 | ) |  | 35.0 | % |  | $ | 33,745 |  |  | 35.0 | % |  | $ | 28,641 |  |  | 35.0 | %
Increase (decrease) resulting from: |  |  |  |  |  |  |  |  |  |  |
State income taxes, net of federal benefit | 1,373 |  |  | (6.8 | ) |  | 4,175 |  |  | 4.3 |  |  | 3,213 |  |  | 3.9 |
Tax credits, net | (17,141 | ) |  | 84.3 |  |  | (14,483 | ) |  | (15.0 | ) |  | (18,564 | ) |  | (22.6 | )
Non-deductible goodwill impairment charge | 17,694 |  |  | (87.0 | ) |  | — |  |  | — |  |  | — |  |  | — |
Non-deductible/non-taxable items | 630 |  |  | (3.1 | ) |  | 2,456 |  |  | 2.5 |  |  | 1,983 |  |  | 2.4 |
Foreign taxes | 993 |  |  | (4.8 | ) |  | (933 | ) |  | (1.0 | ) |  | 1,037 |  |  | 1.3 |
Other, net | (1,519 | ) |  | 7.4 |  |  | 240 |  |  | 0.3 |  |  | (141 | ) |  | (0.2 | )
Total taxes on income (loss) | $ | (5,089 | ) |  | 25.0 | % |  | $ | 25,200 |  |  | 26.1 | % |  | $ | 16,169 |  |  | 19.8 | %
Our effective tax rate for fiscal 2016 was 25.0%. The principal difference between the statutory federal income tax rate of 35.0% and our effective income tax rate results primarily from non-deductible goodwill impairment and federal 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. In December of 2015, WOTC was restored through 2019 as a result of the Protecting Americans from Tax Hikes Act of 2015. We recognized $6.0 million of tax benefits from prior year WOTC. We also recognized $17.7 million of tax detriment from non-deductible goodwill impairment. Other differences between the statutory federal income tax rate of 35.0% and our effective tax rate of 25.0% result from state and foreign income taxes and certain non-deductible expenses. The components of deferred tax assets and liabilities were as follows (in thousands):
| 2016 |  | 2015
Deferred tax assets: |  |  |
Allowance for doubtful accounts | $ | 1,970 |  |  | $ | 2,295 |
Accounts payable and other accrued expenses | 8,577 |  |  | 4,896 |
Net operating loss carryforwards | 2,287 |  |  | 2,385 |
Tax credit carryforwards | 2,835 |  |  | 8,315 |
Accrued wages and benefits | 9,470 |  |  | 10,791 |
Deferred compensation | 7,003 |  |  | 5,156 |
Other | 1,090 |  |  | 1,057 |
Total | 33,232 |  |  | 34,895 |
Valuation allowance | (2,266 | ) |  | (3,227 | )
Total deferred tax asset, net of valuation allowance | 30,966 |  |  | 31,668 |
Deferred tax liabilities: |  |  |
Prepaid expenses, deposits and other current assets | (2,697 | ) |  | (3,141 | )
Depreciation and amortization | (18,330 | ) |  | (44,383 | )
Workers’ compensation | (3,169 | ) |  | (3,643 | )
Total deferred tax liabilities | (24,196 | ) |  | (51,167 | )
Net deferred tax (liabilities) asset, end of year | $ | 6,770 |  |  | $ | (19,499 | )
Deferred taxes related to our foreign currency translation were de minimis for 2016, 2015, and 2014. The following table summarizes our net operating losses (“NOLs”) and credit carryforwards along with their respective valuation allowance as of January 1, 2017 (in thousands):
| Carryover Tax Benefit |  | Valuation Allowance |  | Expected Benefit |  | Year Expiration Begins
Year-end tax attributes: |  |  |  |  |  |  |
Federal WOTCs | $ | 1,419 |  |  | $ | — |  |  | $ | 1,419 |  |  | 2024
State NOLs | 1,093 |  |  | — |  |  | 1,093 |  |  | Various
Foreign NOLs | 1,194 |  |  | (1,194 | ) |  | — |  |  | Various
California Enterprise Zone credits (1) | 1,416 |  |  | (1,072 | ) |  | 344 |  |  | 2023
Total | $ | 5,122 |  |  | $ | (2,266 | ) |  | $ | 2,856 |  |  |
(1) | The California Enterprise 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. We expect to utilize the remaining Seaton federal WOTC carryover of approximately $1.4 million in 2017. Pre-tax income from operations outside the U.S. was $3.1 million ($12.1 million loss with impairment), $7.1 million, and $3.1 million in 2016, 2015, and 2014, respectively. We have not provided for deferred U.S. income taxes relating to undistributed foreign earnings of $18.6 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 January 1, 2017, our liability for unrecognized tax benefits was $2.2 million. If recognized, $1.5 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 January 1, 2017. This liability is recorded in Other non-current liabilities on our Consolidated Balance Sheets. In general, the tax years 2013 through 2015 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):
| 2016 |  | 2015 |  | 2014
Balance, beginning of fiscal year | $ | 2,195 |  |  | $ | 2,039 |  |  | $ | 2,035 |
Increases for tax positions related to the current year | 348 |  |  | 436 |  |  | 389 |
Reductions due to lapsed statute of limitations | (301 | ) |  | (280 | ) |  | (385 | )
Balance, end of fiscal year | $ | 2,242 |  |  | $ | 2,195 |  |  | $ | 2,039 |
We recognize interest and penalties related to unrecognized tax benefits within Income tax expense on the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss). 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 2016 and, in total, as of January 1, 2017, have recognized a liability for penalties of $0.2 million and interest of $0.9 million.

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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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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