Income Taxes

12 Months Ended

Dec. 31, 2020

12. Income Taxes

The provision for income taxes consists of the following (in millions):


	Year Ended December 31,
	2020		2019		2018
Current:
Federal	$	47.7	$	29.9	$	20.6
State	16.5		8.6		10.6
Foreign	4.8		4.6		3.9
	69.0		43.1		35.1
Deferred:
Federal and State	1.8		19.9		11.5
Foreign	(0.4)		(1.0)		(0.4)
	1.4		18.9		11.1
	$	70.4	$	62.0	$	46.2

Income from continuing operations before income taxes consists of the following (in millions):


	Year Ended December 31,
	2020		2019		2018
United States	$	250.7	$	218.7	$	190.7
Foreign	20.0		18.1		13.5
	$	270.7	$	236.8	$	204.2

The components of deferred tax (liabilities) assets are as follows (in millions):


	December 31,
	2020		2019
Intangibles	$	(146.0)	$	(112.7)
Depreciation expense	(14.3)		(13.3)
Operating lease right-of-use assets	(22.1)		(24.8)
Operating lease liabilities	23.3		25.7
Allowance for doubtful accounts	1.4		1.8
Employee-related accruals	14.8		12.0

Stock-based compensation	8.4		9.2
Payroll tax deferral	22.5		—
Net operating loss carryforwards–foreign	0.8		0.8
Other	3.0		3.4
Subtotal	(108.2)		(97.9)
Valuation allowance	(0.5)		(0.8)
	$	(108.7)	$	(98.7)

The reconciliation between the amount computed by applying the U.S. federal statutory tax rate of 21 percent in 2020, 2019 and 2018 to income before income taxes, for each respective year and the income tax provision is as follows (in millions):


	Year Ended December 31,
	2020		2019		2018
Income tax provision at the statutory rate	$	56.8	$	49.7	$	42.9
State income taxes, net of federal benefit	13.3		11.5		9.4
Disallowed meals and entertainment expenses	0.8		1.7		1.6
Excess stock-based compensation benefit	(1.3)		(0.9)		(2.2)
Work opportunity tax credit	(2.0)		(2.5)		(3.1)
Impact of tax reform	—		—		(3.0)
Other	2.8		2.5		0.6
	$	70.4	$	62.0	$	46.2

As of December 31, 2020, the Company had no domestic net operating losses and had $1.7 million of foreign net operating losses, which have no expiration date. The Company has recorded a valuation allowance of approximately $0.5 million and $0.8 million at December 31, 2020 and 2019, respectively, related to net operating loss carryforwards.

At December 31, 2020, the Company had undistributed earnings of foreign subsidiaries of approximately $29.5 million, substantially all of which are permanently reinvested. The Company will repatriate a portion of these foreign earnings in situations it deems advantageous for business operations, tax or cash management reasons. In doing so, the Company could be subject to state income and foreign taxes which would be insignificant. The determination of the amount of unrecognized deferred income tax liability for any basis differences on the permanently reinvested foreign earnings is not practicable due to the complexities associated with this hypothetical calculation.

The Company had gross deferred tax assets of $80.5 million and $58.3 million and gross deferred tax liabilities of $188.7 million and $156.2 million at December 31, 2020 and 2019, respectively. Management has determined the gross deferred tax assets are realizable, with the exception of certain foreign net operating losses discussed above.

At December 31, 2020, 2019 and 2018, there were $1.3 million, $1.3 million and $0.4 million of unrecognized tax benefits, respectively, and changes during those years were not significant. If recognized, these unrecognized tax benefits would affect the annual effective tax rate. The gross unrecognized tax benefits are included in other long-term liabilities. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The amount of interest and penalties recognized in the financial statements is not significant. The Company believes that there will be no significant decrease in unrecognized tax benefits by the end of 2021.

The Company is subject to taxation in the United States and various states and foreign jurisdictions. The IRS has completed an examination of the Company's U.S. income tax return for the 2017 tax year with no change. The Company remains subject to U.S. federal income tax examinations for 2017 and subsequent years. For the majority of U.S. states, with few exceptions and generally for the foreign tax jurisdictions, the Company remains subject to examination for 2016 and subsequent years.