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Income Taxes and Uncertain Tax Positions
3 Months Ended
Mar. 31, 2017
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

Note 8 – Income Taxes and Uncertain Income Tax Positions

The Company’s effective tax rate for the three months ended March 31, 2017 was 50.8% compared to 32.3% for the three months ended March 31, 2016. The increase in the first quarter of the 2017 effective tax rate was primarily due to non-deductible costs related to the previously announced Houghton International, Inc. (“Houghton”) combination.

As of March 31, 2017, the Company’s cumulative liability for gross unrecognized tax benefits was $6.5 million. As of December 31, 2016, the Company’s cumulative liability for gross unrecognized tax benefits was $6.2 million.

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 a credit of $0.2 million for interest and an expense of less than $0.1 million for penalties in its Condensed Consolidated Statement of Income for the three months ended March 31, 2017, and recognized credits of $0.1 million for interest and less than $0.1 million for penalties in its Condensed Consolidated Statement of Income for the three months ended March 31, 2016. As of March 31, 2017, the Company had accrued $0.6 million for cumulative interest and $1.7 million for cumulative penalties in its Condensed Consolidated Balance Sheets, compared to $0.7 million for cumulative interest and $1.6 million for cumulative penalties accrued at December 31, 2016.

During the three months ended March 31, 2017 and 2016, the Company recognized a decrease of $0.4 million and $0.8 million, respectively, 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, 2017 it will reduce its cumulative liability for gross unrecognized tax benefits by approximately $1.2 to $1.3 million 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, 2017.

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 2011, Spain and China from 2012, the United States from 2013, and various domestic state tax jurisdictions from 2007.

As previously reported, the Italian tax authorities have assessed additional tax due from the Company’s subsidiary, Quaker Italia S.r.l., relating to the tax years 2007, 2008, 2009 and 2010. In the fourth quarter of 2016, the Italian tax authorities assessed Quaker Italia S.r.l. for additional tax due relating to the tax years 2011, 2012, and 2013. The Company has filed for competent authority relief from these assessments under the Mutual Agreement Procedures of the Organization for Economic Co-Operation and Development. As of March 31, 2017, the Company believes it has adequate reserves, where merited, for uncertain tax positions with respect to all of these audits.