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INCOME TAXES | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Provision for Income Taxes We are subject to tax in U.S. federal and various state and local jurisdictions, as well as Canada and India. We are open to federal and significant state income tax examinations for tax year 2018 and subsequent years. The provision for income taxes consists of the following:
| Year Ended December 31,
(in millions) | 2023 | 2022 | 2021
Current: |  |  |
Federal | $ | 96 |  | $ | 112 |  | $ | 86 |
State | 24 |  | 36 |  | 28 |
Foreign | 2 |  | — |  | 1 |
Total Current | 122 |  | 148 |  | 115 |
Deferred: |  |  |
Federal | 1 |  | (17) |  | (7) |
State | 3 |  | (6) |  | (3) |
Foreign | — |  | 2 |  | (2) |
Total Deferred | 4 |  | (21) |  | (12) |
Total | $ | 126 |  | $ | 127 |  | $ | 103 |
The U.S. federal statutory income tax rate reconciled to our effective tax rate is as follows:
| Year Ended December 31,
| 2023 | 2022 | 2021
(in millions, except percent) | Pre-Tax Income | Tax Expense/(Benefit) | Percent of Pre-Tax Income (Loss) | Pre-Tax Income | Tax Expense/(Benefit) | Percent of Pre-Tax Income (Loss) | Pre-Tax Income | Tax Expense/(Benefit) | Percent of Pre-Tax Income (Loss)
| $ | 501 |  |  |  | $ | 482 |  |  |  | $ | 441 |  |  |
U.S. federal statutory tax rate |  | $ | 105 |  | 21 | % |  | $ | 101 |  | 21 | % |  | $ | 93 |  | 21 | %
State income taxes, net of federal benefit |  | 34 |  | 7 |  |  | 34 |  | 7 |  |  | 32 |  | 7 |
Tax rate change |  | 1 |  | — |  |  | — |  | — |  |  | (1) |  | — |
Nondeductible meals, entertainment and penalties |  | 2 |  | — |  |  | 3 |  | 1 |  |  | 2 |  | — |
Stock based compensation |  | (2) |  | — |  |  | 3 |  | 1 |  |  | (2) |  | — |
Uncertain tax positions |  | — |  | — |  |  | — |  | — |  |  | (1) |  | — |
Tax credits |  | (6) |  | (1) |  |  | (8) |  | (2) |  |  | (7) |  | (2) |
State and tax return to provision adjustments |  | (11) |  | (2) |  |  | (9) |  | (2) |  |  | (10) |  | (2) |
Other |  | 3 |  | — |  |  | 3 |  | — |  |  | (3) |  | (1) |
Total |  | $ | 126 |  | 25 | % |  | $ | 127 |  | 26 | % |  | $ | 103 |  | 23 | %
Our effective income tax rate decreased by 1% to 25% in 2023 from 26% in 2022. The decrease was primarily due to an increase in excludable income for state tax purposes and an increase in tax benefits related to stock-based compensation. The Inflation Reduction Act enacted on August 16, 2022 introduced new provisions including an excise tax on net stock repurchases made after December 31, 2022. Global tax developments from the Organization for Economic Cooperation and Development proposes implementation of a global minimum tax under the Pillar Two model rules. Management has determined this development applicable to multinational businesses does not have a material impact to our business, cash flows, or financial results. Deferred Income Taxes Significant components of our deferred tax assets and liabilities are as follows:
| Year Ended December 31,
(in millions) | 2023 | 2022
Deferred tax assets: |  |
Net operating losses (federal and state) | $ | 6 |  | $ | 7 |
Accrued expenses | 18 |  | 17 |
Accrued workers' compensation costs | 9 |  | 8 |
Recovery credit | 2 |  | 20 |
Operating lease liabilities | 11 |  | 14 |
Stock based compensation | 2 |  | 3 |
Tax benefits relating to uncertain positions | 1 |  | 1 |
Tax credits (federal, state and foreign) | 7 |  | 7 |
Section 174 Capitalized R&D | 21 |  | 13 |
Other | 2 |  | 3
Total | 79 |  | 93 |
Valuation allowance | (8) |  | (8) |
Total deferred tax assets | 71 |  | 85 |
Deferred tax liabilities: |  |
Depreciation and amortization | (48) |  | (54) |
Prepaid commission expenses | (26) |  | (24) |
Operating lease right-of-use assets | (5) |  | (10) |
Total deferred tax liabilities | (79) |  | (88) |
Net deferred tax liabilities | $ | (8) |  | $ | (3) |
As of December 31, 2023 and 2022, we have federal net operating loss of $1 million and $2 million, respectively, which can be carried forward indefinitely. We have capital loss carryforwards of $3 million which will expire in 2027. As of December 31, 2023 and 2022, we have various state net operating loss carryforwards of $91 million and $94 million, respectively, most of which, if unused, will expire in years 2024 through 2043. As of December 31, 2023 and 2022, we have state tax credit carryforwards (net of federal benefit) of $5 million that will begin expiring in 2026. In addition, Canada tax credit carryforwards of $2 million will begin expiring in 2037. Valuation Allowance We have recorded a valuation allowance to reflect the estimated amount of deferred tax assets that may not be realized, related to state tax credits, state net operating loss and capital loss carryforwards. A reconciliation of the beginning and ending amount of the valuation allowance is presented in the table below:
| Year Ended December 31,
(in millions) | 2023 | 2022 | 2021
Valuation allowance at January 1 | $ | 8 |  | $ | 5 |  | $ | 5 |
Charged to net income | — |  | 3 |  | — |
Valuation allowance at December 31 | 8 |  | 8 |  | 5 |
Uncertain Tax Positions A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) related to uncertain income tax provisions, which would affect the effective tax rate if recognized, is presented in the table below:
| Year Ended December 31,
(in millions) | 2023 | 2022 | 2021
Unrecognized tax benefits at January 1 | $ | 7 |  | $ | 7 |  | $ | 8 |
Additions for tax positions of current period | 2 |  | 2 |  | 1 |
Reductions for tax positions of prior period: |  |  |
Lapse of applicable statute of limitations | (2) |  | (2) |  | (1) |
Adjustments to tax positions | — |  | — |  | (1) |
Unrecognized tax benefits at December 31 | $ | 7 |  | $ | 7 |  | $ | 7 |
As of December 31, 2023 and 2022, the total amount of gross interest and penalties accrued were immaterial. The unrecognized tax benefit, including accrued interest and penalties, is included in other non-current liabilities on the consolidated balance sheets. It is reasonably possible the amount of the unrecognized benefit could increase or decrease within the next twelve months, which would have an impact on net income.

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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 -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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