Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The table below summarizes significant components of deferred tax assets and liabilities:

	December 31,
	2020		2019
Deferred tax assets
Allowance for expected credit losses	$	14,676	$	13,041
Accrued vacation and bonus	30,694		27,438
Share-based compensation	13,522		12,647
Notes receivable from employees	13,333		12,187
State net operating loss carryforward	2,090		2,066
Foreign net operating loss carryforward	9,437		9,388
Federal tax credit and capital loss carryforward	—		7,336
Deferred compensation	240		2,117
Operating lease assets	41,283		43,397
Employee benefits obligations	2,339		1,191
Other, net	3,701		1,898
Total deferred tax assets	131,315		132,706
Deferred tax liabilities
Revenue recognition	(8,351)		(6,732)
Operating lease liabilities	(28,523)		(29,671)
Property and equipment, net	(7,663)		(3,797)
Equity debt discount	(6,623)		(8,890)
Goodwill and intangible assets	(202,842)		(209,250)
Total deferred tax liabilities	(254,002)		(258,340)
Foreign withholding tax	(1,980)		(1,195)
Valuation allowance	(13,300)		(19,865)
Net deferred tax liabilities	$	(137,967)	$	(146,694)

As of December 31, 2020 and 2019, the Company recorded certain deferred tax assets related to foreign tax credits, capital loss and foreign net operating loss carryforwards, which can be carried forward for periods ranging from 10 years to indefinite. Based on forward-looking financial information, the Company believes it is not more likely than not that the attributes will be utilized. Therefore, valuation allowances of $13.3 million and $19.9 million are recorded against the Company’s deferred tax assets as of December 31, 2020 and 2019, respectively.

During the year ended December 31, 2020, a U.S. subsidiary of the Company (the “Licensor”) entered into an intellectual property license agreement with a United Kingdom ("U.K.") subsidiary of the Company (the “Licensee”) in consideration of royalty payments that have been partially prepaid (the "License Agreement"). The prepaid royalties remitted to the Licensor were taxable in the U.S. for the year ended December 31, 2020. The impact on the U.S. current income tax provision was mainly offset by a deferred foreign income tax benefit related to the future tax deductions arising from amortization of intangible assets in the U.K. The License Agreement provided sufficient taxable income in the U.S. to fully utilize the Company’s existing foreign tax credits, which were previously subject to a valuation allowance.

As of December 31, 2020, the Company has not recorded a $27.9 million deferred tax liability related to the basis difference in the investment in our foreign subsidiaries, as the investment is considered permanent in nature.

The table below summarizes the components of income before income tax provision from continuing operations:

	Year Ended December 31,
	2020		2019		2018
Domestic	$	122,800	$	150,860	$	96,543
Foreign	139,646		137,590		111,249
Total	$	262,446	$	288,450	$	207,792

The table below summarizes the components of income tax provision from continuing operations:

	Year Ended December 31,
	2020		2019		2018
Current
Federal	$	22,164	$	30,651	$	10,847
State	10,257		7,702		4,447
Foreign	29,390		37,083		21,056
	61,811		75,436		36,350
Deferred
Federal	3,936		(1,767)		14,538
State	362		785		503
Foreign	(14,345)		(2,730)		5,790
	(10,047)		(3,712)		20,831
Income tax provision	$	51,764	$	71,724	$	57,181

Our income tax provision from continuing operations resulted in effective tax rates that varied from the federal statutory income tax rate as summarized below:

	Year Ended December 31,
	2020		2019		2018
Income tax expense at federal statutory rate	$	55,114	$	60,575	$	43,636
State income taxes, net of federal benefit	10,567		8,430		4,950
Detriment from foreign tax rates	1,175		3,425		3,655
Other expenses not deductible for tax purposes	3,079		4,362		3,543
Adjustment to reserve for uncertain tax positions	(1,231)		2,504		(132)
Impact of 2017 U.S. tax reform	—		(1,088)		(656)
Sale of Ringtail business	—		(2,097)		3,798
Share-based compensation	(6,560)		(4,447)		(1,371)
Release of valuation allowance on foreign tax credits	(7,336)		—		—
Income tax benefit related to the License Agreement, net	(3,899)		—		—
Other adjustments, net	855		60		(242)
Income tax provision	$	51,764	$	71,724	$	57,181

The income tax provision for the years ended December 31, 2020 and 2019 was $51.8 million and $71.7 million, respectively. The decrease in expense is primarily attributable to lower pre-tax income in 2020 as compared with 2019, the release of the valuation allowance on foreign tax credits and the income tax benefit related to the License Agreement.

We file numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and in many city, state and foreign jurisdictions. We are no longer subject to U.S. federal income tax examinations for years prior to 2016. We are also no longer subject to state and local or foreign tax examinations by tax authorities for years prior to 2014.

Our liability for uncertain tax positions was $7.3 million and $11.1 million as of December 31, 2020 and 2019, respectively. The Company does not expect any of the uncertain tax positions to settle within the next 12 months. As of December 31, 2020, our accrual for the payment of tax-related interest and penalties was not significant.