INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2019

The sources of pre-tax operating income are as follows (in thousands):


	Year Ended December 31,
	2019		2018		2017
Domestic	$	39,864	$	(13,926)	$	10,909
Foreign		70,547		70,164		77,978
Total	$	110,411	$	56,238	$	88,887

Components of Income Tax Expense (Benefit)

The components of the Company’s Provision for (benefit from) income taxes are as follows (in thousands):


	Year Ended December 31,
	2019		2018		2017
Current provision for (benefit from)
Federal	$	5,289	$	2,771	$	48,556
State		2,826		2,754		99
Foreign		18,938		18,933		12,643
Total current provision for (benefit from)		27,053		24,458		61,298
Deferred provision for (benefit from)
Federal		2,515		(943)		14,441
State		118		(138)		707
Foreign		(4,009)		(6,894)		1,629
Total deferred provision for (benefit from)		(1,376)		(7,975)		16,777
Total provision for (benefit from) income taxes	$	25,677	$	16,483	$	78,075

Effective Income Tax Rate Reconciliation Table

The following reconciles the Company’s effective tax rate to the federal statutory rate (in thousands):


	Year Ended December 31,
	2019		2018		2017
Income tax per U.S. federal statutory rate (21%, 21%, 35%)	$	23,186	$	11,810	$	31,110
State income taxes, net of federal deduction		3,144		2,003		460
Change in valuation allowances		9,832		2,191		(924)
Foreign income taxes at different rates than the U.S.		(3,356)		(3,758)		(14,417)
Foreign withholding taxes		600		785		323
Losses in international markets without tax benefits		(2,651)		(68)		1,098
Nondeductible compensation under Section 162(m)		668		615		647
Liabilities for uncertain tax positions		661		1,105		1,607
Permanent difference related to foreign exchange gains		36		136		142
(Income) losses of foreign branch operations		55		475		(824)
Non-taxable earnings of noncontrolling interest		(1,294)		(594)		(1,030)
Foreign dividend less foreign tax credits		(1,681)		(1,748)		(4,798)
Decrease (increase) to deferred tax asset - change in tax rate		(2,848)		(1,944)		1,101
State income tax credits		(1,176)		19		207
Foreign earnings taxed currently in U.S.		2,172		3,976		3,143
Taxes related to prior year filings		(1,643)		(1,659)		(865)
Taxes related to acquisition accounting		978		2,110		—
Transition tax		—		—		61,569
Other		(1,006)		1,029		(474)
Income tax per effective tax rate	$	25,677	$	16,483	$	78,075

Effective tax rate percentage		23.30%		29.30%		87.80%

Schedule of Deferred Tax Assets and Liabilities

The Company’s deferred income tax assets and liabilities are summarized as follows (in thousands):


	Year Ended December 31,
	2019		2018
Deferred tax assets, gross
Accrued workers compensation, deferred compensation and employee benefits	$	7,999	$	8,724
Allowance for doubtful accounts, insurance and other accruals		3,393		3,301
Amortization of deferred lease liabilities		25,757		2,614
Net operating losses		19,222		18,475
Equity compensation		1,442		1,348
Customer acquisition and deferred revenue accruals		9,047		13,894
Federal and state tax credits, net		1,263		549
Unrealized losses on derivatives		1,421		2,035
Impairment of equity investment		4,142		4,221
Partnership Investment		2,435		—
Other		1,322		1,001
Total deferred tax assets, gross		77,443		56,162
Valuation allowances		(17,051)		(10,867)
Total deferred tax assets, net		60,392		45,295
Deferred tax liabilities
Depreciation and amortization		(6,095)		(15,547)
Unrealized gain on derivatives		(1,491)		—
Contract acquisition costs		(5,740)		(8,519)
Intangible assets		(22,585)		(15,890)
Operating lease assets		(21,413)		—
Other		(407)		(187)
Total deferred tax liabilities		(57,731)		(40,143)
Net deferred tax assets	$	2,661	$	5,152

Valuation Allowance Rollforward

Activity in the Company’s valuation allowance accounts consists of the following (in thousands):


	Year Ended December 31,
	2019		2018		2017
Beginning balance	$	10,867	$	9,526	$	9,949
Additions of deferred income tax expense		7,373		2,913		2,044
Reductions of deferred income tax expense		(1,189)		(1,572)		(2,467)
Ending balance	$	17,051	$	10,867	$	9,526

Expiration of Net Operating Loss Carryforwards

As of December 31, 2019, after consideration of all tax loss and tax credit carry back opportunities, the Company had tax affected tax loss carry forwards worldwide expiring as follows (in thousands):


2020	$	1,151
2021		5
2022		3
2023		1,105
After 2023		9,298
No expiration		7,660
Total	$	19,222

Reserve for Uncertain Tax Positions Rollforward

The tabular reconciliation of the reserve for uncertain tax benefits on a gross basis without interest for the three years ended December 31, 2019 is presented below (in thousands):


Balance as of December 31, 2016	$	2,382
Additions for current year tax positions		916
Reductions in prior year tax positions		—
Balance as of December 31, 2017		3,298
Additions for current year tax positions		3,600
Reductions in prior year tax positions		(2,114)
Balance as of December 31, 2018		4,784
Additions for current year tax positions		—
Reductions in prior year tax positions		—
Balance as of December 31, 2019	$	4,784

Jurisdictions Open to Income Tax Examination

The following table presents the major tax jurisdictions and tax years that are open as of December 31, 2019 and subject to examination by the respective tax authorities:


Tax Jurisdiction		Tax Year Ended
United States		2016 to present
Australia		2015 to present
Brazil		2014 to present
Canada		2011 to present
Mexico		2014 to present
Philippines		2016 to present