5. Income Taxes

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred taxes are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax laws that will be in effect when the differences are expected to reverse.

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2015 and 2014 were as follows (amounts in thousands):



	2015		2014
Deferred tax assets:
Allowance for uncollectible accounts	$	9,048	$	6,397
Accrued employee benefits	5,260		4,195



Stock compensation	1,068			1,228
Accrued self-insurance	2,517			2,526
Acquisition costs	1,651			1,510
Net operating loss carry forward	983			927
Intangible asset impairment	43			49
Uncertain tax position—state tax portion	215			215
Uncertain tax position - interest expense	254			186
Other	93			121
Valuation allowance	(44		)	(44		)
Deferred tax assets	$	21,088		$	17,310
Deferred tax liabilities:
Amortization of intangible assets	(35,355		)	(29,370		)
Tax depreciation in excess of book depreciation	(8,201		)	(7,994		)
Prepaid expenses	(655		)	(697		)
Non-accrual experience accounting method	(606		)	(1,459		)
Deferred tax liabilities	(44,817		)	(39,520		)
Net deferred tax liability	$	(23,729	)	$	(22,210	)

Based on the Company’s historical pattern of taxable income, the Company believes it will produce sufficient income in the future to realize its deferred income tax assets. Management provides a valuation allowance for any net deferred tax assets when it is more likely than not that a portion of such net deferred tax assets will not be recovered.

The components of the Company’s income tax expense from continuing operations, less noncontrolling interest, were as follows (amounts in thousands):



	2015		2014		2013
Current:
Federal	$	18,094	$	10,195	$	11,962
State	3,232		1,916		1,546
	21,326		12,111		13,508
Deferred:
Federal	1,389		2,187		1,448
State	133		215		903
	1,522		2,402		2,351
Total income tax expense	$	22,848	$	14,513	$	15,859

A reconciliation of the difference between the federal statutory tax rate and the Company's effective tax rate for income taxes for each period is as follows:



	2015		2014		2013
Federal statutory tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	3.9		3.5		3.5
Nondeductible expenses	2.5		2.3		3.1
Credits and other	—		(0.9	)	—
Effective tax rate	41.4	%	39.9	%	41.6	%

A reconciliation of the differences between income tax expense on net income attributable to the Company, computed at the federal statutory rate and provisions for income taxes for each period is as follows (amounts in thousands):



	2015		2014			2013
Income taxes computed at federal statutory tax rate	$	19,314	$	12,723		$	13,360
State income taxes, net of federal benefit	2,184		1,407			1,641
Nondeductible expenses	1,352		766			1,022
Other items	278		(99		)	101



Income tax credits	(280		)	(284		)	(265		)
Total income tax expense	$	22,848		$	14,513		$	15,859

The Company is subject to both federal tax and state income tax for jurisdictions within which it operates. Within these jurisdictions, the Company is open to examination for tax years ended after December 31, 2011.

As of December 31, 2015, $3.4 million was recorded in income tax payable as an unrecognized tax benefit which, if recognized, would decrease the Company’s effective tax rate. All of the Company's unrecognized tax benefit is due to the settlement with the United States of America, which was announced September 30, 2011. On July 31, 2014, the Internal Revenue Service ("IRS") issued a notice of proposed adjustment asserting that a portion of the original tax deduction claimed by the Company associated with the settlement of the United States of America should be disallowed. The Company is currently appealing this proposed adjustment with the IRS Appeals. The Company intends to vigorously defend its original position of the deductibility of the full settlement on its 2011 tax return. A reconciliation of the total amounts of unrecognized tax benefits follows (amounts in thousands):




Total unrecognized tax benefits as of December 31, 2014	$	3,415
Increases (decreases) in unrecognized tax benefits as a result of:
Tax positions taken during the current period	—
Total unrecognized tax benefits as of December 31, 2015	$	3,415

The Company recognizes interest and penalties related to uncertain tax positions in interest expense and general and administrative expenses, respectively. During the years ended December 31, 2015, 2014 and 2013, the Company recognized $0.2 million each year in interest expense, and recorded an accrued liability of interest payments related to uncertain tax positions.