XML 38 R22.htm IDEA: XBRL DOCUMENT v3.20.4
Income Taxes
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
For the years ended December 31, 2020, 2019, and 2018, our income tax provision was calculated based on income from continuing operations before income taxes as follows (in thousands):
 202020192018
United States$228,181 $430,253 $375,408 
Foreign24,145 20,636 19,620 
 $252,326 $450,889 $395,028 
The income tax provision for the years ended December 31, 2020, 2019, and 2018 consisted of the following (in thousands):
 202020192018
Current provision:   
Federal$115,633 $89,264 $75,405 
State and local36,182 31,099 28,063 
Foreign3,922 3,685 1,389 
 155,737 124,048 104,857 
Deferred (benefit) provision(36,354)1,701 4,249 
 $119,383 $125,749 $109,106 
For the year ended December 31, 2020, our income tax provision from continuing operations was $119.4 million compared to $125.7 million for the year ended December 31, 2019 and $109.1 million for the year ended December 31, 2018. The decrease in the income tax provision for 2020, when compared to 2019, was primarily driven by reduced state income taxes, inclusive of a deferred state benefit, resulting from a change in the mix of earnings. The increase in the income tax provision for 2019, when compared to 2018, was largely due to increased income from continuing operations before income taxes.
The income tax rates on income from continuing operations before income taxes for the years ended December 31, 2020, 2019, and 2018, were 47.3%, 27.9%, and 27.6%, respectively. The increase in the 2020 income tax rate, when compared to 2019, was predominantly due to the tax-effect of the $232.8 million of non-cash goodwill, identifiable intangible asset, and other long-lived asset impairment charges recorded during the second quarter, the majority of which is non-deductible for tax purposes. The slight increase in the 2019 income tax rate, when compared to 2018, was primarily due to: (a) an increase in our state deferred tax rate, partially as a result of a change in the mix of income during 2019, and (b) the continued impact of the Tax Cuts and Jobs Act, including the application of guidance regarding certain permanent differences and other nondeductible expenses.
NOTE 12 - INCOME TAXES - (Continued)
Items accounting for the differences between income taxes computed at the federal statutory rate and the income tax provision for the years ended December 31, 2020, 2019, and 2018 were as follows (in thousands):
 202020192018
Federal income taxes at the statutory rate$52,989 $94,687 $82,946 
State and local income taxes, net of federal tax benefits19,290 24,904 21,827 
Permanent differences5,860 7,149 6,584 
Excess tax benefit from share-based compensation(142)(733)(1,227)
Non-deductible impairment charges40,165 — — 
Foreign income taxes (including UK statutory rate changes)(140)(170)70 
Other1,361 (88)(1,094)
 $119,383 $125,749 $109,106 
The minimum tax on global intangible low-taxed income for certain earnings of our foreign subsidiaries was approximately $0.1 million for each of the years ended December 31, 2020 and 2019 and approximately $0.6 million for the year ended December 31, 2018. The Company recognizes such tax as an expense in the period incurred.
As of December 31, 2020, we had undistributed foreign earnings from certain foreign subsidiaries of approximately $89.6 million. Based on our evaluation, and given that a significant portion of such earnings were subject to tax in prior periods, or are indefinitely reinvested, we have concluded that any taxes associated with the repatriation of such foreign earnings would be immaterial. As of December 31, 2020, the amount of cash held by these foreign subsidiaries was approximately $100.8 million which, if repatriated, should not result in any federal or state income taxes.
We file a consolidated federal income tax return including all of our U.S. subsidiaries with the Internal Revenue Service. We additionally file income tax returns with various state, local, and foreign tax agencies. Our income tax returns are subject to audit by various taxing authorities and are currently under examination for the years 2014 through 2019.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act provides for various tax relief and tax incentive measures, which did not have a material impact on our results of operations. Certain provisions of the CARES Act, however, did favorably impact our liquidity throughout 2020 as they allowed for the deferral of the employer’s portion of current year Social Security tax payments until 2021 and 2022.
On December 27, 2020, the Consolidated Appropriations Act, 2021, was signed into law. This act provides for tax relief, as well as an omnibus appropriations package that extends various expiring tax provisions and allows for a 100% tax deduction for the cost of business meals in 2021 and 2022. The Consolidated Appropriations Act is not expected to have a material impact on the Company's income tax provision.
NOTE 12 - INCOME TAXES - (Continued)
Deferred income tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement and income tax bases of assets and liabilities. The deferred income tax assets and deferred income tax liabilities recorded as of December 31, 2020 and 2019 were as follows (in thousands):
 20202019
Deferred income tax assets:  
Excess of amounts expensed for financial statement purposes over amounts deducted for income tax purposes:  
Insurance liabilities$47,602 $47,022 
Pension liability6,789 2,733 
Operating lease liabilities68,652 68,158 
Deferred compensation36,790 32,685 
Accrued federal payroll taxes (1)
27,428 — 
Other (including liabilities and reserves)29,816 25,647 
Total deferred income tax assets217,077 176,245 
Valuation allowance for deferred tax assets(3,856)(3,463)
Net deferred income tax assets213,221 172,782 
Deferred income tax liabilities:  
Costs capitalized for financial statement purposes and deducted for income tax purposes:  
Goodwill and identifiable intangible assets(146,821)(156,604)
Operating lease right-of-use assets(64,434)(65,090)
Depreciation of property, plant and equipment(23,958)(18,622)
Other(7,444)(4,212)
Total deferred income tax liabilities(242,657)(244,528)
Net deferred income tax liabilities$(29,436)$(71,746)
_________________
(1)Represents employer Social Security tax payments deferred under the CARES Act.
The components of the net deferred income tax liabilities in the accompanying Consolidated Balance Sheets are included in “Other assets” in the amount of $7.4 million and $3.4 million and “Other long-term obligations” in the amount of $36.8 million and $75.2 million, at December 31, 2020 and 2019, respectively.
Valuation allowances are established when necessary to reduce deferred income tax assets when it is more likely than not that a tax benefit will not be realized. As of December 31, 2020 and 2019, the total valuation allowance on deferred income tax assets was approximately $3.9 million and $3.5 million, respectively, related to state and local net operating losses. Realization of our deferred income tax assets is dependent on our generating sufficient taxable income in the jurisdictions in which such deferred tax assets will reverse. Although realization is not assured, based on current projections of future taxable income, we believe it is more likely than not that the deferred income tax assets, net of the valuation allowance discussed above, will be realized. The amount of the deferred income tax assets considered realizable, however, could be reduced if estimates of future income are reduced.