Income Taxes

The provision for income taxes was as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Income tax provision	$	11,390		$	12,127		$	26,810		$	25,120
Effective tax rate	13.7		%	19.1		%	19.5		%	21.1		%

The effective tax rate for the three and six months ended June 30, 2018, is lower than the United States Federal tax rate of 21.0 percent mainly due to excess tax benefits from stock compensation, offset partially by state taxes, higher tax rates applied to income earned in certain foreign jurisdictions, and other discrete items.

New tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), was enacted on December 22, 2017. In connection with the Company's initial analysis of the impact of the Tax Act, the Company recorded provisional net tax expense of $94.4 million for the period ended December 31, 2017. This amount consists of net expense of $66.5 million for the transition tax and net expense of $12.8 million for the remeasurement of the Company's net deferred tax assets using the reduced United States tax rate. In addition, the Company also recorded net tax expense of $15.1 million for state income and foreign taxes estimated to be due upon distribution of approximately $1.0 billion of previously undistributed foreign earnings no longer permanently reinvested as of December 31, 2017. These provisional amounts may be impacted by the need for further analysis and future clarification and guidance regarding available tax accounting methods and elections, earnings and profits computations, foreign tax credit calculations, and state tax conformity to federal tax changes. As of June 30, 2018, the Company has not completed the accounting for the tax effects of the Tax Act described above and there have been no material changes to estimated amounts.

As of June 30, 2018, the Company had approximately $63.3 million of unrecognized tax benefits, all of which would affect the Company’s effective tax rate if recognized. The Company anticipates approximately $44.7 million of its net unrecognized tax benefits will be recognized within 12 months as the result of settlements or effective settlements with various tax authorities, the closure of certain audits and the lapse of the applicable statute of limitations.

The Company classifies interest and penalties related to unrecognized tax benefits in the income tax provision. As of June 30, 2018, the Company had $6.7 million of accrued interest and penalties related to unrecognized tax benefits that are recorded as current and non-current accrued income taxes on the Consolidated Balance Sheet.

In 2016, the Company recorded discrete tax charges totaling $39.6 million related to the January 11, 2016 announcement from the European Commission of a decision concluding that certain rules under Belgian tax legislation were deemed to be incompatible with European Union regulations on state aid. As a result of this decision, the European Commission directed the Belgian Government to recover past taxes from certain entities, reflective of disallowed state aid, which impacts one of the Company’s international subsidiaries. The Belgian Government announced they have appealed this decision and filed action for an annulment in the General Court of the European Union, and in July 2016 the Company filed a separate appeal with the General Court of the European Union. In accordance with FASB ASC Topic 740, “Income Taxes,” the Company recorded discrete tax expense of $39.6 million during 2016, related to this matter and on January 10, 2017, received tax assessments from the Belgium government for a similar amount, which the Company has classified as current taxes payable on the Consolidated Balance Sheet as of June 30, 2018. The Company has filed a complaint against the Belgian tax assessments, and the result of this complaint, the appeal with the General Court of the European Union, new information received from the Belgian Government, or other future events may cause the income tax provision associated with the decision to be entirely or partially reversed. At June 30, 2018, the Company held the euro equivalent of $35.3 million in a restricted cash account. Those amounts, or portions thereof, could become unrestricted depending on the outcome of this matter.


Note 17.	Income Taxes - (Continued)

The Company currently has the following tax years open to examination by major taxing jurisdictions:



	Tax Years:
United States Federal	2014 - 2016
State of California	2013 - 2016
State of Massachusetts	2013 - 2016
State of Oregon	2014 - 2016
Sweden	2013 - 2016
United Kingdom	2013 - 2016
Belgium	2011 - 2016