Income Tax Matters

9 Months Ended

Sep. 30, 2019

The provision for income taxes consisted of the following for the periods presented (in millions of dollars):



	Quarter Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Domestic	$	8.5	$	7.5	$	24.7	$	20.5
Foreign	0.2		0.7		1.1		1.4
Total	$	8.7	$	8.2	$	25.8	$	21.9

The income tax provision for the quarters ended September 30, 2019 and September 30, 2018 was $8.7 million and $8.2 million, respectively, reflecting an effective tax rate of 26% and 27%, respectively. The difference between the effective tax rate and the projected blended statutory tax rate for the quarter ended September 30, 2019 was primarily due to an increase of $0.5 million (2% of taxable income) related to non-deductible compensation expense.

The difference between the effective tax rate and the projected blended statutory tax rate for the quarter ended September 30, 2018 was primarily due to: (i) an increase of $0.6 million (2% of taxable income) related to non-deductible compensation expense; (ii) an increase of $0.3 million (1% of taxable income) for an Advance Pricing Agreement settlement with Canada; and (iii) an increase of $0.2 million (1% of taxable income) for the sequestration of AMT credits, partially offset by a decrease of $0.4 million (1% of taxable income) to the valuation allowance for certain state net operating losses.

The income tax provision for the nine months ended September 30, 2019 and September 30, 2018 was $25.8 million and $21.9 million, respectively, reflecting an effective tax rate of 26% and 24% respectively. The difference between the effective tax rate and the projected blended statutory tax rate for the nine months ended September 30, 2019 was primarily due to: (i) an increase of $1.5 million (2% of taxable income) related to non-deductible compensation expense; (ii) an increase of $0.6 million (1% of taxable income) to the valuation allowance for certain state net operating losses, partially offset by a decrease of $0.6 million (1% of taxable income) for the recognition of excess tax benefits from stock-based compensation.

The difference between the effective tax rate and the projected blended statutory tax rate for the nine months ended September 30, 2018 was due to: (i) a decrease of $2.0 million (2% of taxable income) for the recognition of excess tax benefits from stock-based compensation and (ii) a decrease of $0.9 million (1% of taxable income) to the valuation allowance for certain state net operating losses, partially offset by: (i) an increase of $1.7 million (2% of taxable income) related to non-deductible compensation expense and (ii) an increase of $0.6 million (1% of taxable income) for the sequestration of AMT credits.

Our gross unrecognized benefits relating to uncertain tax positions were $1.7 million and $1.5 million at September 30, 2019 and December 31, 2018, respectively, of which, $0.6 million and $0.4 million would be recorded through our income tax provision and thus impact the effective tax rate at September 30, 2019 and December 31, 2018, respectively, if the gross unrecognized tax benefits were to be recognized.

We do not expect our gross unrecognized tax benefits to significantly change within the next 12 months.