Income Taxes

12 Months Ended

Dec. 31, 2020

Note 7, Income Taxes:

The provision for income taxes for the years ended December 31 consist of the following:

(In thousands)	2020			2019			2018
Current
Federal	$	16,831		$	7,701		$	8,422
State		3,210			1,849			2,118
		20,041			9,550			10,540
Deferred
Federal		(1,217	)		(2,217	)		(232	)
State		(1,241	)		(474	)		(207	)
		(2,458	)		(2,691	)		(439	)
Total income tax expense	$	17,583		$	6,859		$	10,101

CARES Act

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was signed into law. The CARES Act provides numerous tax provisions and other stimulus measures, including temporary suspension of certain payment requirements for the employer-paid portion of social security taxes, the creation of certain refundable employee retention credits, and technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property. We elected to defer the employer-paid portion of social security taxes beginning with pay dates on and after April 1, 2020 and through December 31, 2020 and have deferred $1,607,000 which is included in accrued liabilities. During 2020, we recorded $2,301,000 for refundable employee retention credits reducing selling, general and administrative expenses. We also benefited from the technical correction for qualified leasehold improvements eligible for 100% tax bonus depreciation which reduced our 2019 income tax liability by approximately $2,053,000 and we adjusted our deferred income taxes and income taxes receivable accordingly.

The differences between income tax expense in the accompanying Consolidated Financial Statements and the amount computed by applying the statutory Federal income tax rate are as follows:

(In thousands)	2020			2019			2018
Statutory rates applied to income before income taxes	$	16,164		$	6,032		$	8,486
State income taxes, net of Federal tax benefit		2,057			1,149			1,616
Net permanent differences		520			228			220
Other		48			(128	)		(218	)
Leases		—			(418	)		—
State tax credits		(1,206	)		(4	)		(3	)
	$	17,583		$	6,859		$	10,101

The 2020 effective tax rate differs from the federal statutory rate primarily due to state income taxes partially offset by benefits associated with state tax credits. We completed the computations and recorded in the fourth quarter of 2020, state quality jobs credits of $1,527,000 generated in 2018, 2019, and 2020.

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. The amounts in the following table are grouped based on broad categories of items that generate the deferred tax assets and liabilities.

(In thousands)	2020		2019
Deferred tax assets:
Property and equipment	$	8,868	$	10,517
Lease Liabilities		58,417		44,751
Accrued liabilities		9,885		9,386
Retirement benefits		662		504
State tax credits		943		21
Other		660		574
Total deferred tax assets		79,435		65,753

Deferred tax liabilities:		7,135
Inventory related		7,135		7,912
Right-of-use lease assets		56,032		44,152
Other		454		491
Total deferred tax liabilities		63,621		52,555
Net deferred tax assets	$	15,814	$	13,198

We review our deferred tax assets to determine the need for a valuation allowance. Based on evidence, we conclude that it is more-likely-than-not that our deferred tax assets will be realized and therefore a valuation allowance is not required.

We file income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. With respect to U.S. federal, state and local jurisdictions, with limited exceptions, we are no longer subject to income tax audits for years before 2016.

Uncertain Tax Positions

Interest and penalties associated with uncertain tax positions, if any, are recognized as components of income tax expense. No amounts for uncertain tax positions were recorded for the years currently open under statute of limitations.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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