Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

v3.3.0.814
Income Taxes
9 Months Ended
Sep. 30, 2015
Income Taxes  
Income Taxes

10.Income Taxes

 

The following table includes the Companys income before income tax provision, income tax provision and effective tax rate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

    

2015

    

2014

    

2015

    

2014

 

Income before income tax provision

 

$

5,981

 

$

5,941

 

$

14,675

 

$

16,098

 

Income tax provision

 

 

2,679

 

 

2,173

 

 

6,326

 

 

5,812

 

Effective tax rate

 

 

44.8

%  

 

36.6

%  

 

43.1

%  

 

36.1

%  

 

The Companys effective tax rate in the three months ended September 30, 2015, was higher than the effective tax rate in the three months ended September 30, 2014, primarily due to a valuation allowance against certain losses, an increase in permanent items related to transaction costs and meals and entertainment. The Companys effective tax rate in the nine months ended September 30, 2015, was higher than the effective tax rate in the nine months ended September 30, 2014, primarily due to the increase in tax rate for federal purposes from 34% to 35%, an increase in the blended state tax rate, the true-up on India unremitted earnings that was recorded in the nine months ended September 30, 2014 and not in the same period in 2015, the release of certain uncertain tax position reserves in the nine months ended September 30, 2014 that were not repeated in the same period in 2015 and non-recognition of a loss from a subsidiary due to a full valuation allowance.

 

The liability for unrecognized tax benefits reported in other non-current liabilities was $2,000 and $2,092 at September 30, 2015 and December 31, 2014, respectively. At September 30, 2015, the amount of unrecognized tax benefits that would benefit the Companys effective tax rate, if recognized, was $1,884. At this time, the Company estimates it is reasonably possible that the liability for unrecognized tax benefits will decrease by as much as $1,676 in the next twelve months due to the completion of reviews by tax authorities and the expiration of certain statutes of limitations.

 

The Company recognizes potential interest and penalties related to unrecognized tax benefits in income tax expense. The Company had accrued interest and penalties of $452 and $594 as of September 30, 2015 and December 31, 2014, respectively.

 

The Company files a consolidated federal income tax return and separate tax returns with various states. Additionally, foreign subsidiaries of the Company file tax returns in foreign jurisdictions. The Companys tax returns for the calendar years ended December 31, 2014, 2013, and 2012 remain open to examination by the Internal Revenue Service in their entirety. With respect to state taxing jurisdictions, the Companys tax returns for calendar years ended December 31, 2014, 2013, 2012, 2011 and 2010 remain open to examination by various state revenue services.

 

The Companys Indian subsidiary is currently under examination by the India Tax Authority for the fiscal year ended March 31, 2011 and 2012. It is possible that one or more of these audits may be finalized within the next twelve months.

 

Included in income tax receivable which is included in prepaid expenses and other current assets on the condensed consolidated balance sheet as of September 30, 2015, is $18,010 related to excess tax benefits from stock-based compensation.