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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 7. Income Taxes

The following is a reconciliation of our effective tax rate to the federal statutory tax rate:

 

Years Ended December 31,

 

 

 

2023

 

 

2022

 

 

2021

 

 

U.S. federal statutory rate

 

21.0

 

%

 

21.0

 

%

 

21.0

 

%

State taxes, net of federal benefit

 

0.4

 

 

 

3.5

 

 

 

3.5

 

 

Federal and state incentives

 

(1.9

)

 

 

(1.4

)

 

 

(0.5

)

 

State law changes

 

(0.2

)

 

 

0.4

 

 

 

1.1

 

 

Permanent differences

 

0.6

 

 

 

0.2

 

 

 

0.6

 

 

Net effective rate

 

19.9

 

%

 

23.7

 

%

 

25.7

 

%

 

The following is a summary of our provision for income taxes (in thousands):

 

Years Ended December 31,

 

 

2023

 

 

2022

 

 

2021

 

Current

 

 

 

 

 

 

 

 

    Federal

$

34,951

 

 

$

85,831

 

 

$

51,918

 

    State and local

 

(1,191

)

 

 

25,162

 

 

 

13,876

 

    Foreign

 

55

 

 

 

32

 

 

 

38

 

 

 

33,815

 

 

 

111,025

 

 

 

65,832

 

 

 

 

 

 

 

 

 

 

Deferred

 

 

 

 

 

 

 

 

    Federal

 

8,305

 

 

 

7,366

 

 

 

(5,125

)

    State and local

 

(432

)

 

 

(7,388

)

 

 

(1,254

)

    Foreign

 

(12

)

 

 

7

 

 

 

(17

)

 

 

7,861

 

 

 

(15

)

 

 

(6,396

)

 

 

 

 

 

 

 

 

 

              Total provision

$

41,676

 

 

$

111,010

 

 

$

59,436

 

 

The following is a summary of our deferred tax assets and liabilities (in thousands):

 

December 31,

 

 

2023

 

 

2022

 

Accrued compensation

 

9,884

 

 

 

21,035

 

Other reserves

 

32,060

 

 

 

30,588

 

Tax credit carryforwards

 

6,533

 

 

 

8,156

 

Operating loss carryforwards

 

151

 

 

 

166

 

Lease accounting liability

 

44,440

 

 

 

29,185

 

Total gross deferred income taxes

 

93,068

 

 

 

89,130

 

Valuation allowances

 

(1,174

)

 

 

(1,567

)

Total deferred tax assets

 

91,894

 

 

 

87,563

 

 

 

 

 

 

 

Prepaids

 

(6,444

)

 

 

(6,077

)

Property and equipment

 

(153,790

)

 

 

(156,961

)

Intangibles

 

(53,759

)

 

 

(54,796

)

Lease right-of-use asset

 

(41,668

)

 

 

(25,652

)

Total deferred tax liabilities

 

(255,661

)

 

 

(243,486

)

 

 

 

 

 

 

        Total deferred taxes

$

(163,767

)

 

$

(155,923

)

 

We are subject to income taxation in the United States, numerous state jurisdictions, Mexico, Canada, and India. Because income tax return formats vary among the states, we file both unitary and separate company state income tax returns. We do not permanently reinvest our foreign earnings, all amounts are accrued and accounted for, though not material.

Our state tax net operating losses total $0.2 million. Some of those state losses have no expiration date while others will expire between December 31, 2024, and December 31, 2042. Management believes it is more likely than not that the loss carryforward deferred tax assets will be fully realized.

Our federal incentive tax credit carryforward of $0.1 million expires between December 31, 2025 and December 31, 2028. Our state incentive tax credit carryforwards of $8.1 million expire between December 31, 2024, and December 31, 2027. Management believes it is more likely than not that approximately $6.7 million of the incentive carryforward deferred tax assets will be realized and a valuation allowance of $1.2 million has been established for the remainder which are not expected to be realized.

 

As of December 31, 2023 and December 31, 2022, the amount of unrecognized tax benefits was $12.9 million and $11.1 million, respectively. If recognized, these benefits would decrease our income tax provision by $10.2 million and $9.0 million, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

 

2023

 

 

2022

 

Gross unrecognized tax benefits - beginning of the year

$

11,116

 

 

$

6,647

 

Gross increases related to prior year tax positions

 

761

 

 

 

425

 

Gross increases related to current year tax positions

 

1,460

 

 

 

4,665

 

Lapse of applicable statute of limitations

 

(478

)

 

 

(621

)

Gross unrecognized tax benefits - end of year

$

12,859

 

 

$

11,116

 

We recognize interest and penalties related to income tax liabilities in our provision for income taxes. In 2023, we included $0.1 million in our provision for income taxes.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic. Among other things, the CARES Act includes provisions related to refundable payroll tax credits, deferment of the employer portion of social security payments, net operating loss carryback periods, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. On December 27, 2020, the Consolidated Appropriations Act (“CAA”) was enacted in further response to the COVID-19 pandemic, in combination with omnibus spending for the 2021 federal fiscal year. The CAA extended many of the provisions enacted by the CARES Act, Though some provisions of the CARES Act and CAA do impact the Company, there was no material effect on the Company’s consolidated financial condition or results of operations for the years ended December 31, 2023, 2022 or 2021.

The Inflation Reduction Act of 2022 was signed into law on August 16, 2022, and the CHIPS and Science Act of 2022 was signed into law on August 9, 2022. These laws implement new tax provisions, primarily a 15% corporate alternative minimum tax and a nondeductible 1% excise tax on the fair market value of stock repurchased by publicly traded corporations. We do not anticipate any other material impact of these provisions. The two acts also provide various tax credits, several of which are transferable or refundable, for the investment in or production of clean-energy effective January 1, 2023. We will continue to evaluate potential tax benefits available under the acts as additional guidance is issued in future periods.