On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (AMT) and changing how existing AMT credits can be realized; (6) creating the base erosion anti-abuse tax (BEAT), a new minimum tax; (7) creating a new limitation on deductible interest expense; and (8) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017.

Accounting Standards Codification (ASC) 740, Income Taxes, requires companies to recognize the effect of the tax law changes in the period of enactment. However, the SEC staff issued Staff Accounting Bulletin (SAB) 118, which allows companies to record provisional amounts during a measurement period that is similar to the measurement period used when accounting for business combinations. The Company recorded reasonable estimates when possible in 2017 with the understanding that provisional amounts would be finalized during the measurement period.

As a result, the Company has completed its accounting for the provision of the Tax Act as follows:

The Company has not recorded a U.S. deferred tax liability for the excess book basis over the tax basis of its investments in foreign subsidiaries as these amounts continue to be indefinitely reinvested in foreign operations.

In January 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from accumulated other comprehensive income (AOCI),” which gives entities the option to reclassify to retained earnings the tax effects resulting from the Tax Act related to items in AOCI that the FASB refers to as having been stranded in AOCI. The Company must adopt this guidance for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The guidance requires new disclosures regarding a company’s accounting policy for releasing the tax effects in AOCI and permits the company the option to reclassify to retained earnings the tax effects resulting from the Tax Act that are stranded in AOCI. The Company reclassified approximately $0.3 million to retained earnings due to the adoption of ASU 2018-02 in the 2018 fourth quarter.

The provision for income taxes for 2018, 2017, and 2016 consists of the following:

	2018			2017			2016
(amounts in thousands)
Domestic and foreign components of income (loss) before income taxes are as follows:
Domestic	$	(1,119	)	$	591		$	(35,100	)
Foreign		3,388			3,466			1,564
Total income (loss) before income taxes	$	2,269		$	4,057		$	(33,536	)
The provision (benefit) for income taxes consists of:
Current tax:
U.S. federal	$	16		$	(570	)	$	47
Foreign		1,937			1,458			1,533
U.S. state and local		107			116			101
Total current tax		2,060			1,004			1,681
Deferred tax:
Enactment of the Tax Cuts and Jobs Act	$	—		$	1,704		$	—
U.S. federal		3,939			347			(584	)
Foreign		(784	)		(25	)		28
U.S. state and local		(129	)		221			(23	)
Total deferred tax		3,026			2,247			(579	)
Total tax	$	5,086		$	3,251		$	1,102
The effective and statutory income tax rate can be reconciled as follows:
Tax at statutory rate	$	476		$	1,379		$	(11,402	)
State tax, net of federal benefit		(12	)		212			47
Non-taxable income		(300	)		(573	)		(495	)
Non-deductible expenses		607			971			13,465
Change in estimate primarily related to foreign taxes		(767	)		(69	)		46
Change in valuation allowance related to U.S. federal taxes		4,154			—			—
Tax credits		(389	)		(289	)		(552	)
Enactment of the Tax Cuts and Jobs Act		—			1,704			—
GILTI		662			—			—
Foreign rate differential		608			(164	)		(46	)
Other, net		47			80			39
Total tax	$	5,086		$	3,251		$	1,102
Effective income tax rate		224.2	%		80.1	%		(3.3	)%

The ETR was higher in 2018 primarily due to the recording of a valuation allowance against the companies US deferred tax assets and GILTI. This additional tax expense was partially offset by a non-taxable life insurance gain, the Tax Cuts and Jobs Act which reduced the US federal corporate tax rate to 21%, and tax benefits for the Work Opportunity Tax Credit (WOTC) and Research and Development tax credit (R&D).

The ETR was higher in 2017 primarily due to the effects of the Tax Cuts & Jobs Act and the adoption of ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which required the Company to record additional tax expense for shortfalls that would previously have been recorded to capital in excess of par value on the Company’s consolidated balance sheet. This additional tax expense was partially offset by tax benefits for the Work Opportunity Tax Credit (WOTC) and Research and Development tax credit (R&D).

The Company’s deferred tax assets and liabilities at December 31, 2018 and 2017 consist of the following:

December 31,	2018			2017
(amounts in thousands)
Assets
Deferred compensation	$	4,025		$	4,348
Loss and credit carryforwards		1,735			1,362
Accruals deductible for tax purposes when paid		189			247
State taxes		558			556
Depreciation		30			15
Unrealized gain		184			—
Other		31			39
Gross deferred tax assets		6,752			6,567
Deferred tax asset valuation allowance		(5,590	)		(2,505	)
Gross deferred tax assets less valuation allowance		1,162			4,062
Liabilities
Amortization		(1,433	)		—
Depreciation		(393	)		(197	)
Deferred compensation		(201	)		(32	)
Gross deferred tax liabilities		(2,027	)		(229	)
Net deferred tax assets (liabilities)	$	(865	)	$	3,833
Net deferred tax assets and liabilities are recorded as follows:
Net non-current assets	$	767		$	3,861
Net non-current liabilities		(1,632	)		(28	)
Deferred tax assets, net of deferred tax liabilities	$	(865	)	$	3,833

The significant decrease in net deferred tax assets is due to the Company recording a valuation allowance against its U.S. deferred tax assets of $4.1 million. In assessing the realizability of deferred tax assets, management considers, within each taxing jurisdiction, whether it is more likely than not that all or some portion of the deferred tax assets will be realized, or that a valuation allowance is required. Management considers all available evidence, both positive and negative, in assessing realizability of its deferred tax assets. A key component of this assessment is management’s critical evaluation of current and future impacts of business and economic factors on the Company’s ability to generate future taxable income. Factors that may affect the Company’s ability to generate taxable income include, but are not limited to: increased competition, a decline in revenue or margins, a loss of market share, the availability of qualified professional staff, and a decrease in demand for the Company’s services. Based on the Company’s recent history of US losses for tax purposes and uncertain profitability in future years and assessment of the factors discussed above, management has determined that it is more likely than not that it will not realize its U.S. deferred tax assets, and accordingly a full valuation allowance has been recorded against these assets. Additionally, management has determined that a valuation allowance is required against its Netherlands deferred taxes, but are no longer necessary against its U.K. and India deferred tax assets. The total valuation allowance recorded against these deferred tax assets is $5.6 million, a net increase of $3.1 million during the year, which was recorded as income tax expense in the consolidated statement of operations.

The Company has various U.S. state net operating loss carryforwards of $0.3 million, which begin to expire in 2021. The Company has U.S. federal credit carryovers of $0.7 million, which begin to expire in 2037. The Company has net operating loss carryforwards in the Netherlands, United Kingdom, and Belgium of $0.5 million, $3.3 million, and $0.3 million, respectively. The carryforwards in the Netherlands expire between 2019 and 2025, and the carryforwards in the United Kingdom and Belgium have no expiration date.

The Company files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years prior to 2015.

At December 31, 2018, the Company believes it has adequately provided for its tax-related liabilities, and that no reserve for unrecognized tax benefits is necessary. No significant change in the total amount of unrecognized tax benefits is expected within the next twelve months. The Company recognizes accrued interest and penalties related to unrecognized tax benefits (if any) in tax expense, as applicable. At December 31, 2018, the Company had no accrual for the payment of interest and penalties.

During 2018 and 2017, the Company recorded approximately $0.1 million of tax benefit and approximately $0.3 million of additional tax expense, respectively, for tax windfalls and shortfalls that would previously have been recorded in excess of par value. In 2016, the Company recorded approximately $0.2 million of tax expense to capital in excess of par value. These tax benefits have also been recognized in the consolidated balance sheets as an increase (reduction) of income taxes payable.

Net income tax payments during 2018, 2017, and 2016 totaled $2.1 million, $1.6 million, and $2.1 million, respectively.