10-K
TTEC HOLDINGS, INC. filed this Form 10-K on 03/06/2019
Entire Document
 

Table of Contents

TTEC HOLDINGS, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of December 31, 2018, after consideration of all tax loss and tax credit carry back opportunities, the Company had tax affected tax loss carry forwards worldwide expiring as follows (in thousands):

 

 

 

 

 

2019

    

$

86

2020

 

 

146

2021

 

 

91

2022

 

 

 —

After 2022

 

 

12,361

No expiration

 

 

5,791

Total

 

$

18,475

 

The Company has been granted “Tax Holidays” as an incentive to attract foreign investment by the governments of the Philippines and Costa Rica. Generally, a Tax Holiday is an agreement between the Company and a foreign government under which the Company receives certain tax benefits in that country, such as exemption from taxation on profits derived from export-related activities. In the Philippines, the Company has been granted multiple agreements, with an initial period of four years and additional periods for varying years, expiring at various times between 2019 and 2020. The aggregate benefit to income tax expense for the years ended December 31, 2018,  2017 and 2016 was approximately $8.2 million, $11.9 million and $12.4 million, respectively, which had a favorable impact on diluted net income per share of $0.18,  $0.26 and $0.27, respectively.

Accounting for Uncertainty in Income Taxes

In accordance with ASC 740, the Company has recorded a reserve for uncertain tax positions. The total amount of interest and penalties recognized in the accompanying Consolidated Balance Sheets and Consolidated Statements of Comprehensive Income (Loss) as of December 31, 2018,  2017 and 2016 was approximately $1.4 million,  $1.8 million and $693 thousand, respectively.

The Company had a reserve for uncertain tax benefits, on a net basis, of $4.8 million and $3.3 million for the years ended December 31, 2018 and 2017, respectively. The liability for uncertain tax positions was decreased by $2.1 million during 2018 for the release of uncertain tax positions related to the closing of statues of limitations and increased by $3.6 million relating to new positions.

The tabular reconciliation of the reserve for uncertain tax benefits on a gross basis without interest for the three years ended December 31, 2018 is presented below (in thousands):

 

 

 

 

 

Balance as of December 31, 2015

    

$

2,709

Additions for current year tax positions

 

 

826

Reductions in prior year tax positions

 

 

(1,153)

Balance as of December 31, 2016

 

 

2,382

Additions for current year tax positions

 

 

916

Reductions in prior year tax positions

 

 

 —

Balance as of December 31, 2017

 

 

3,298

Additions for current year tax positions

 

 

3,600

Reductions in prior year tax positions

 

 

(2,114)

Balance as of December 31, 2018

 

$

4,784

 

At December 31, 2018, the amount of uncertain tax benefits including interest, that, if recognized, would reduce tax expense was $6.2 million. Within the next 12 months, it is expected that the amount of unrecognized tax benefits may be reduced by $2.5 million as a result of the expiration of various statutes of limitation or other confirmations of tax positions.

In accordance with ASC 740, during the second quarter of 2018, $1.1 million of liability was released due to the closing of statues of limitations. During the third quarter of 2018, $2.0 million of liability was released due to the closing of statutes of limitations and changes calculated as allowed under SAB 118 related to the 2017 Tax Act. During the fourth quarter of 2018, the Company recorded liabilities of $3.6 million related to new uncertain tax positions.

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