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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The following is a summary of the Company’s income tax expense from continuing operations:
| Year Ended December 31,
(In Thousands) | 2021 |  | 2020 |  | 2019
Current Income Tax Expense (Benefit): |  |  |  |  |
Federal | $ | 50,240 |  |  | $ | (15,895) |  |  | $ | 4,453 |
State | 18,678 |  |  | 16,219 |  |  | 11,206 |
| 68,918 |  |  | 324 |  |  | 15,659 |
Deferred Income Tax Expense: |  |  |  |  |
Federal | 16,852 |  |  | 37,132 |  |  | 38,353 |
State | (1,123) |  |  | 493 |  |  | (1,784) |
| 15,729 |  |  | 37,625 |  |  | 36,569 |
Income Tax Expense | $ | 84,647 |  |  | $ | 37,949 |  |  | $ | 52,228 |
Significant components of the Company’s deferred income tax liabilities and assets are as follows:
| December 31,
(In Thousands) | 2021 |  | 2020
Deferred Tax Liabilities: |  |  |
Lease Merchandise and Property, Plant and Equipment | $ | 244 |  |  | $ | 179 |
Goodwill and Other Intangibles | 1,046 |  |  | — |
Investment in Partnership | 170,568 |  |  | 150,988 |
Operating Lease Right-of-Use Assets | 421 |  |  | 447 |
Total Deferred Tax Liabilities | 172,279 |  |  | 151,614 |
Deferred Tax Assets: |  |  |
Accrued Liabilities | 10,415 |  |  | 10,699 |
Operating Lease Liabilities | 440 |  |  | 472 |
Other, Net | 20,476 |  |  | 17,539 |
Total Deferred Tax Assets | 31,331 |  |  | 28,710 |
Less: Valuation Allowance | (2,557) |  |  | (4,034) |
Net Deferred Tax Liabilities | $ | 143,505 |  |  | $ | 126,938 |
The Company’s effective tax rate from continuing operations differs from the statutory United States Federal income tax rate as follows:
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Statutory Rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Increases (Decreases) in United States Federal Taxes |  |  |  |  |
Resulting From: |  |  |  |  |
State Income Taxes, Net of Federal Income Tax Benefit | 3.8 |  |  | 4.6 |  |  | 26.9 |
Permanent Difference for Loss on Progressive FTC matter | — |  |  | — |  |  | 133.1 |
NOL Carryback under CARES Act | — |  |  | (13.1) |  |  | — |
Other Permanent Differences | — |  |  | (1.0) |  |  | (7.4) |
Deferred Tax Adjustments | — |  |  | 1.1 |  |  | 5.8 |
Current Uncertain Tax Position Expense | 0.7 |  |  | (0.3) |  |  | 7.2 |
Other, Net | 0.3 |  |  | 1.7 |  |  | 2.5 |
Effective Tax Rate | 25.8 | % |  | 14.0 | % |  | 189.1 | %
The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted on March 27, 2020 in the United States. As a result of the CARES Act legislation, the Company elected to carryback its 2018 net operating losses of $242.2 million to 2013, thus generating a refund of $84.4 million, which was received in July 2020, and an income tax benefit of $34.2 million which was reported within continuing operations in 2020. Vive filed a separate federal return from the Company and has also elected to carryback its 2018 and 2019 net operating losses of $5.4 million and $5.2 million respectively, to 2013 and 2014, thus generating a refund of $1.8 million in 2020, $0.5 million in 2021, and an estimated refund of $1.3 million anticipated to be received in 2022. The tax benefit related to the carryback of the net operating losses is the result of the federal income tax rate differential between the current statutory rate of 21% and the 35% rate applicable to 2013 and 2014. At December 31, 2021, the Company had $0.9 million of tax-effected state net operating loss carryforwards and $6.7 million of state tax credit carryforwards, which will both begin to expire in 2023. The Company files a federal consolidated income tax return in the United States, and the separate legal entities file in various states. With few exceptions, the Company is no longer subject to federal, state and local tax examinations by tax authorities for years before 2018. In connection with our separation and distribution of The Aaron's Company, we entered into various agreements that govern the relationship between the parties going forward, including a tax matters agreement. Under the tax matters agreement, the Company is generally responsible for all additional taxes (and will be entitled to all related refunds of taxes) imposed on The Aaron's Company and its subsidiaries arising after the separation date with respect to the taxable periods ended on or prior to November 30, 2020. Uncertain Tax Positions The following table summarizes the activity related to the Company’s uncertain tax positions:
| Year Ended December 31,
(In Thousands) | 2021 |  | 2020 |  | 2019
Balance at January 1, | $ | 2,748 |  |  | $ | 3,699 |  |  | $ | 1,896 |
Additions Based on Tax Positions Related to the Current Year | 44,816 |  |  | 26 |  |  | 103 |
Additions for Tax Positions of Prior Years | 21 |  |  | 220 |  |  | 1,957 |
Prior Year Reductions | (1) |  |  | (108) |  |  | (32) |
Statute Expirations | (692) |  |  | (1,053) |  |  | (225) |
Settlements | (142) |  |  | (36) |  |  | — |
Balance at December 31, | $ | 46,750 |  |  | $ | 2,748 |  |  | $ | 3,699 |
As of December 31, 2021 and 2020, uncertain tax positions (inclusive of accrued interest) were $48.5 million and $3.0 million, respectively. The increase is primarily driven by the Company’s tax treatment of its settlement with the Federal Trade Commission ("FTC"). In December 2019, Progressive Leasing reached an agreement in principle with the staff of the FTC with respect to a tentative settlement to resolve the FTC inquiry received by the Company in July 2018, under which Progressive Leasing agreed to make a lump-sum payment of $175.0 million. At the time of the agreement, the Company treated the tentative settlement as a non-deductible regulatory charge for tax purposes and recognized tax expense. The $175.0 million settlement was finalized and paid to the FTC in 2020. Prior to filing the Company’s 2020 income tax return, it was determined there is a reasonable basis for deducting the settlement amount on the return. However, the tax position does not meet the more-likely-than-not recognition standard and no tax benefit has been recognized in the current period. As a result, the Company has reclassified $44.7 million from taxes payable, previously recognized in December 2019, to an uncertain tax position as of September 30, 2021. Additionally, $1.6 million of accrued interest related to the uncertain tax position has been recognized as a component of income tax expense in accordance with the Company's accounting policy. As of December 31, 2021 and 2020, the amount of uncertain tax benefits that, if recognized, would affect the effective tax rate is $46.1 million and $2.6 million, respectively, including interest and penalties. During the years ended December 31, 2021, 2020 and 2019 the Company recognized a net expense (benefit) of $1.5 million, $(0.1) million and $0.2 million, respectively, related to penalties and interest. The Company had $1.7 million and $0.2 million of accrued interest and penalties at December 31, 2021 and 2020, respectively. The Company recognizes potential interest and penalties related to uncertain tax benefits as a component of income tax expense (benefit).

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