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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | 17. Income Taxes Provision for income taxes consists of the following for the periods presented (in thousands):
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 48,292 |  |  | $ | (18,215 | ) |  | $ | 18,954 |
State |  |  | 6,715 |  |  |  | 4,981 |  |  |  | 3,440 |
Foreign |  |  | 778 |  |  |  | 732 |  |  |  | 1,602 |
Total current |  |  | 55,785 |  |  |  | (12,502 | ) |  |  | 23,996 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 13,339 |  |  |  | 46,442 |  |  |  | (1,572 | )
State |  |  | (1,892 | ) |  |  | 564 |  |  |  | 2,509 |
Foreign |  |  | 325 |  |  |  | 6,102 |  |  |  | 152 |
Total deferred provision |  |  | 11,772 |  |  |  | 53,108 |  |  |  | 1,089 |
Provision for income taxes |  | $ | 67,557 |  |  | $ | 40,606 |  |  | $ | 25,085 |
A reconciliation of the U.S. federal statutory rate to the effective tax rate is as follows for the periods presented:
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
U.S. federal statutory rate on income before income taxes |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
Impact of foreign operations |  |  | 1.7 |  |  |  | (0.5 | ) |  |  | 1.1 |
Effects of statutory rate change |  |  | — |  |  |  | 3.2 |  |  |  | — |
State income taxes, net of federal tax effect |  |  | 3.9 |  |  |  | 5.1 |  |  |  | 5.8 |
Permanent differences |  |  | 1.7 |  |  |  | 1.5 |  |  |  | 3.3 |
Change in valuation allowance |  |  | (2.8 | ) |  |  | 127.4 |  |  |  | 0.6 |
Unrecognized tax benefit release |  |  | (0.9 | ) |  |  | (0.4 | ) |  |  | 0.5 |
Federal tax credits |  |  | (0.8 | ) |  |  | (1.0 | ) |  |  | (2.2 | )
Basis recognition related to foreign divestiture |  |  | — |  |  |  | (129.9 | ) |  |  | — |
CARES Act impacts to net operating losses |  |  | — |  |  |  | (4.5 | ) |  |  | — |
Other |  |  | 0.7 |  |  |  | 0.2 |  |  |  | 1.9 |
Effective income tax rate |  |  | 24.5 | % |  |  | 22.1 | % |  |  | 32.0 | %
For the year ended December 31, 2021, the provision for income taxes was $67.6 million, reflecting an effective tax rate of 24.5%, compared to $40.6 million, reflecting an effective tax rate of 22.1%, for the year ended December 31, 2020. The increase in the effective tax rate for the year ended December 31, 2021 was primarily attributable to the Company’s recognition of a deferred tax liability as a result of the Company’s previous permanent reinvestment assertion and non-recurring impacts of the U.S. and U.K. tax legislation enacted in 2020. The domestic and foreign components of income from continuing operations before income taxes for continuing operations are as follows (in thousands):
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Foreign |  | $ | 5,596 |  |  | $ | 9,904 |  |  | $ | 6,070 |
Domestic |  |  | 270,164 |  |  |  | 173,893 |  |  |  | 72,325 |
Income from continuing operations before income taxes |  | $ | 275,760 |  |  | $ | 183,797 |  |  | $ | 78,395 |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities of the Company at December 31, 2021 and December 31, 2020 were as follows (in thousands):
|  | December 31, |
|  | 2021 |  |  | 2020 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating losses and tax credit carryforwards – federal and state |  | $ | 9,354 |  |  | $ | 7,486 |
Capital loss carryovers (a) |  |  | 215,367 |  |  |  | 239,269 |
Bad debt allowance |  |  | 1,083 |  |  |  | 1,243 |
Accrued compensation and severance |  |  | 18,241 |  |  |  | 20,889 |
Insurance reserves |  |  | 18,847 |  |  |  | 18,497 |
Leases |  |  | 896 |  |  |  | 846 |
Accrued expenses |  |  | 5,768 |  |  |  | 11,817 |
Interest carryforwards |  |  | 3,396 |  |  |  | 3,374 |
Lease right-of-use liabilities |  |  | 26,154 |  |  |  | 24,402 |
Other assets |  |  | 8,066 |  |  |  | 13,251 |
Total gross deferred tax assets |  |  | 307,172 |  |  |  | 341,074 |
Less: valuation allowance |  |  | (217,325 | ) |  |  | (241,225 | )
Deferred tax assets |  |  | 89,847 |  |  |  | 99,849 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Fixed asset basis difference |  |  | (2,456 | ) |  |  | (5,553 | )
Prepaid items |  |  | (2,882 | ) |  |  | (2,960 | )
Intangible assets |  |  | (126,446 | ) |  |  | (115,196 | )
Lease right-of-use assets |  |  | (24,660 | ) |  |  | (22,948 | )
Investment in foreign subsidiary |  |  | (4,691 | ) |  |  | — |
Total deferred tax liabilities |  |  | (161,135 | ) |  |  | (146,657 | )
Total net deferred tax liability |  | $ | (71,288 | ) |  | $ | (46,808 | )
(a) | The presentation of the December 31, 2020 deferred tax liability attributable to the U.K. divestiture has been adjusted to reflect the final outcome of the sale.
The Company established a deferred tax asset, during 2020, related to the Company’s investment in a foreign subsidiary in the amount of $239.1 million, in anticipation of the Company’s divestiture of the U.K. business on January 19, 2021. The Company concluded a full valuation allowance of this deferred tax asset was required as the Company expected the finalization of the divestiture to result in a capital loss. In 2021, upon the closing of the transaction, the Company recorded adjustments to its previous estimates of the capital loss, resulting in a tax benefit of $7.5 million to account for current year transactions and certain state jurisdictions where the tax benefit from the U.K. loss is projected to be realized. The Company concluded that a full valuation allowance on the remaining capital loss of $215.4 million was necessary due to the limitations in realizing the asset via offsetting capital gains in the future. For the year ended December 31, 2021, the Company determined and asserts that the current and accumulated earnings from foreign operations are no longer indefinitely reinvested, and a deferred tax liability was established on the current and accumulated undistributed earnings of the Company’s continuing foreign operations within Puerto Rico in the amount of $4.6 million, resulting in an income tax expense in the current year. This deferred tax liability was not recognized in prior years under the exception within ASC 740-30-25-18 that limits the recognition of deferred tax liabilities for the excess of book basis over tax basis in an investment in a subsidiary in instances when the Company is permanently reinvested. The Company records a valuation allowance to reduce its net deferred tax assets to the amount that is more likely than not to be realized. At December 31, 2021 and 2020, the Company carried a valuation allowance against deferred tax assets of $217.3 million and $241.2 million, respectively. These amounts are primarily related to deferred tax assets related to the Company’s capital loss carryforward resulting from the U.K. Sale and certain state net operating losses. As of December 31, 2021 and 2020, the Company had no federal net operating loss carryforwards. The foreign net operating loss carryforwards at December 31, 2021 and 2020 are approximately $0.1 million and $0.1 million, respectively, and have no expiration. The Company has state net operating loss carryforwards at December 31, 2021 and 2020 of approximately $227.3 million and $170.0 million, respectively. The increase in net operating loss carryforwards from prior year results from states that do not distinguish losses as either capital or ordinary in nature; therefore, the Company is able to deduct the loss on the sale of its U.K. operations. These net operating loss carryforwards, if not used to offset future taxable income, will expire from 2022 to 2035. In addition, the Company has certain state tax credits of $0.4 million which will begin to expire in 2030 if not utilized. Income taxes receivable was $24.6 million and $0.9 million at December 31, 2021 and 2020, respectively. At December 31, 2021, $23.1 million of income taxes receivable has been included in other assets due to anticipated delays in receipt of income tax refunds associated with amended tax return filings. The remaining $1.5 million of income taxes receivable is included in other current assets in the December 31, 2021 consolidated balance sheet. Income taxes payable of $5.5 million and $16.3 million at December 31, 2021 and 2020, respectively, was included in other accrued liabilities in the consolidated balance sheets. The decrease in the payable for the year ended December 31, 2021 was primarily attributable to tax payments in excess of accruals and the income tax benefit derived from the Company's accelerated repayment of $18.5 million of CARES payroll tax deferrals taken on the 2020 U.S. jurisdictional filings. The Company recorded income taxes payable related to unrecognized tax benefits of $0.0 million and $2.5 million at December 31, 2021 and December 31, 2020, respectively. These amounts are inclusive of any interest and penalties, which is included in other liabilities on the consolidated balance sheets. A reconciliation of the beginning and ending amount of unrecognized income tax benefits, exclusive of any interest and penalties, net of the federal benefit, is as follows (in thousands):
|  | 2021 |  |  | 2020 |
Balance at January 1 |  | $ | 2,060 |  |  | $ | 2,441 |
Additions based on tax positions related to the current year |  |  | — |  |  |  | — |
Reductions as a result of the lapse of applicable statutes of limitations and settlements with tax authorities |  |  | (2,060 | ) |  |  | (381 | )
Balance at December 31 |  | $ | — |  |  | $ | 2,060 |
At December 31, 2021 and 2020, the cumulative amounts of interest and penalties recognized were $0.0 million and $0.5 million, respectively. Unrecognized tax benefits of $2.1 million would affect the effective rate if recognized during the current year as a result of a lapse of the statute of limitations and settlements with taxing authorities. The Company and its subsidiaries file income tax returns in federal and in many state and local jurisdictions as well as foreign jurisdictions. The Company may be subject to examination by the Internal Revenue Service (“IRS”) for calendar year 2018 through 2020. Additionally, any net operating losses that were generated in prior years and utilized in these years may also be subject to examination by the IRS. While no other foreign jurisdictions are presently under examination, the Company may be subject to examination for calendar years 2017 through 2020. Generally, for state tax purposes, the Company’s 2015 through 2020 tax years remain open for examination by the tax authorities. At the date of this report there were no audits or inquires that had progressed sufficiently to predict their ultimate outcome.

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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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