Income Taxes	6 Months Ended
Jun. 30, 2018
Income Taxes
Income Taxes	Note 7 — Income Taxes Refer to Notes 1 and 13 of the Company’s audited financial statements for the year ended December 31, 2017, which are included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC, for a discussion regarding income taxes. TSYS is the parent of an affiliated group that files a consolidated U.S. federal income tax return and most state and foreign income tax returns on a separate entity basis. In the normal course of business, the Company is subject to examinations by these taxing authorities unless statutory examination periods lapse. TSYS is no longer subject to U.S. federal income tax examinations for years before 2011 and with few exceptions, the Company is no longer subject to income tax examinations from state and local or foreign tax authorities for years before 2011. There are currently federal income tax examinations in progress for the years 2011 through 2013. Additionally, a number of tax examinations are in progress by the relevant state tax authorities. Although TSYS is unable to determine the ultimate outcome of these examinations, TSYS believes that its liability for uncertain tax positions relating to these jurisdictions for such years is adequate. TSYS’ effective tax rate was 22.3% and 34.4% for the three months ended June 30, 2018 and 2017, respectively, and 17.5% and 33.0% for the six months ended June 30, 2018 and 2017, respectively. The primary reasons for the lower 2018 effective income tax rate as compared to the 2017 effective income tax rate are the lower 2018 statutory Federal income tax rate as enacted by the Tax Cuts and Jobs Act of 2017 (“Tax Act”) and favorable variances in discrete items related to excess tax benefits from share-based compensation. On December 22, 2017, the President signed into law the Tax Act. Some key provisions of this law impacted the Company during this reporting period. One such provision was the reduction of the Federal corporate income tax rate from 35.0% to 21.0%. The Company’s consolidated financial statements reflect the impact of this rate reduction. Additionally, the Tax Act provides for two U.S. tax base erosion provisions which began in 2018. They are the base-erosion and anti-abuse tax (“BEAT”) and the global intangible low-taxed income (“GILTI”). While TSYS’ calculations indicate no impact related to BEAT in 2018, the Company’s GILTI calculations did indicate an insignificant impact, which has been reflected in the Company’s financial statements. TSYS will continue to perform all necessary calculations, make any needed elections and report any future impacts of GILTI and BEAT as appropriate. The Tax Act also provides for another new deduction starting in 2018 which impacted TSYS. This deduction is described as a deduction for foreign-derived intangible income. TSYS has appropriately incorporated the results of this calculated deduction in the Company’s consolidated financial statements. Pursuant to the Tax Act, some amounts related to repatriation of foreign accumulated earnings and related to executive compensation may be considered provisional amounts pursuant to SEC Staff Accounting Bulletin No. 118. Authoritative guidance and interpretation by the regulatory bodies is ongoing and the accounting for the full impact of the new regulations is still being evaluated. As such, these amounts may be adjusted during the measurement period ending December 31, 2018. GAAP prescribes a recognition threshold and measurement attribute for the financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken in a tax return. The amount of unrecognized tax benefits were $24.0 million and $23.8 million as of June 30, 2018 and December 31, 2017, respectively, which resulted in an increase of $0.2 million during the period. TSYS recognizes potential interest and penalties related to the underpayment of income taxes as income tax expense in the consolidated statements of income. Gross accrued interest and penalties on unrecognized tax benefits totaled $2.4 million and $2.0 million as of June 30, 2018 and December 31, 2017, respectively. The total amounts of unrecognized income tax benefits as of June 30, 2018 and December 31, 2017, that, if recognized, would affect the effective tax rates are $25.2 million and $24.5 million (net of the federal benefit on state tax issues), respectively, which include interest and penalties of $1.6 million and $1.3 million, respectively. TSYS does not expect any significant changes to its calculation of uncertain tax positions during the next twelve months.

Note 7 — Income Taxes

Refer to Notes 1 and 13 of the Company’s audited financial statements for the year ended December 31, 2017, which are included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC, for a discussion regarding income taxes.

TSYS is the parent of an affiliated group that files a consolidated U.S. federal income tax return and most state and foreign income tax returns on a separate entity basis. In the normal course of business, the Company is subject to examinations by these taxing authorities unless statutory examination periods lapse. TSYS is no longer subject to U.S. federal income tax examinations for years before 2011 and with few exceptions, the Company is no longer subject to income tax examinations from state and local or foreign tax authorities for years before 2011. There are currently federal income tax examinations in progress for the years 2011 through 2013. Additionally, a number of tax examinations are in progress by the relevant state tax authorities. Although TSYS is unable to determine the ultimate outcome of these examinations, TSYS believes that its liability for uncertain tax positions relating to these jurisdictions for such years is adequate.

TSYS’ effective tax rate was 22.3% and 34.4% for the three months ended June 30, 2018 and 2017, respectively, and 17.5% and 33.0% for the six months ended June 30, 2018 and 2017, respectively. The primary reasons for the lower 2018 effective income tax rate as compared to the 2017 effective income tax rate are the lower 2018 statutory Federal income tax rate as enacted by the Tax Cuts and Jobs Act of 2017 (“Tax Act”) and favorable variances in discrete items related to excess tax benefits from share-based compensation.

On December 22, 2017, the President signed into law the Tax Act. Some key provisions of this law impacted the Company during this reporting period. One such provision was the reduction of the Federal corporate income tax rate from 35.0% to 21.0%. The Company’s consolidated financial statements reflect the impact of this rate reduction.

Additionally, the Tax Act provides for two U.S. tax base erosion provisions which began in 2018. They are the base-erosion and anti-abuse tax (“BEAT”) and the global intangible low-taxed income (“GILTI”). While TSYS’ calculations indicate no impact related to BEAT in 2018, the Company’s GILTI calculations did indicate an insignificant impact, which has been reflected in the Company’s financial statements. TSYS will continue to perform all necessary calculations, make any needed elections and report any future impacts of GILTI and BEAT as appropriate.

The Tax Act also provides for another new deduction starting in 2018 which impacted TSYS. This deduction is described as a deduction for foreign-derived intangible income. TSYS has appropriately incorporated the results of this calculated deduction in the Company’s consolidated financial statements.

Pursuant to the Tax Act, some amounts related to repatriation of foreign accumulated earnings and related to executive compensation may be considered provisional amounts pursuant to SEC Staff Accounting Bulletin No. 118. Authoritative guidance and interpretation by the regulatory bodies is ongoing and the accounting for the full impact of the new regulations is still being evaluated. As such, these amounts may be adjusted during the measurement period ending December 31, 2018.

GAAP prescribes a recognition threshold and measurement attribute for the financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken in a tax return. The amount of unrecognized tax benefits were $24.0 million and $23.8 million as of June 30, 2018 and December 31, 2017, respectively, which resulted in an increase of $0.2 million during the period.

TSYS recognizes potential interest and penalties related to the underpayment of income taxes as income tax expense in the consolidated statements of income. Gross accrued interest and penalties on unrecognized tax benefits totaled $2.4 million and $2.0 million as of June 30, 2018 and December 31, 2017, respectively. The total amounts of unrecognized income tax benefits as of June 30, 2018 and December 31, 2017, that, if recognized, would affect the effective tax rates are $25.2 million and $24.5 million (net of the federal benefit on state tax issues), respectively, which include interest and penalties of $1.6 million and $1.3 million, respectively. TSYS does not expect any significant changes to its calculation of uncertain tax positions during the next twelve months.