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INCOME TAXES | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
INCOME TAXES | 12. INCOME TAXES The Company’s income tax provision consisted of the following:
For the years ended December 31, |  | 2020 |  |  | 2019 |  |  | 2018 |
(in thousands) |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 67,861 |  |  | $ | 43,593 |  |  | $ | 49,911 |
State |  |  | 18,381 |  |  |  | 15,337 |  |  |  | 13,602 |
Foreign |  |  | 8,869 |  |  |  | 6,111 |  |  |  | 7,929 |
Total current tax |  |  | 95,111 |  |  |  | 65,041 |  |  |  | 71,442 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (2,076 | ) |  |  | (5,217 | ) |  |  | 6,091 |
State |  |  | 312 |  |  |  | (1,518 | ) |  |  | 1,957 |
Foreign |  |  | 549 |  |  |  | (493 | ) |  |  | (420 | )
Total deferred tax |  |  | (1,215 | ) |  |  | (7,228 | ) |  |  | 7,628 |
Total income tax provision |  | $ | 93,896 |  |  | $ | 57,813 |  |  | $ | 79,070 |
The primary factors causing income tax expense to be different than the federal statutory rate for 2020, 2019 and 2018 are as follows:
For the years ended December 31, |  | 2020 |  |  | 2019 |  |  | 2018 |
(in thousands) |  |  |  |  |  |  |  |  |
Income tax at statutory rate |  | $ | 74,491 |  |  | $ | 54,845 |  |  | $ | 65,254 |
State income tax expense (net of federal benefit) |  |  | 14,393 |  |  |  | 10,182 |  |  |  | 12,984 |
Foreign tax expense |  |  | 2,341 |  |  |  | 933 |  |  |  | 1,186 |
Foreign tax credit |  |  | (240 | ) |  |  | (242 | ) |  |  | (234 | )
Repatriation tax under TCJA |  |  | — |  |  |  | (844 | ) |  |  | 1,233 |
Pension settlement |  |  | — |  |  |  | (10,537 | ) |  |  | — |
Executive compensation |  |  | 5,557 |  |  |  | 2,445 |  |  |  | 2,165 |
Restricted stock adjustments |  |  | (3,927 | ) |  |  | (2,973 | ) |  |  | (4,420 | )
Other |  |  | 1,281 |  |  |  | 4,004 |  |  |  | 902 |
Total income tax provision |  | $ | 93,896 |  |  | $ | 57,813 |  |  | $ | 79,070 |
Other includes the release of deferred tax liabilities, tax credits, valuation allowance, and other immaterial adjustments. During 2018, the Company completed the analysis of earnings and profits of foreign investments. This resulted in the recognition at year ended December 31, 2018 of an additional $1.2 million related to the imposition of a tax on deemed repatriated earnings of foreign subsidiaries. The Company has elected to include the global intangible low-taxed income (GILTI) as part of tax expense in the year incurred. The Provision for Income Taxes resulted in an effective tax rate of 26.5% on Income Before Income Taxes for the year ended December 31, 2020. The effective rate differs from the annual federal statutory rate primarily because of state and foreign income taxes, adjustments related to the accelerated stock vesting expense and certain other disallowed deductions. For 2019 the effective tax rate was 22.1%. The effective rate differs from the annual federal statutory rate primarily because of state and foreign income taxes and beneficial adjustments related to the pension settlement. For 2018 the effective tax rate was 25.4%. The effective income tax rate differs from the annual federal statutory tax rate primarily because of state and foreign income taxes, tax benefits associated with restricted stock and adjustments due to the TCJA. During 2020, 2019 and 2018, the Company paid income taxes of $81.2 million, $75.8 million and $77.3 million, respectively, net of refunds. Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2020 and 2019 are as follows:
December 31, |  | 2020 |  |  | 2019 |
(in thousands) |  |  |  |  |  |
Deferred tax assets: |  |  |  |  |  |  |  |
Termite accrual |  | $ | 721 |  |  | $ | 786 |
Insurance and contingencies |  |  | 19,531 |  |  |  | 18,464 |
Unearned revenues |  |  | 11,825 |  |  |  | 11,506 |
Compensation and benefits |  |  | 12,304 |  |  |  | 11,983 |
State and foreign operating loss carryforwards |  |  | 2,768 |  |  |  | 3,939 |
Bad debt reserve |  |  | 4,214 |  |  |  | 4,312 |
Foreign tax credit |  |  | 3,804 |  |  |  | 3,972 |
Other |  |  | 2,519 |  |  |  | 2,439 |
Valuation allowance |  |  | (144 | ) |  |  | (83 | )
Total deferred tax assets |  |  | 57,542 |  |  |  | 57,318 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | (25,730 | ) |  |  | (24,981 | )
Net pension liability |  |  | (727 | ) |  |  | (5,279 | )
Intangibles and other |  |  | (39,475 | ) |  |  | (34,805 | )
Total deferred tax liabilities |  | $ | (65,932 | ) |  | $ | (65,065 | )
Net deferred taxes |  |  |  |  |  |  |  |
Deferred tax assets |  | $ | 2,222 |  |  | $ | 2,180 |
Deferred tax liabilities |  | $ | (10,612 | ) |  | $ | (9,927 | )
Analysis of the valuation allowance:
December 31, |  | 2020 |  |  | 2019 |
(in thousands) |  |  |  |  |  |
Valuation allowance at beginning of year |  | $ | 83 |  |  | $ | 76 |
Increase in valuation allowance |  |  | 61 |  |  |  | 7 |
Valuation allowance at end of year |  | $ | 144 |  |  | $ | 83 |
As of December 31, 2020, the Company has net operating loss carryforwards for foreign and state income tax purposes of approximately $58.5 million, which will be available to offset future taxable income. If not used, these carryforwards will expire between 2021 and 2032. Management believes that it is unlikely to be able to utilize approximately $0.7 million of foreign net operating losses before they expire and has included a valuation allowance for the effect of these unrealizable operating loss carryforwards. The valuation allowance increased by $0.06 million due to foreign net operating losses. The Company has a foreign tax credit carryforward of $3.8 million which if not fully utilized will expire in 2026. Earnings from continuing operations before income tax included foreign income of $25.3 million in 2020, $26.7 million in 2019 and $22.7 million in 2018. The Company’s international business is expanding, and we intend to continue to grow the business in foreign markets in the future through reinvestment of foreign deposits and future earnings as well as acquisition of unrelated companies. Repatriation of cash from the Company’s foreign subsidiaries is not part of the Company’s current business plan. The total amount of unrecognized tax benefits at December 31, 2020 that, if recognized, would affect the effective tax rate is $0.8 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
December 31, |  | 2020 |  |  | 2019 |
(in thousands) |  |  |  |  |  |
Unrecognized tax benefits at beginning of year |  | $ | 844 |  |  | $ | 2,554 |
Additions for tax positions of prior years |  |  | — |  |  |  | 844 |
Reductions for tax positions of prior years |  |  | — |  |  |  | (2,554 | )
Unrecognized tax benefits at end of year |  | $ | 844 |  |  | $ | 844 |
The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. In addition, the Company has subsidiaries in various state and international jurisdictions that are currently under audit for years ranging from 2013 through 2019. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S., income tax examinations for years prior to 2013. It is reasonably possible that the amount of unrecognized tax benefits will decrease in the next 12 months. The Company’s policy is to record interest and penalties related to income tax matters in income tax expense. Accrued interest and penalties were $0.07 million and $0.03 million as of December 31, 2020 and 2019, respectively. During 2020 the Company recognized interest and penalties of $0.1 million.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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