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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes from operations consisted of the following:
| Years Ended December 31,
(in thousands) | 2021 |  | 2020 |  | 2019
Current |  |  |  |  |
Federal | $ | 65,861 |  |  | $ | 42,337 |  |  | $ | 28,314 |
State | 19,515 |  |  | 12,571 |  |  | 7,465 |
Foreign | 7,641 |  |  | 4,478 |  |  | 6,039 |
Deferred |  |  | 0 |  |
Federal | 802 |  |  | 2,330 |  |  | 3,329 |
State | (169) |  |  | 598 |  |  | 805 |
Foreign | (1,548) |  |  | 250 |  |  | (1,577) |
| $ | 92,102 |  |  | $ | 62,564 |  |  | $ | 44,375 |
Income and loss from operations before income taxes for the years ended December 31, 2021, 2020, and 2019, respectively, consisted of the following:
| Years Ended December 31,
(in thousands) | 2021 |  | 2020 |  | 2019
Domestic | $ | 336,085 |  |  | $ | 238,320 |  |  | $ | 163,257 |
Foreign | 22,464 |  |  | 11,244 |  |  | 15,100 |
| $ | 358,549 |  |  | $ | 249,564 |  |  | $ | 178,357 |
At December 31, 2021, the Company had $41.4 million of pre-tax loss carryforwards in various foreign taxing jurisdictions. All of the tax losses can be carried forward indefinitely. At December 31, 2021, and 2020, the Company has valuation allowances of $12.0 million and $11.3 million, respectively. The valuation allowance increased $0.7 million and decreased $0.3 million for the years ended December 31, 2021, and December 31, 2020, respectively. The increase in the 2021 valuation allowances was primarily the result of an impairment on a foreign equity investment. The decrease in the 2020 valuation allowances was primarily a result of the release of valuation allowance for foreign losses in Simpson Strong-Tie A/S, a subsidiary in Denmark. As of December 31, 2021, the Company asserts that its accumulated undistributed earnings generated by our foreign subsidiaries are permanently reinvested and as such, has not recognized a US deferred tax liability on its investment in foreign subsidiaries. The Company will continue to assess its permanent reinvestment assertion on a quarterly basis. Reconciliations between the statutory federal income tax rates and the Company’s effective income tax rates as a percentage of income before income taxes for its operations were as follows:
| Years Ended December 31,
(in thousands) | 2021 |  | 2020 |  | 2019
Federal tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State taxes, net of federal benefit | 4.3 | % |  | 4.2 | % |  | 3.6 | %
Change in valuation allowance | — | % |  | 0.1 | % |  | (0.1) | %
True-up of prior year tax returns to tax provision | (0.1) | % |  | (0.4) | % |  | (0.3) | %
Difference between U.S. statutory and foreign local tax rates | 0.4 | % |  | 0.4 | % |  | 0.8 | %
Change in uncertain tax position | — | % |  | — | % |  | 0.1 | %
Other | 0.1 | % |  | (0.2) | % |  | (0.2) | %
Effective income tax rate | 25.7 | % |  | 25.1 | % |  | 24.9 | %
The tax effects of the significant temporary differences that constitute the deferred tax assets and liabilities at December 31, 2021 and 2020, respectively, were as follows:
| December 31,
(in thousands) | 2021 |  | 2020
Deferred asset taxes |  |  |
State tax | $ | 1,490 |  |  | $ | 1,076 |
Workers’ compensation | 892 |  |  | 883 |
Health claims | 1,351 |  |  | 1,207 |
Vacation liability | 376 |  |  | 374 |
Allowance for doubtful accounts | 344 |  |  | 384 |
Inventories | 7,497 |  |  | 6,108 |
Sales incentive and advertising allowances | 1,777 |  |  | 1,086 |
Lease obligations | 11,562 |  |  | 11,631 |
Stock-based compensation | 2,612 |  |  | 2,148 |
Unrealized foreign exchange gain or loss | 378 |  |  | 344 |
Foreign tax credit carryforwards | 4,983 |  |  | 4,744 |
Uncertain tax positions’ unrecognized tax benefits | 72 |  |  | 77 |
Non-United States tax loss carry forward | 7,824 |  |  | 7,717 |
Other | 940 |  |  | — |
| $ | 42,098 |  |  | $ | 37,779 |
Less valuation allowances | (11,992) |  |  | (11,316) |
Total deferred asset taxes | $ | 30,106 |  |  | $ | 26,463 |
Deferred tax liabilities |  |  |
Depreciation | $ | (14,999) |  |  | $ | (12,933) |
Goodwill and other intangibles amortization | (16,682) |  |  | (15,642) |
Tax effect on cumulative translation adjustment | (504) |  |  | (568) |
Right of use assets | (11,453) |  |  | (11,489) |
Other | — |  |  | (247) |
Total deferred tax liabilities | (43,638) |  |  | (40,879) |
Total Deferred tax asset/(liability) | $ | (13,532) |  |  | $ | (14,416) |
A reconciliation of the beginning and ending amounts of unrecognized tax benefits in 2021, 2020 and 2019, respectively, were as follows, including foreign translation amounts:
Reconciliation of Unrecognized Tax Benefits | 2021 |  | 2020 |  | 2019
Balance at January 1 | $ | 1,168 |  |  | $ | 1,706 |  |  | $ | 1,757 |
Additions based on tax positions related to prior years | 9 |  |  | 78 |  |  | 8 |
Reductions based on tax positions related to prior years | (47) |  |  | (7) |  |  | (30) |
Additions for tax positions of the current year | 3 |  |  | 48 |  |  | 167 |
Lapse of statute of limitations | (189) |  |  | (657) |  |  | (196) |
Balance at December 31 | $ | 944 |  |  | $ | 1,168 |  |  | $ | 1,706 |
Tax positions of $0.3, $0.3, and $0.2 million are included in the balance of unrecognized tax benefits at December 31, 2021, 2020, and 2019, respectively, which if recognized, would reduce the effective tax rate. The Company accrues interest and penalties related to unrecognized tax benefits in income tax expense in accordance with the Company’s historical accounting policy. During the year ended December 31, 2021, 2020 and 2019, accrued interest decreased by $39 thousand and $108 thousand and $20 thousand, respectively. The Company had accrued $0.2 million for fiscal year ended 2021, $0.3 million for fiscal year ended 2020 and $0.4 million for fiscal year ended 2019, for the potential payment of interest before income tax benefits. The Company does not expect any material changes in unrecognized tax benefits within the next 12 months. At December 31, 2021, the Company remained subject to federal income tax examinations in the U.S. for the tax years 2018 through 2021. In addition, tax years 2016 through 2021 remain open to examination in states, local and foreign jurisdictions.

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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=121826272&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=122134291&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=121826272&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=122134291&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=121826272&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 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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