Annual report pursuant to Section 13 and 15(d)

Income Taxes (Notes)

v3.20.4
Income Taxes (Notes)
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income TaxesThe 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 2013.
    The provision for income taxes by location of the taxing jurisdiction for the years ended December 31, 2020, 2019 and 2018 consisted of the following:

  2020 2019 2018
Current:
Federal $ 11,914  $ 15,612  $ 15,643 
State 3,907  4,681  3,635 
  15,821  20,293  19,278 
Deferred:
Federal 922  5,766  6,826 
State (150) 1,323  764 
  772  7,089  7,590 
  $ 16,593  $ 27,382  $ 26,868 

A reconciliation of income taxes computed at the U.S. federal statutory income tax rate (21% for 2020, 2019 and 2018) to the provision for income taxes reflected in the Company’s Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018 is as follows:
  2020 2019 2018
Tax expense at the statutory rate $ 14,566  $ 23,038  $ 24,241 
State income taxes, net of federal income tax benefit 2,602  4,594  3,659 
Share-based compensation (298) (587) (50)
Other permanent differences 48  (5) 139 
Non-deductible compensation 751  421  13 
Change in income tax contingency reserves (400) —  — 
Federal income tax credits (37) (83) (186)
Other (639) 4  (948)
  $ 16,593  $ 27,382  $ 26,868 

    
    
The significant components of the deferred tax assets and liabilities at December 31, 2020 and 2019 were as follows:
December 31,
2020		 December 31,
2019
Deferred tax assets:
Accrued expenses $ 12,095  $ 7,245 
Allowance for doubtful accounts 577  527 
Operating lease liabilities 31,309  26,989 
Share-based compensation 3,554  3,881 
Accruals for income tax contingencies 166  185 
Net operating loss carryforwards 671  1,089 
Total gross deferred tax assets 48,372  39,916 
Valuation allowance (395) (395)
Total net deferred tax assets 47,977  39,521 
Deferred tax liabilities:
Tax over book depreciation 24,964  23,795 
Prepaid expenses 6,499  4,043 
Operating lease right-of-use assets 31,277  26,992 
Goodwill 17,368  15,337 
Intangible assets 9,855  10,568 
Total deferred tax liabilities 89,963  80,735 
Net deferred tax liabilities $ (41,986) $ (41,214)

The Company paid income taxes, net of refunds, of $13,463, $19,959 and $20,894 for the years ended December 31, 2020, 2019 and 2018, respectively.

The Company maintains a valuation allowance to reserve against its state net operating loss carryforwards. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company assessed the likelihood that its deferred tax assets would be recovered from estimated future taxable income and available tax planning strategies. In making this assessment, all available evidence was considered including economic climate, as well as reasonable tax planning strategies. The Company believes it is more likely than not that it will realize its remaining net deferred tax assets, net of the valuation allowance, in future years.     

As a result of the Towne acquisition, the Company had approximately $2,000 and $10,258 of federal net operating losses as of December 31, 2019 and 2018, respectively. The Company fully utilized the federal net operating losses in 2020.

At December 31, 2020 and 2019, the Company had a state net operating loss carryforward of $16,926, and at December 31, 2018, the Company had a state net operating loss carryforward of $18,148, that expire between 2020 and 2031. The state net operating loss carryforwards are limited to the future taxable income of separate legal entities. The valuation allowance on the state net operating loss carryforwards increased $35 during 2018. No change in the valuation allowance during 2020 and 2019.
A reconciliation of the beginning and ending amount of unrecognized tax benefits as of and during the years ended December 31, 2020 and 2019 is as follows:
Balance at December 31, 2018 $ 1,058 
Reductions for settlement with state taxing authorities (99)
Additions for tax positions of current year 28 
Balance at December 31, 2019 987 
Reductions for settlement with state taxing authorities (466)
Additions for tax positions of current year 23 
Balance at December 31, 2020 $ 544 
The Company recognizes income tax benefits from uncertain tax positions where the realization of the ultimate benefit is uncertain. At December 31, 2020 and 2019, the Company had $544 and $987, respectively, of unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized. At December 31, 2020 and 2019, the Company had accrued interest and penalties related to unrecognized tax benefits of $168 and $281, respectively.