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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
The following table summarizes the income tax expense from continuing operations:
For the Years Ended December 31,
(in millions)202120202019
Current tax expense (benefit):
Federal$14.7 $16.4 $20.7 
Foreign5.0 1.4 0.4 
State and local4.0 5.1 6.0 
Total current tax expense23.7 22.9 27.1 
Deferred tax expense (benefit):
Federal0.4 2.7 2.8 
Foreign1.5 3.1 2.2 
State and local(8.6)(0.2)(1.9)
Total deferred tax (benefit) expense(6.7)5.6 3.1 
Total income tax expense$17.0 $28.5 $30.2 
The following table summarizes the differences between the statutory federal income tax rate and the effective income tax rate from continuing operations:
For the Years Ended December 31,
202120202019
Statutory federal income tax rate21.0 %21.0 %21.0 %
State income taxes, net of federal tax benefit3.4 3.5 3.2 
Valuation allowance(2.9)0.1 (0.6)
Remeasurement of deferred taxes(2.8)— — 
Tax reserves0.1 (0.1)(0.4)
Tax credits(0.4)(0.3)(0.4)
Foreign tax rate effects1.2 0.8 0.4 
Excess tax benefits from stock compensation activity(4.8)(2.9)(1.2)
Other, net(0.3)0.8 (0.2)
Effective income tax rate14.5 %22.9 %21.8 %
The following table summarizes income before income taxes from continuing operations:
For the Years Ended December 31,
(in millions)202120202019
U.S.$94.8 $107.4 $126.0 
Non-U.S.22.8 17.2 12.6 
Income before income taxes$117.6 $124.6 $138.6 
Summary
The Company recognized income tax expense of $17.0 million for the year ended December 31, 2021, compared to $28.5 million for the year ended December 31, 2020. The reduction in income tax expense in the current year was primarily due to the recognition of a $3.4 million tax benefit associated with the release of state valuation allowances and a $3.3 million tax benefit associated with the remeasurement of deferred taxes for changes in state tax apportionment, both of which primarily resulted from a change in tax status and other tax planning activities executed during the year, a $2.0 million increase in excess tax benefits from stock compensation activity and the effects of lower pre-tax earnings. Including these items, the Company’s effective tax rate for the year ended December 31, 2021 was 14.5%, compared to 22.9% in 2020.
The Company recognized income tax expense of $28.5 million for the year ended December 31, 2020, compared to $30.2 million for the year ended December 31, 2019. The reduction in income tax expense in 2020 was primarily due to lower earnings and a $1.9 million increase in excess tax benefits from stock compensation activity, partially offset by the non-recurrence of a $0.8 million tax benefit from the release of state deferred tax valuation allowance recognized in 2019. The Company’s effective tax rate for the year ended for the year ended December 31, 2020 was 22.9%, compared to 21.8% in 2019.
The Company paid income taxes of $35.5 million in 2021, $22.3 million in 2020 and $25.7 million in 2019.
Deferred Taxes
The following table summarizes deferred income tax assets and liabilities of the Company’s continuing operations:
(in millions)20212020
Deferred tax assets:
Properties and equipment$2.8 $2.6 
Accrued expenses24.7 27.5 
Stock-based compensation3.3 3.7 
Net operating loss and tax credit carryforwards19.4 21.0 
Goodwill and intangibles1.8 1.7 
Pension benefits15.1 21.8 
Gross deferred tax assets67.1 78.3 
Valuation allowance(5.1)(8.8)
Total deferred tax assets62.0 69.5 
Deferred tax liabilities:
Properties and equipment(31.2)(32.5)
Pension benefits(9.2)(12.1)
Goodwill and intangibles(64.4)(67.8)
Other(1.9)(1.2)
Gross deferred tax liabilities(106.7)(113.6)
Net deferred tax liabilities$(44.7)$(44.1)
The deferred tax asset for tax loss and tax credit carryforwards at December 31, 2021 includes state net operating loss carryforwards of $6.5 million and state income tax credits of $0.3 million, both of which will begin to expire in 2022, foreign net operating loss carryforwards of $9.8 million, which will begin to expire in 2025, and U.S. foreign tax credits of $2.8 million, which will begin to expire in 2023.
The deferred tax asset for tax loss and tax credit carryforwards at December 31, 2020, included state net operating loss carryforwards of $6.6 million, state income tax credits of $0.2 million, foreign net operating loss carryforwards of $11.1 million, and U.S. foreign tax credits of $3.1 million.
The $62.0 million of deferred tax assets at December 31, 2021, for which no valuation allowance is recorded, is anticipated to be realized through future taxable income or the future reversal of existing taxable temporary differences recorded as deferred tax liabilities at December 31, 2021. Should the Company determine that it is not more-likely-than-not to be able to realize its remaining deferred tax assets in the future, an adjustment to the valuation allowance would be recorded in the period such determination is made.
Generally, the Company has considered cash and cash equivalents held by subsidiaries outside the U.S. to be indefinitely reinvested in its foreign operations and the Company’s current plans do not demonstrate a need to repatriate such cash to fund U.S. operations. However, in the event that these funds were needed to fund U.S. operations or to satisfy U.S. obligations, they generally could be repatriated. The repatriation of these funds may cause the Company to incur additional U.S. income tax expense, dependent on income tax laws and other circumstances at the time any such amounts were repatriated. As of December 31, 2021, the Company continues to assert that its undistributed earnings of certain foreign subsidiaries are indefinitely reinvested. It is not practicable to determine the income tax liability that would be payable if such earnings were not permanently reinvested.
Valuation Allowances
ASC 740, Income Taxes, requires that the future realization of deferred tax assets depends on the existence of sufficient taxable income in future periods. Possible sources of taxable income include taxable income in carryback periods, the future reversal of existing taxable temporary differences recorded as a deferred tax liability, tax-planning strategies that generate future income or gains in excess of anticipated losses in the carryforward period and projected future taxable income. If, based upon all available evidence, both positive and negative, it is more likely than not such deferred tax assets will not be realized, a valuation
allowance is recorded. Significant weight is given to positive and negative evidence that is objectively verifiable. A company’s three-year cumulative loss position is significant negative evidence in considering whether deferred tax assets are realizable and the accounting guidance restricts the amount of reliance the Company can place on projected taxable income to support the recovery of the deferred tax assets.
We continually evaluate the need to maintain a valuation allowance for deferred tax assets based on our assessment of whether it is more likely than not that deferred tax benefits will be realized through the generation of future taxable income. Appropriate consideration is given to all available evidence, both positive and negative, in assessing the need for a valuation allowance.
During the year ended December 31, 2021, the total valuation allowance recorded against the Company’s deferred tax assets decreased by $3.7 million, primarily due to the aforementioned release of state valuation allowances. At December 31, 2021, the total valuation allowance recorded against the Company’s deferred tax assets was $5.1 million, comprised of a $1.0 million valuation allowance recorded against state net operating loss carryforwards, a $2.8 million valuation allowance recorded against U.S. foreign tax credits, a $1.2 million valuation allowance recorded against foreign net deferred tax assets, and a $0.1 million valuation allowance recorded against other deferred tax assets.
Unrecognized Tax Benefits
The following table summarizes the activity related to the Company’s unrecognized tax benefits:
(in millions)202120202019
Balance at January 1$1.2 $1.3 $1.6 
Increases related to current year tax0.1 — — 
Increases from prior period positions— — 0.2 
Decreases from settlements with tax authorities— — (0.2)
Decreases due to lapse of statute of limitations(0.1)(0.1)(0.3)
Balance at December 31$1.2 $1.2 $1.3 
The Company’s accounting policy is to recognize interest and penalties related to income tax matters in income tax expense. At each of December 31, 2021 and 2020, accruals for interest and penalties amounting to $0.4 million, are included in the Consolidated Balance Sheets but are not included in the table above. At December 31, 2021 and 2020, liabilities for unrecognized tax benefits, including interest and penalties of $1.6 million and $1.5 million, respectively, were included within Other long-term liabilities on the Consolidated Balance Sheets. At each of December 31, 2021 and 2020, unrecognized tax benefits of $0.1 million, were included as a component of Deferred tax liabilities on the Consolidated Balance Sheets.
All of the unrecognized tax benefits of $1.2 million at each of December 31, 2021 and 2020, would impact our annual effective tax rate, if recognized. We do not expect any significant change to our unrecognized tax benefits as a result of potential expiration of statute of limitations or settlements with tax authorities within the next twelve months.
Status of Tax Returns
We file U.S., state and foreign income tax returns in jurisdictions with varying statutes of limitations. The 2018 through 2020 tax years generally remain subject to examination by federal tax authorities, whereas the 2017 through 2020 tax years generally remain subject to examination by most state tax authorities. In significant foreign jurisdictions, the tax years from 2017 through 2020 generally remain subject to examination by their respective tax authorities.