Income Taxes (Notes)

9 Months Ended

Sep. 30, 2019

Income Taxes [Abstract]

Income Tax Disclosure

Income Taxes

Income tax expense during interim periods is based on our estimated annual effective income tax rate plus any discrete items, which are recorded in the period in which they occur. Discrete items include, among others, such events as changes in estimates due to the finalization of tax returns, tax audit settlements, expiration of statutes of limitation, and increases or decreases in valuation allowances on deferred tax assets. Our effective tax rate was 2.7% and 19.8% for the three months ended September 30, 2019 and 2018, respectively. The lower effective tax rate for the three months ended September 30, 2019 was primarily due to the reduction in a tax liability as a result of the expiration of the statute of limitations. Our effective tax rate was 17.3% and 19.4% for the nine months ended September 30, 2019 and 2018, respectively. The lower effective tax rate for the nine months ended September 30, 2019 was primarily due to the reduction in a tax liability as a result of the expiration of the statute of limitations and higher excess tax benefits on the increased exercises of stock options, partially offset by the adjustment related to the implementation of tax reform in 2018.

Unrecognized Tax Benefits

As of September 30, 2019, the total amount of our unrecognized tax benefits was $1.4 million and the total amount of our accrued interest was $0.6 million.

The federal statutes of limitations have expired for all tax years prior to 2016, and we are not currently under audit by the IRS. Various state jurisdictions are auditing years 2009 through 2017. There are currently no federal or provincial audits in Canada; however, years subsequent to 2014 remain open and could be subject to examination. It is reasonably possible that the amount of unrecognized tax benefits may change within the next twelve months. However, given the number of years that remain subject to examination and the number of matters being examined, an estimate of the range of the possible increase or decrease cannot be made.