Income Taxes

12 Months Ended

Dec. 31, 2019

The provision (benefit) for income taxes for the years ended December 31, 2019, 2018 and 2017, consisted of the following (in thousands):


	Years Ended December 31,
	2019		2018		2017
Current:
Federal	$	107,699	$	99,830	$	133,097
State	39,028		38,356		24,944
Foreign	33,227		35,007		27,079
Deferred:
Federal and state	(9,959)		$	(15,849)	$	41,717
Foreign	1,087		(30)		95
	$	171,082	$	157,314	$	226,932

Income before the provision for income taxes for the years ended December 31, 2019, 2018 and 2017, consisted of the following (in thousands):


	Years Ended December 31,
	2019		2018		2017
Domestic	$	545,695	$	485,489	$	445,418
Foreign	79,820		106,113		72,098
	$	625,515	$	591,602	$	517,516

The income taxes shown above varied from the statutory federal income tax rates for these periods as follows:


	Years Ended December 31,
	2019		2018		2017
Federal U.S. income tax rate	21.0	%	21.0	%	35.0	%
State income taxes, net of federal tax benefit	4.9		4.7		3.7
Permanent book/tax differences	1.1		0.6		0.4
Non-U.S. income taxed at different rates, net of foreign tax credits	2.1		2.0		—
Federal tax credits	(1.4)		(1.7)		(1.3)
Tax impact of uncertain tax positions	0.2		0.8		0.2

Tax effects of TCJA	—		0.4		6.5
Other, net	(0.5)		(1.2)		(0.6)
Effective tax rate	27.4	%	26.6	%	43.9	%

The deferred portion of the tax (benefit) provision consisted of the following (in thousands):


	Years Ended December 31,
	2019		2018		2017


Accrued expenses, deducted for tax when paid	$	(17,797)	$	(21,884)	$	15,213
Capitalized costs for books, deducted for tax	3,246		(4,832)		(5,790)
Depreciation	3,526		10,071		(4,079)


Tax effects of TCJA	—		—		34,633
Other, net	2,153		766		1,835
	$	(8,872)	$	(15,879)	$	41,812

The components of the deferred income tax amounts at December 31, 2019 and 2018, were as follows (in thousands):


	December 31,
	2019		2018
Deferred Income Tax Assets
Deferred compensation and other benefit obligations	$	105,096	$	87,513
Credits and net operating loss carryforwards	25,130		31,169
Stock-based compensation	7,805		9,535
Provision for bad debts	7,944		7,891
Workers’ compensation	3,929		3,580
Operating lease liabilities	51,932		—
Other	10,256		14,959
Total deferred income tax assets	212,092		154,647
Deferred Income Tax Liabilities
Amortization of intangible assets	(22,009)		(21,210)
Property and equipment basis differences	(16,981)		(9,761)
Right-of-use assets	(44,448)		—
Other	(7,278)		(10,319)
Total deferred income tax liabilities	(90,716)		(41,290)
Valuation allowance	(21,618)		(23,072)
Total deferred income tax assets, net	$	99,758	$	90,285

Credits and net operating loss carryforwards primarily include net operating losses in foreign countries of $21.7 million that expire in 2020 and later; and California enterprise zone tax credits of $3.0 million that expire in 2023. Of the $3.0 million of California enterprise zone tax credits, the Company expects that it will utilize $1.2 million of these credits prior to expiration. Valuation allowances of $19.9 million have been maintained against net operating loss carryforwards and other deferred items in foreign countries. In addition, a valuation allowance of $1.8 million has been maintained against California enterprise zone tax credits.

As of December 31, 2019, the Company’s consolidated financial statements provide for any related U.S. tax liability on earnings of foreign subsidiaries that may be repatriated.

The following table reconciles the total amounts of gross unrecognized tax benefits from January 1, 2017 to December 31, 2019 (in thousands):


	December 31,
	2019		2018		2017
Balance at beginning of period	$	8,418	$	2,886	$	731
Gross increases—tax positions in prior years	—		3,259		1,503
Gross decreases—tax positions in prior years	(760)		(8)		(257)
Gross increases—tax positions in current year	1,703		2,284		956
Settlements	(4)		—		(40)
Lapse of statute of limitations	(3)		(3)		(7)
Balance at end of period	$	9,354	$	8,418	$	2,886

The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $9.3 million, $8.3 million and $2.8 million for 2019, 2018 and 2017, respectively.

The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. The total amount of interest and penalties accrued as of December 31, 2019 is $0.5 million, including a $0.2 million increase recorded in income tax expense during the year. The total amount of interest and penalties accrued as of December 31,

2018 was $0.3 million, including a $0.2 million increase recorded in income tax expense during the year. The total amount of interest and penalties accrued as of December 31, 2017, was $0.1 million.

The Company does not believe it is reasonably possible that the settlement of tax uncertainties will occur within the next twelve months.

The Company’s major income tax jurisdictions are the United States, Australia, Belgium, Canada, France, Germany and the United Kingdom. For U.S. federal income tax, the Company remains subject to examination for 2016 and subsequent years. For major U.S. states, with few exceptions, the Company remains subject to examination for 2015 and subsequent years. Generally, for foreign countries, the Company remains subject to examination for 2012 and subsequent years.