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Income Taxes
9 Months Ended
Sep. 30, 2015
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

The Company’s tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate. Each quarter the Company evaluates its estimated annual effective tax rate and, if the estimate changes, makes a cumulative adjustment. j2 Global’s annual effective tax rate is normally lower than the 35% U.S. federal statutory rate and applicable apportioned state tax rates primarily due to anticipated earnings of the Company’s subsidiaries outside of the U.S. in jurisdictions where the Company’s effective tax rate is lower than in the U.S. The Company's effective tax rate was 15.8% and 20.3% for the three months ended September 30, 2015 and 2014, respectively and 14.3% and 17.6% for the nine months ended September 30, 2015 and 2014, respectively.  j2 Global does not provide for U.S. income taxes on the undistributed earnings of the Company’s foreign operations because the Company intends to permanently reinvest such earnings in foreign jurisdictions and any determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable.  Income before income taxes included income from domestic operations of $33.7 million and $70.5 million for the nine months ended September 30, 2015 and 2014, respectively, and income from foreign operations of $80.8 million and $41.9 million for the nine months ended September 30, 2015 and 2014, respectively.

As of September 30, 2015 and December 31, 2014, the Company had $27.6 million and $37.6 million, respectively, in liabilities for uncertain income tax positions. Accrued interest and penalties related to unrecognized tax benefits are recognized in income tax expense on the Company’s consolidated statement of income.

Cash paid for income taxes net of refunds received was $40.5 million for the nine months ended September 30, 2015.

Certain taxes are prepaid during the year and included within prepaid expenses and other current assets on the consolidated balance sheet. The Company’s prepaid taxes were $24.6 million and $5.8 million at September 30, 2015 and December 31, 2014, respectively.

Income Tax Audits:

The Company was under examination by the U.S. Internal Revenue Service ("IRS") for tax years 2009 through 2011. In April 2015, the Company and the IRS reached a settlement which effectively closed the IRS examination for the Company’s 2009 and 2010 tax years. In conjunction with the settlement, the Company made tax and interest payments totaling $1.8 million to the IRS. In June 2015, the Company filed amended state franchise and income tax returns to reflect the IRS settlement and paid tax and interest related to those amended returns totaling $0.9 million. As a result of the IRS settlement, the Company determined that the 2009 and 2010 tax years were effectively closed and decreased its liabilities for uncertain tax positions by $9.3 million.

In September 2015, the Company and the IRS reached a settlement which effectively closed the IRS examination for the Company’s 2011 tax year and resolved the disputed issues for the 2011 tax year. In conjunction with the settlement, the Company made a tax payment of $1.2 million to the IRS. The Company is in the process of preparing amended state franchise and income tax returns to reflect the IRS settlement and expects to pay tax and interest totaling $0.1 million. As a result of the IRS settlement, the Company determined that its 2011 tax year was effectively closed and decreased its liabilities for uncertain tax positions by $0.9 million.

The Company has been notified that the IRS will begin its income tax audit for tax years 2012 and 2013 during the quarter ending December 31, 2015.
j2 Global was under income tax audit by the California Franchise Tax Board (the “FTB”) for tax years 2009 through 2011. In April 2015, the Company was notified by the FTB that the income tax audit for tax years 2009 through 2011 had concluded with no changes. In September 2015, the Company was notified by the FTB that tax years 2012 and 2013 are under income tax audit.

In July 2015, the Company was notified by the New York State Department of Taxation and Finance that its tax returns for tax years 2011 through 2013 would be audited.

The Company is currently under income tax audit by the New York City Department of Finance for tax years 2009 through 2011 and by the Canada Revenue Agency for tax years 2010 through 2011. In January 2015, the Company was notified by the Illinois Department of Revenue that the income tax audit for tax years 2008 and 2009 had been concluded with no changes.

It is reasonably possible that these audits may conclude in the next 12 months and that actual assessment of tax by tax agencies may differ from the uncertain tax position liabilities that the Company has recorded in relation to these tax years. If the recorded uncertain tax position liabilities are inadequate to cover the actual tax liabilities assessed by the tax agencies, the Company would be required to recognize additional tax expense in the relevant period, which could be material. If the recorded uncertain tax position liabilities exceed the actual tax liabilities assessed by the tax agencies, the Company would be required to recognize any excess as reduction in tax expense in the relevant period, which could be material. However, it is not currently possible to estimate the amount, if any, of such change.