Income Taxes

The provision (benefit) for income taxes for the years ended December 31, 2014, 2013 and 2012, consisted of the following (in thousands):



	Years Ended December 31,
	2014			2013			2012
Current:
Federal	$	146,633		$	114,687		$	99,354
State	33,054			27,358			24,339
Foreign	15,377			16,598			25,603
Deferred:
Federal and state	(4,626		)	(7,759		)	(15,188		)
Foreign	983			(5,500		)	195
	$	191,421		$	145,384		$	134,303

Income before the provision for income taxes for the years ended December 31, 2014, 2013 and 2012, consisted of the following (in thousands):



	Years Ended December 31,
	2014		2013		2012
Domestic	$	449,834	$	357,382	$	286,537
Foreign	47,515		40,197		57,708
	$	497,349	$	397,579	$	344,245

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



	Years Ended December 31,
	2014		2013		2012
Federal U.S. income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	4.2		4.3		4.0
Non-deductible expenses	0.6		0.7		0.8
Non-U.S. income taxed at different rates, net of foreign tax credits	(0.2	)	(1.0	)	0.7
Federal tax credits	(0.6	)	(1.3	)	(0.3	)
Tax impact of uncertain tax positions	(0.1	)	0.1		(1.2	)
Valuation allowance release, net	(0.3	)	(1.0	)	—
Other, net	(0.1	)	(0.2	)	—
Effective tax rate	38.5	%	36.6	%	39.0	%

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



	Years Ended December 31,
	2014			2013			2012
Amortization of franchise rights	$	514		$	514		$	514
Amortization of other intangibles	1,241			621			1,180
Accrued expenses, deducted for tax when paid	(14,221		)	(11,190		)	(13,494		)
Capitalized costs for books, deducted for tax	8,809			3,019			7,395
Depreciation	(4,147		)	(2,597		)	(7,813		)
Federal impact of unrecognized tax benefits	44			(274		)	478
Foreign tax credit carryforwards	(186		)	(3,449		)	—
Other, net	4,303			97			(3,253		)
	$	(3,643	)	$	(13,259	)	$	(14,993	)

The deferred income tax amounts included on the Consolidated Statements of Financial Position are composed of the following (in thousands):



	December 31,
	2014			2013
Current deferred income tax assets, net	$	133,151		$	112,881
Long-term deferred income tax liabilities, net	(26,807		)	(10,601		)
	$	106,344		$	102,280

The components of the deferred income tax amounts at December 31, 2014 and 2013, were as follows (in thousands):



	December 31,
	2014			2013
Deferred Income Tax Assets
Provision for bad debts	$	9,210		$	8,012
Deferred compensation and other benefit obligations	83,065			72,227
Workers’ compensation	9,138			9,538
Stock-based compensation	14,572			12,067
Credits and net operating loss carryforwards	39,309			49,556
Other	25,316			25,953
Total deferred income tax assets	180,610			177,353
Deferred Income Tax Liabilities
Amortization of intangible assets	(25,060		)	(23,305		)
Property and equipment basis differences	(12,384		)	(8,098		)
Other	(7,261		)	(6,626		)
Total deferred income tax liabilities	(44,705		)	(38,029		)
Valuation allowance	(29,561		)	(37,044		)
Total deferred income tax assets, net	$	106,344		$	102,280

Credits and net operating loss carryforwards primarily include net operating losses in foreign countries of $29.9 million that expire in 2015 and later; foreign tax credits of $3.6 million that expire in 2024; and California enterprise zone tax credits of $5.7 million that expire in 2023. Of the $5.7 million of California enterprise zone credits, the Company expects that it will utilize $3.1 million of these credits prior to expiration.

The Company has not provided deferred income taxes or foreign withholding taxes on $3.7 million and $2.8 million of undistributed earnings of its non-U.S. subsidiaries as of December 31, 2014 and 2013, respectively, since the Company intends to reinvest these earnings indefinitely. The U.S. tax impact upon repatriation, net of foreign tax credits, would be zero for the years ended December 31, 2014 and 2013.

FASB authoritative guidance prescribes a recognition threshold and measurement attribute criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The literature also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The following table reconciles the total amounts of gross unrecognized tax benefits from January 1, 2012 to December 31, 2014 (in thousands):



	December 31,
	2014			2013			2012
Balance at beginning of period	$	6,110		$	7,097		$	11,669
Gross increases—tax positions in prior years	1			559			352
Gross decreases—tax positions in prior years	(333		)	(369		)	(273		)
Gross increases—tax positions in current year	35			38			42
Settlements	—			—			(252		)
Lapse of statute of limitations	(1,240		)	(1,215		)	(4,441		)
Balance at end of period	$	4,573		$	6,110		$	7,097

The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $0.9 million, $1.3 million and $1.0 million for 2014, 2013 and 2012, 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, 2014, is $2.5 million, including a $0.3 million reduction recorded in income tax expense during the year. The total amount of interest and penalties accrued as of December 31, 2013, was $2.8 million, including a $0.3 million reduction recorded in income tax expense during the year. The total amount of interest and penalties accrued as of December 31, 2012, was $3.1 million, including a $2.3 million reduction recorded in income tax expense during the year.

The Company believes it is reasonably possible that the settlement of certain tax uncertainties could occur within the next twelve months; accordingly, $2.2 million of the unrecognized gross tax benefit has been classified as a current liability as of December 31, 2014. This amount primarily represents unrecognized tax benefits composed of items related to assessed state income tax audits and negotiations.

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 2011 and subsequent years. For major U.S. states, with few exceptions, the Company remains subject to examination for 2010 and subsequent years. Generally, for the foreign countries, the Company remains subject to examination for 2007 and subsequent years.