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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes: The significant components of the Provision for income tax expense related to continuing operations are as follows (in millions):
| For the Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Current: |  |  |  |  |
Federal | $ | 37.7 |  |  | $ | 58.1 |  |  | $ | 103.8 |
State and other | 13.7 |  |  | 17.8 |  |  | 24.2 |
Total current expense | 51.4 |  |  | 75.9 |  |  | 128.0 |
Deferred: |  |  |  |  |
Federal | 39.5 |  |  | 32.0 |  |  | (13.7) |
State and other | 12.9 |  |  | 8.0 |  |  | 4.6 |
Total deferred expense (benefit) | 52.4 |  |  | 40.0 |  |  | (9.1) |
Total income tax expense related to continuing operations | $ | 103.8 |  |  | $ | 115.9 |  |  | $ | 118.9 |
A reconciliation of differences between the federal income tax at statutory rates and our actual income tax expense on our income from continuing operations, which include federal, state, and other income taxes, is presented below:
| For the Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Tax expense at statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Increase (decrease) in tax rate resulting from: |  |  |  |  |
State and other income taxes, net of federal tax benefit | 4.2 | % |  | 4.3 | % |  | 4.5 | %
Increase (decrease) in valuation allowance | 1.7 | % |  | 0.8 | % |  | (0.4) | %
Government, class action, and related settlements | — | % |  | (1.2) | % |  | 2.7 | %
Noncontrolling interests | (3.7) | % |  | (3.0) | % |  | (3.2) | %
Share-based windfall tax benefits | (1.0) | % |  | (1.0) | % |  | (0.4) | %
Other, net | (0.2) | % |  | (0.3) | % |  | (0.1) | %
Income tax expense | 22.0 | % |  | 20.6 | % |  | 24.1 | %
The Provision for income tax expense in 2020 was greater than the federal statutory rate primarily due to: (1) state and other income tax expense and (2) the increase in valuation allowance offset by (3) the impact of noncontrolling interests and (4) share-based windfall tax benefits. The Provision for income tax expense in 2019 was less than the federal statutory rate primarily due to: (1) the impact of noncontrolling interests, (2) g overnment, class action, and related settlements, and (3) share-based windfall tax benefits offset by (4) state and other income tax expense. See Note 1, Summary of Significant Accounting Policies, “Income Taxes,” for a discussion of the allocation of income or loss related to pass-through entities, which is referred to as the impact of noncontrolling interests in this discussion. The Provision for income tax expense in 2018 was greater than the federal statutory rate primarily due to: (1) state and other income tax expense and (2) g overnment, class action, and related settlements offset by (3) the impact of noncontrolling interests. In addition to the CARES Act provisions previously discussed in Note 1, Summary of Significant Accounting Policies, “Risks and Uncertainties,” the CARES Act also includes provisions relating to net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, technical corrections to tax depreciation methods for qualified improvement property and deferral of employer payroll taxes. The CARES Act did not materially impact our effective tax rate for the year ended December 31, 2020, although it will impact the timing of future cash payments for taxes. Deferred income taxes recognize the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes and the impact of available NOLs. The significant components of our deferred tax assets and liabilities are presented in the following table (in millions):
| As of December 31,
| 2020 |  | 2019
Deferred income tax assets: |  |  |
Net operating loss | $ | 57.6 |  |  | $ | 61.8 |
Property, net | 6.6 |  |  | 33.9 |
Insurance reserve | 17.8 |  |  | 17.0 |
Stock-based compensation | 15.2 |  |  | 38.3 |
Operating lease liabilities | 22.1 |  |  | 30.6 |
Other accruals | 43.4 |  |  | 23.4 |
Tax credits | 10.5 |  |  | 6.8 |
Other | 0.1 |  |  | 0.2 |
Total deferred income tax assets | 173.3 |  |  | 212.0 |
Less: Valuation allowance | (46.2) |  |  | (38.4) |
Net deferred income tax assets | 127.1 |  |  | 173.6 |
Deferred income tax liabilities: |  |  |
Revenue reserves | (5.7) |  |  | (11.6) |
Intangibles | (99.7) |  |  | (94.6) |
Operating lease right-of-use assets | (21.7) |  |  | (30.3) |
Carrying value of partnerships | (51.4) |  |  | (34.0) |
Other | (0.4) |  |  | (0.2) |
Total deferred income tax liabilities | (178.9) |  |  | (170.7) |
Net deferred income tax (liabilities) assets | $ | (51.8) |  |  | $ | 2.9 |
We have state NOLs of $57.6 million that expire in various amounts at varying times through 2031. For the years ended December 31, 2020 and 2019, the net increase in our valuation allowance was $7.8 million, and $4.7 million, respectively. The increase in our valuation allowance in 2020 and 2019 related primarily to our expected ability to use related net operating losses prior to their expiration. As of December 31, 2020, we have a remaining valuation allowance of $46.2 million. This valuation allowance remains recorded due to uncertainties regarding our ability to utilize a portion of our state NOLs and other credits before they expire. The amount of the valuation allowance has been determined for each tax jurisdiction based on the weight of all available evidence including management’s estimates of taxable income for each jurisdiction in which we operate over the periods in which the related deferred tax assets will be recoverable. It is possible we may be required to increase or decrease our valuation allowance at some future time if our forecast of future earnings varies from actual results on a consolidated basis or in the applicable state tax jurisdictions, if the timing of future tax deductions differs from our expectations, or pursuant to changes in state tax laws and rates. During the third quarter of 2016, we filed a non-automatic tax accounting method change related to billings denied under pre-payment claims reviews conducted by certain of our MACs. In March 2017, the IRS approved our request resulting in establishment of a deferred tax liability and additional cash tax benefits of approximately $51.3 million through December 31, 2017. This amount was reduced to $33.7 million after considering the federal tax rate reduction to 21% provided for in the 2017 Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act included revisions to Internal Revenue Code §451 that might have eliminated a portion of this deferral of revenue for tax purposes. Accordingly, we reversed $23.6 million of our revenue reserves and carrying value of partnerships deferred tax liabilities and recorded a current tax payable for the same amount in the first quarter of 2018. In September 2019, a Treasury Regulation was issued that supported the accounting method change we received calling for continued deferral of denied prepayment claims. As a result, we recorded additional deferred tax liabilities of $22.2 million and a corresponding benefit to our income tax receivable to fully defer taxable income related to pre-payment claim denials as of December 31, 2019. These changes did not have a material impact on our effective tax rate in any period of adjustment and all benefits are expected to reverse as pre-payment claims denials are settled or collected. As of January 1, 2018, total remaining gross unrecognized tax benefits were $0.3 million, all of which would have affected our effective tax rate if recognized. The amount of unrecognized tax benefits did not change significantly during 2018, 2019 or 2020. Total remaining gross unrecognized tax benefits were $0.9 million, $0.4 million, and $0.2 million as of December 31, 2018, 2019, and 2020, respectively, all of which would have affected our effective tax rate if recognized. A reconciliation of the beginning and ending liability for unrecognized tax benefits is as follows (in millions):
| Gross Unrecognized Income Tax Benefits |  | Accrued Interest and Penalties
January 1, 2018 | $ | 0.3 |  |  | $ | — |
Gross amount of increases in unrecognized tax benefits related to prior periods | 0.8 |  |  | 0.1 |
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations | (0.2) |  |  | — |
December 31, 2018 | 0.9 |  |  | 0.1 |
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations | (0.5) |  |  | — |
December 31, 2019 | 0.4 |  |  | 0.1 |
Gross amount of increases in unrecognized tax benefits related to current period | — |  |  | 0.1 |
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations | (0.2) |  |  | (0.2) |
December 31, 2020 | $ | 0.2 |  |  | $ | — |
Our continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. Interest recorded as part of our income tax provision during 2020, 2019, and 2018 was not material. Accrued interest income related to income taxes as of December 31, 2020 and 2019 was not material. In December 2016, we signed an agreement with the IRS to participate in their Compliance Assurance Process (“CAP”) for the 2017 tax year. CAP is a program in which we and the IRS endeavor to agree on the treatment of significant tax positions prior to the filing of our federal income tax returns. We renewed this agreement in January 2018 for the 2018 tax year, in December 2018 for the 2019 tax year, and in February 2020 for the 2020 tax year. As a result of these agreements, the IRS is currently examining the 2019 and 2020 tax years. In July 2020, the IRS issued a no-change letter effectively closing our 2018 tax year audit. The statute of limitations has expired or we have settled federal income tax examinations with the IRS for all tax years through 2018. Our state income tax returns are also periodically examined by various regulatory taxing authorities. We are not currently under audit by any states. For the tax years that remain open under the applicable statutes of limitations, amounts related to unrecognized tax benefits have been considered by management in its estimate of our potential net recovery of prior years’ income taxes. Based on discussions with taxing authorities, we anticipate $0.2 million of our unrecognized tax benefits will be released within the next 12 months.

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