XML 63 R13.htm IDEA: XBRL DOCUMENT v3.3.0.814
Income Taxes and Uncertain Tax Positions
9 Months Ended
Sep. 30, 2015
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

Note 7 – Income Taxes and Uncertain Income Tax Positions

The Company’s first nine months of 2015 effective tax rate was 27.3%, compared to the first nine months of 2014 effective tax rate of 30.5%. The primary contributors to the difference in the effective tax rate from the prior year were lower changes in reserves related to uncertain tax positions, a mix of earnings between higher and lower tax jurisdictions, and certain other one-time items that impacted 2015’s effective tax rate comparison.

As of September 30, 2015, the Company’s cumulative liability for gross unrecognized tax benefits was $10,628. At December 31, 2014, the Company’s cumulative liability for gross unrecognized tax benefits was $11,845.

The Company continues to recognize interest and penalties associated with uncertain tax positions as a component of taxes on income before equity in net income of associated companies in its Condensed Consolidated Statements of Income. The Company recognized ($55) and ($216) for interest and ($1) and $187 for penalties on its Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2015, respectively, and recognized ($6) and ($64) for interest and ($99) and ($1) for penalties on its Condensed Consolidated Statements of Income during the three and nine months ended September 30, 2014, respectively. As of September 30, 2015, the Company had accrued $1,508 for cumulative interest and $1,900 for cumulative penalties, compared to $1,868 for cumulative interest and $1,845 for cumulative penalties accrued at December 31, 2014.

During the three months ended September 30, 2015, the Company recognized a decrease of approximately $793 in its cumulative liability for gross unrecognized tax benefits due to the expiration of the applicable statutes of limitations for certain tax years. During the three months ended September 30, 2014, the Company recognized a decrease in its cumulative liability for gross unrecognized tax benefits of $802 due to the expiration of the applicable statutes of limitations for certain tax years.

During the nine months ended September 30, 2015, the Company recognized a decrease of approximately $1,533 in its cumulative liability for gross unrecognized tax benefits due to the expiration of the applicable statutes of limitations for certain tax years. During the nine months ended September 30, 2014, the Company recognized a decrease of approximately $1,877 in its cumulative liability for gross unrecognized tax benefits due to the expiration of the applicable statutes of limitations for certain tax years.

The Company estimates that during the year ending December 31, 2015 it will reduce its cumulative liability for gross unrecognized tax benefits by approximately $1,800 to $1,900 due to the expiration of the statute of limitations with regard to certain tax positions. This estimated reduction in the cumulative liability for unrecognized tax benefits does not consider any increase in liability for unrecognized tax benefits with regard to existing tax positions or any increase in cumulative liability for unrecognized tax benefits with regard to new tax positions for the year ending December 31, 2015.

The Company and its subsidiaries are subject to U.S. Federal income tax, as well as the income tax of various state and foreign tax jurisdictions. Tax years that remain subject to examination by major tax jurisdictions include Brazil from 2000, Italy from 2007, the Netherlands and the United Kingdom from 2009, China from 2010, Spain from 2011, the United States from 2011, and various domestic state tax jurisdictions from 1993.

During 2012, the Italian tax authorities initiated a transfer pricing audit of the Company’s Italian subsidiary, Quaker Italia S.r.l., relating to the tax years 2007, 2008, 2009 and 2010. During the second quarter of 2015, the Italian tax authorities completed an audit of the Company’s Italian subsidiary, Quaker Chemical S.r.l. (formerly NP Coil Dexter Industries, S.r.l.), relating to the tax years 2010, 2011, 2012 and 2013, and proposed audit adjustments for those years. There have been no significant developments during the third quarter of 2015 related to either of these Italian tax assessments. In October 2015, subsequent to the date of these financial statements, the Dutch tax authorities notified the Company that they intend to assess the Company's Netherlands subsidiary for additional income taxes related to the 2011 tax year. As of September 30, 2015, the Company believes it has adequate reserves, where merited, for uncertain tax positions with respect to these audits