XML 48 R21.htm IDEA: XBRL DOCUMENT v3.22.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Components of the provision for income taxes and the income to which it relates for the years ended December 31, 2021, 2020 and 2019 consist of the following (in thousands):

Year Ended December 31,
202120202019
Income before income taxes (1):
Domestic$110,535 $98,111 $145,570 
Foreign55,967 45,588 79,041 
Income before income taxes$166,502 $143,699 $224,611 
Current income taxes:
U.S. Federal$14,031 $14,951 $26,624 
Foreign15,242 9,909 21,904 
U.S. state and local2,045 2,158 2,553 
Current provision for income taxes31,318 27,018 51,081 
Deferred provision (benefit) for income taxes:
U.S. Federal11,008 4,485 7,498 
Foreign(1,542)5,287 863 
U.S. state and local809 330 551 
Total deferred provision for income taxes10,275 10,102 8,912 
Provision for income taxes$41,593 $37,120 $59,993 

(1)Includes the allocation of certain administrative expenses and intercompany payments, such as royalties and interest, between domestic and foreign subsidiaries.

At December 31, 2021, the cumulative amount of undistributed earnings of foreign subsidiaries was $248.8 million. The Tax Cuts and Jobs Act imposed a mandatory transition tax on accumulated foreign earnings and generally eliminated U.S. federal income taxes on dividends from foreign subsidiaries with the exception of foreign withholding taxes and other foreign local tax. During 2021, the Company repatriated $10.0 million from certain foreign subsidiaries, which was not subject to withholding or federal income tax. It is the Company’s intent to indefinitely reinvest the remaining undistributed earnings and future earnings of these subsidiaries outside the U.S. and, therefore, deferred taxes are not currently recorded on cumulative foreign currency translation adjustments.
The principal deferred tax assets and liabilities consist of the following (in thousands):

As of December 31,
20212020
Deferred tax assets:
Property and equipment in foreign jurisdictions$11,452 $9,905 
Finance receivables7,421 — 
Accrued fees on forfeited pawn loans6,645 5,246 
Deferred cost of goods sold deduction1,989 3,622 
Accrued compensation, payroll taxes and employee benefits4,294 4,235 
U.S. state and certain foreign net operating losses6,429 5,942 
Other3,811 3,364 
Total deferred tax assets42,041 32,314 
Deferred tax liabilities:
Intangible assets126,283 81,749 
Leased merchandise and property and equipment in domestic jurisdictions24,035 3,759 
Net operating lease asset3,726 4,188 
Other2,052 3,691 
Total deferred tax liabilities156,096 93,387 
Net deferred tax liabilities before valuation allowance(114,055)(61,073)
Valuation allowance(6,429)(5,942)
Net deferred tax liabilities$(120,484)$(67,015)
Reported as:
Deferred tax assets$5,614 $4,158 
Deferred tax liabilities(126,098)(71,173)
Net deferred tax liabilities$(120,484)$(67,015)

The Company has a valuation allowance of $6.4 million and $5.9 million as of December 31, 2021 and 2020, respectively, related to the deferred tax assets associated with its U.S. state and certain foreign net operating losses. The Company has evaluated the nature and timing of its other deferred tax assets and concluded that no additional valuation allowance is necessary.
The following is a reconciliation of income taxes calculated at the U.S. federal statutory rate to the provision for income taxes (dollars in thousands):

Year Ended December 31,
202120202019
U.S. federal statutory rate21 %21 %21 %
Tax at the U.S. federal statutory rate$35,149 $30,177 $47,168 
U.S. state income tax, net of federal tax benefit of $599, $522 and $652, respectively
2,255 1,965 2,452 
Net incremental income tax expense from foreign earnings (1)
2,007 5,732 6,314 
Non-deductible compensation expense1,943 1,050 2,074 
Global intangible low-taxed income tax— (1,863)1,100 
Other taxes and adjustments, net239 59 885 
Provision for income taxes$41,593 $37,120 $59,993 
Effective tax rate25.0 %25.8 %26.7 %

(1)Includes a $6.3 million, $2.0 million and $2.3 million foreign permanent tax benefit related to an inflation index adjustment allowed under Mexico tax law for the years ended December 31, 2021, 2020 and 2019, respectively.

The Company’s foreign operating subsidiaries are owned by a wholly-owned subsidiary located in the Netherlands. The foreign operating subsidiaries are subject to their respective foreign statutory rates, which differ from the U.S. federal statutory rate. The statutory tax rates in Mexico, Guatemala, Colombia and El Salvador are 30%, 25%, 31% and 30%, respectively. The statutory tax rate in the Netherlands is 0% on eligible dividends received from its foreign subsidiaries.

The Company reviews the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. Interest and penalties related to income tax liabilities that could arise would be classified as interest expense in the Company’s consolidated statements of income.

As of December 31, 2021 and 2020, the Company had no unrecognized tax benefits and, therefore, the Company did not have a liability for accrued interest and penalties and no such interest or penalties were incurred for the years ended December 31, 2021, 2020 and 2019.

The Company files federal income tax returns in the U.S., Mexico, Guatemala, Colombia, El Salvador and the Netherlands, as well as multiple state and local income tax returns in the U.S. The Company’s U.S. federal returns are not subject to examination for tax years prior to 2017. The majority of the Company’s U.S. state income tax returns are not subject to examination for the tax years prior to 2018. With respect to federal tax returns in Mexico, Guatemala, Colombia, El Salvador and the Netherlands, the tax years prior to 2016 are closed to examination. There are no state income taxes in Mexico, Guatemala, Colombia, El Salvador or the Netherlands.