Income Taxes (Notes) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Text Block] |
Deferred tax assets and liabilities reflect the effects of tax losses, credits, and the future income tax effects of temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The current and deferred portions (in thousands) of federal, foreign and state income tax benefit or expense, as the case may be, are as follows:
We experienced an effective income tax expense rate of 51.7% for the year ended December 31, 2015 compared to an effective income tax benefit rate of 126.8% for the year ended December 31, 2014. Our effective income tax expense rate for the year ended December 31, 2015 reflects in part, the establishment of a valuation allowance against our U.K.-related deferred tax assets. Our effective income tax benefit rate for the year ended December 31, 2014 resulted principally from (1) changes in valuation allowances against income statement-oriented federal, foreign and state deferred tax assets with the most significant benefits related to the complete release of all federal tax-related valuation allowances and (2) the reversal of excess prior year interest accruals on our then-accrued prior year liabilities for uncertain tax positions, such reversal of excess interest accruals resulting from a favorable settlement (relative to accrued prior year liabilities for uncertain tax positions) reached with the Internal Revenue Service (“IRS”) in December 2014 and the favorable resolution of accrued prior year liabilities for uncertain state tax positions. We report potential accrued interest and penalties related to both our accrued liabilities for uncertain tax positions and unpaid tax liabilities within our income tax benefit or expense line item on our consolidated statements of operations. We likewise report the reversal of such accrued interest and penalties within the income tax benefit or expense line item to the extent that we resolve our liabilities for uncertain tax positions or our unpaid tax liabilities in a manner favorable to our accruals therefor. Considering both the aforementioned accruals and reversals, we experienced net charges for interest and penalties of $0.3 million in 2015. During the year ended December 31, 2014, the effect of interest and penalties on our income tax benefit was a $8.9 million net increase in our income tax benefit (representing the net of the release of $11.2 million of prior year interest and penalty accruals associated with then-uncertain tax liabilities, $0.3 million of new accruals in 2014 associated with uncertain tax liabilities in 2014, and $2.0 million of accrued interest and penalties related to unpaid tax liabilities). As referenced above, in December 2014, we reached a settlement with the IRS concerning the tax treatment of net operating losses that we incurred in 2007 and 2008 and carried back to obtain refunds of federal income taxes paid in earlier years dating back to 2003. The original agreed federal income tax assessment of $9.1 million from the settlement (which excluded interest), now stands at $7.3 million after the effects of (1) the IRS’s application of a $1.0 million overpayment from our 2014 federal income tax return against the assessed balance and (2) a $0.8 million offsetting claim that we made on an amended return in 2015 as permitted under the terms of the settlement and that was approved by the IRS also in 2015. Also as permitted under the settlement, we recently made additional claims on amended returns — claims which, if accepted, would eliminate all of the remaining $7.3 million outstanding assessment and result in a $0.6 million refund to us. The expected effect of our amended return filings is two-fold. First, it is our belief that the IRS will not pursue collections of the amounts for which we have asserted offsetting claims (i.e., all of the remaining $7.3 million assessment) until the final disposition of our amended return filings. Second, should the IRS accept some or all of the additional claims we have made, we would experience reversals of interest and penalty accruals we are currently making associated with the unpaid tax assessment; these accruals totaled $2.8 million as of December 31, 2015. Currently, the IRS is examining our additional amended return claims. Our settlement with the IRS materially enhanced our 2014 reported income tax benefits in two ways as noted above. First, we released into 2014 income tax benefit prior year tax, interest and penalty liability accruals associated with then-uncertain tax positions that were resolved in a significantly favorable manner relative to the liabilities accrued therefor. Second, we reclassified to deferred tax liabilities as of December 31, 2014 significant levels of liabilities that had been classified as current liability accruals for uncertain tax positions as of December 31, 2013, thereby eliminating the need for valuation allowances that existed as of December 31, 2013 against net deferred tax assets at that date. The following table reconciles our effective tax expense rate for 2015 and our effective tax benefit rate for 2014 to the federal statutory rate:
As of December 31, 2015 and December 31, 2014, the significant components (in thousands) of our deferred tax assets and liabilities were:
Certain of our deferred tax assets relate to federal, foreign and state net operating losses as noted in the above table, and we have no other net operating losses or credit carry-forwards other than those noted herein. We have recorded a deferred tax asset of $75.7 million reflecting the benefit of loss carryforwards, which expire in varying amounts between 2019 and 2033. Our $36.0 million of deferred tax asset valuation allowances are primarily the result of uncertainties regarding the future realization of recorded tax benefits, principally net operating losses and credits from operations in various states and foreign jurisdictions (including U.S. territories), and it is more likely than not that these recorded tax benefits will not be utilized to reduce future state and foreign tax liabilities in these jurisdictions. We conduct business globally, and as a result, our subsidiaries file federal, state and/or foreign income tax returns. In the normal course of business we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as the U.S., the U.K., and various U.S. territories. With a few exceptions of a non-material nature, and with the exception of our 2008 tax-settlement-related claims discussed previously, we are no longer subject to federal, state, local, or foreign income tax examinations for years prior to 2012. Reconciliation (in thousands) of unrecognized tax benefits from the beginning to the end of 2015 and 2014 is as follows:
Unrecognized tax benefits that, if recognized, would affect the effective tax rate totaled $1.8 million and $5.2 million at December 31, 2015 and 2014, respectively. Absent the effects of potential agreements to extend statutes of limitations periods, the total amount of unrecognized tax benefits with respect to certain of our unrecognized tax positions will significantly change as a result of the lapse of applicable limitations periods in the next 12 months. However, it is not reasonably possible to determine which (if any) limitations periods will lapse in the next 12 months due to the effect of existing and new tax audits and tax agency determinations. Moreover, the net amount of such change cannot be reasonably estimated because our operations over the next 12 months may cause other changes to the total amount of unrecognized tax benefits. Due to the complexity of the tax rules underlying our uncertain tax position liabilities, and the unclear timing of tax audits, tax agency determinations, and other events (such as the outcomes of tax controversies involving related issues with unrelated taxpayers), we cannot establish reasonably reliable estimates for the periods in which the cash settlement of our uncertain tax position liabilities will occur. |