Income Taxes

The effective tax rates for the three and nine-month periods in 2016 and 2015 are as follows:



	Three Months Ended				Nine Months Ended
	September 30,		September 27,		September 30,		September 27,
	2016		2015		2016		2015
Effective tax rate	68.3	%	31.2	%	43.2	%	(59.2	)%

CTS' effective income tax rate was 68.3% and 31.2% in the third quarter of 2016 and 2015, respectively. The tax rate in the third quarter and first nine months of 2016 reflected an increase in valuation allowances recorded against certain state net operating losses and tax credits and the revaluation of U.S. deferred taxes as a result of the June 2016 restructuring activities discussed in Note 7. The rates also reflect an increase in a valuation allowance on certain non-U.S. losses as a result of changes in the expectation of CTS' ability to utilize those losses, changes in the mix of earnings by jurisdiction, various other discrete items, CTS' decision to no longer permanently reinvest the earnings of its Canadian and U.K. subsidiaries, and tax expense for withholding taxes on earnings in China that are not anticipated to be maintained in China. CTS began recording tax expense for withholding taxes in China in the fourth quarter of 2015 and expects to continue this practice going forward. During the first nine months of 2015, CTS reflected a benefit attributable to filing amended U.S. federal tax returns in order to take credits for foreign taxes paid which was partially offset by a reserve recorded on an uncertain tax position.

CTS’ continuing practice is to recognize interest and/or penalties related to income tax matters as income tax expense. For the three months ended September 30, 2016, and September 27, 2015, CTS accrued $181 and $136 of interest or penalties in income tax expense. For the nine months ended September 30, 2016 and September 27, 2015, CTS accrued $552 and $957 of interest or penalties in income tax expense.