INCOME TAXES (Notes)

9 Months Ended

Sep. 30, 2016

10. INCOME TAXES

Our effective income tax rate was 35.0% for the third quarter of 2016, compared with 33.2% for the third quarter of 2015. The increase is primarily related to an adjustment related to the filing of our 2015 tax return. Our effective income tax rate was 35.1% for the first nine months of 2016, compared with 33.3% for the first nine months of 2015. The increase is primarily related to a $341,000 tax charge for uncertain tax positions related to current and prior years (net of federal benefit) recorded in the first nine months of 2016, as well as the adjustment related to the filing of our 2015 tax return in the third quarter of 2016.

As of September 30, 2016 and December 31, 2015, the Company's gross liability related to uncertain tax positions was $2.2 million and $1.6 million, respectively. A number of years may elapse before an uncertain tax position is finally resolved. To the extent that the Company has favorable tax settlements, or determines that accrued amounts are no longer needed due to a lapse in the applicable statute of limitations or other changes in circumstances, such liabilities, as well as any related interest and penalties, would be reversed as a reduction of income tax expense, net of federal tax effects, in the period such determination is made. A reconciliation of the change in recorded uncertain tax positions during the nine months ended September 30, 2016 is as follows (in thousands):



Balance at January 1, 2016	$	1,629
Additions for tax positions related to the current year	206
Additions for tax positions related to prior years	475
Reductions for tax positions related to prior years	(156		)
Balance at September 30, 2016	$	2,154

Within the next twelve months, it is reasonably possible that the liability for uncertain tax positions could decrease by as much as $2.2 million as a result of settlements with certain taxing authorities, which, if recognized, would decrease our provision for income taxes by $1.4 million.