Annual report pursuant to Section 13 and 15(d)

Income Taxes (Notes)

v2.4.1.9
Income Taxes (Notes)
 12 Months Ended
Dec. 31, 2014
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

The provision for income taxes consists of the following:

 
2014

2013

2012
Current:
 

 

 
Federal
$
33,631


$
22,466


$
24,981

State
4,306


2,133


3,462

 
37,937


24,599


28,443

Deferred:
 


 


 

Federal
(2,102
)

4,367


2,452

State
(919
)

489


(408
)
 
(3,021
)

4,856


2,044

 
$
34,916


$
29,455


$
30,487



The tax benefit associated with the exercise of stock options and the vesting of non-vested shares recorded to additional paid in capital during the years ended December 31, 2014, 2013 and 2012 were $2,109, $3,612 and $385, respectively, and are reflected as an increase in additional paid-in capital in the accompanying consolidated statements of shareholders’ equity.
 
The historical income tax expense differs from the amounts computed by applying the federal statutory rate of 35.0% to income before income taxes as follows:
 
2014
 
2013
 
2012
Tax expense at the statutory rate
$
33,630

 
$
29,373

 
$
29,125

State income taxes, net of federal benefit
1,879

 
1,876

 
1,842

Incentive stock options
(96
)
 
(908
)
 
(154
)
Meals and entertainment
186

 
139

 
172

Deferred tax asset valuation allowance
39

 
(85
)
 
(39
)
Federal income tax credits
(533
)
 
(1,023
)
 
(619
)
Other
(189
)
 
83

 
160

 
$
34,916

 
$
29,455

 
$
30,487



Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets are as follows:
December 31,
2014

December 31,
2013
Deferred tax assets:
 

 
Accrued expenses
$
6,313


$
4,287

Allowance for doubtful accounts
1,002


745

Share-based compensation
5,698


6,066

Accruals for income tax contingencies
300


547

Impairment of goodwill and other intangible assets
534


854

Net operating loss carryforwards
280


253

Total deferred tax assets
14,127


12,752

Valuation allowance
(273
)

(234
)
Total deferred tax assets, net of valuation allowance
13,854


12,518

Deferred tax liabilities:
 

 
Tax over book depreciation
19,222


21,806

Non-compete agreements
3,639


5,149

Prepaid expenses deductible when paid
2,488


2,354

Goodwill
11,189


8,914

Total deferred tax liabilities
36,538


38,223

Net deferred tax liabilities
$
(22,684
)

$
(25,705
)

The balance sheet classification of deferred income taxes is as follows:
 
December 31,
2014
 
December 31,
2013
Current assets
$
2,496

 
$
1,145

Noncurrent liabilities
(25,180
)
 
(26,850
)
 
$
(22,684
)
 
$
(25,705
)


Total income tax payments, net of refunds, during fiscal years 2014, 2013 and 2012 were $30,087, $25,168 and $32,214, respectively.

At December 31, 2014 and 2013, the Company had state net operating loss carryforwards of $6,500 and $5,468, respectively, that will expire between 2015 and 2029. The use of these state net operating losses is limited to the future taxable income of separate legal entities. Based on expectations of future taxable income, management believes that it is more likely than not that the results of operations for these separate legal entities will not generate sufficient taxable income to realize these net operating loss benefits for state loss carryforwards.  As a result, a valuation allowance has been provided for most of these state loss carryforwards. The valuation allowance on these state loss carryforwards increased $39 during 2013 but decreased $85 during 2012.

Income Tax Contingencies

The Company, or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction, various states and Canada. With a few exceptions, the Company is no longer subject to U.S. federal, state and local, or Canadian examinations by tax authorities for years before 2010.
 
    




A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:

 
Liability for
 
Unrecognized Tax
 
Benefits
Balance at December 31, 2011
481

Reductions for settlement with state taxing authorities
(204
)
Balance at December 31, 2012
277

Additions for tax positions of current year
209

Additions for tax positions of prior years - TQI
853

Balance at December 31, 2013
1,339

Reductions for settlement with state taxing authorities
(697
)
Additions for tax positions of prior years - TQI
63

Additions for tax positions of current year
66

Balance at December 31, 2014
$
771



Included in the liability for unrecognized tax benefits at December 31, 2014 and December 31, 2013 are tax positions of $771 and $1,339, respectively, which represents tax positions where the realization of the ultimate benefit is uncertain and the disallowance of which would affect the Company’s annual effective income tax rate.

Included in the liability for unrecognized tax benefits at December 31, 2014 and December 31, 2013, are accrued penalties of $170 and $277, respectively.  The liability for unrecognized tax benefits at December 31, 2014 and December 31, 2013 also included accrued interest of $414 and $299, respectively.