INCOME TAXES

Income tax expense consisted of the following (in thousands):



	Years Ended December 31,
	2014		2013			2012
Current:
Federal	$	51,260	$	55,227		$	69,590
State	6,606		6,616			10,088
Foreign	220		1,472			(478		)
	58,086		63,315			79,200
Deferred:
Federal	4,503		(9,668		)	(8,630		)
State	535		1,279			(438		)
	5,038		(8,389		)	(9,068		)
Total income tax expense	$	63,124	$	54,926		$	70,132

The effective income tax rate differs from the federal corporate tax rate of 35% in 2014, 2013 and 2012 as follows (in thousands):



	Years Ended December 31,
	2014			2013			2012
Tax at statutory rate	$	56,621		$	49,599		$	60,608
State income taxes, net of federal tax benefits	4,641			5,132			6,273
Non-deductible meals and entertainment	1,497			1,577			2,686
Income tax credits	(1,600		)	(1,574		)	(758		)
Other, net	1,965			192			1,323
Total income tax expense	$	63,124		$	54,926		$	70,132

At December 31, deferred tax assets and liabilities consisted of the following (in thousands):



	December 31,
	2014		2013
Deferred tax assets:
Insurance and claims accruals	$	74,651	$	76,596
Allowance for uncollectible accounts	8,260		5,672
Other	14,724		8,437
Gross deferred tax assets	97,635		90,705
Deferred tax liabilities:
Property and equipment	295,628		282,642
Prepaid expenses	6,913		6,906
Other	2,634		3,079
Gross deferred tax liabilities	305,175		292,627
Net deferred tax liability	$	207,540	$	201,922

These amounts are presented in the accompanying Consolidated Balance Sheets as of December 31 as follows (in thousands):



	December 31,
	2014		2013
Current deferred tax asset	$	34,066	$	25,315
Non-current deferred tax liability	241,606		227,237
Net deferred tax liability	$	207,540	$	201,922

We have not recorded a valuation allowance because we believe that all deferred tax assets are more likely than not to be realized as a result of our historical profitability, future taxable income and reversal of deferred tax liabilities.

We recognized a $37 thousand decrease in the net liability for unrecognized tax benefits for the year ended December 31, 2014 and a $1.8 million decrease for the year ended December 31, 2013. We accrued interest expense of $0.2 million during 2014 and $0.3 million during 2013, excluding from both years the reversal of accrued interest related to the adjustment of uncertain tax positions. If recognized, $5.5 million of unrecognized tax benefits as of December 31, 2014 and $5.5 million as of December 31, 2013 would impact our effective tax rate. Interest of $1.7 million as of December 31, 2014 and $1.7 million as of December 31, 2013 has been reflected as a component of the total liability. We expect no other significant increases or decreases for uncertain tax positions during the next twelve months.

The reconciliations of beginning and ending gross balances of unrecognized tax benefits for 2014 and 2013 are shown below (in thousands).



	December 31,
	2014			2013
Unrecognized tax benefits, beginning balance	$	8,644		$	11,563
Gross increases – tax positions in prior period	244			286
Gross increases – current-period tax positions	745			742
Settlements	(1,050		)	(3,947		)
Unrecognized tax benefits, ending balance	$	8,583		$	8,644

We file U.S. federal income tax returns, as well as income tax returns in various states and several foreign jurisdictions. The years 2011 through 2013 are open for examination by the U.S. Internal Revenue Service (“IRS”), and various years are open for examination by state and foreign tax authorities. State and foreign jurisdictional statutes of limitations generally range from three to four years.

In May 2010, the IRS began an audit of our 2007 and 2008 federal income tax returns. During the second quarter of 2012, we received a notice of deficiency including proposed penalties related to our like-kind exchange program for tractors and trailers. The proposed tax deficiency related to timing differences for recognition of gains on sales of equipment. Prior to holding a scheduled appeals conference in June 2013, the IRS appeals officer decided to no longer contest this issue based on the merits of our position. In July 2013, we entered into a stipulation with the IRS that there are no deficiencies in federal income tax and no penalties due for the tax years 2007 and 2008. The IRS decision has no impact on our financial condition, results of operations or income tax rate because we had not previously accrued a liability for any proposed interest or penalties related to this issue.