11.Income Taxes

 

The following table includes the Company’s income (loss) before income tax provision (benefit), income tax provision (benefit) and effective tax rate:

 

 

The Company’s effective tax rate in the three months ended September 30, 2016, was lower than the effective tax rate in the three months ended September 30, 2015, primarily due to various permanent items and accrual for reserves for uncertain tax positions. The Company’s effective tax rate in the nine months ended September 30, 2016, was lower than the effective tax rate in the nine months ended September 30, 2015, primarily due to a decrease in the tax rate for federal purposes from 35% to 34%, various permanent items and accrual for reserves for uncertain tax positions.

 

The liability for unrecognized tax benefits was $15,060 and $14,129 at September 30, 2016 and December 31, 2015, respectively. At September 30, 2016, the amount of unrecognized tax benefits that would benefit the Company’s effective tax rate, if recognized, was $15,060. At this time, the Company does not believe the liability will materially decrease in the next twelve months.

 

The Company recognizes potential interest and penalties related to unrecognized tax benefits in income tax expense. The Company recognized interest and penalties of $723 and $(158) during the nine and twelve months ended September 30, 2016 and December 31, 2015, 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 Company’s tax returns for the calendar years ended December 31, 2015, 2014, and 2013 remain open to examination by the Internal Revenue Service in their entirety. With respect to state taxing jurisdictions, the Company’s tax returns for calendar years ended December 31, 2015, 2014, and 2013 remain open to examination by various state revenue services.

 

Our Indian subsidiaries are currently under examination by the India tax authorities for the fiscal years ending March 31, 2005 and forward. Based on the outcome of the examinations of our subsidiaries or the result of the expiration of statutes of limitations it is reasonably possible that the unrecognized tax benefits could change from those recorded in the consolidated balance sheet. It is possible that one or more of these audits may be finalized within the next twelve months.