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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Taxes [Abstract]  
Income Taxes
13. Income Taxes


Significant components of deferred tax assets and liabilities included in the consolidated balance sheets at December 31, 2022 and 2021 were as follows (in thousands):

 
December 31, 2022
    
December 31, 2021
  
Deferred tax assets:
            
Compensation
  
$
1,464
    
$
2,817
  
Allowance for credit losses
    
605
      
573
  
Lease obligations - including closed clinics
    
28,525
      
26,856
  
Deferred tax assets
  
$
30,594
    
$
30,246
  
Deferred tax liabilities:
                
Depreciation and amortization
  
$
(23,836
)
  
$
(19,607
)
Operating lease right-of-use assets
    
(26,318
)
    
(24,637
)
Gain on cash flow hedge
     (1,373 )     -  
Other
    
(370
)
    
(387
)
Deferred tax liabilities
    
(51,897
)
    
(44,631
)
Net deferred tax liability
  
$
(21,303
)
  
$
(14,385
)


The deferred tax assets and liabilities related to purchased interests not yet finalized may result in an immaterial adjustment.


During 2022, the Company recorded net deferred tax assets of $0.4 million related to the revaluation of redeemable non-controlling interests and acquisitions of non-controlling interests. In addition, during 2022, the Company recorded an adjustment to the deferred tax assets of $0.3 million as a result of a detailed reconciliation of its federal and state taxes payable and receivable accounts along with its federal and state deferred tax asset and liability accounts with its federal and state tax returns for 2021. The offset of this adjustment was an increase to the previously reported state income tax receivable and to federal income tax. As of December 31, 2022, the Company has a federal tax receivable of $3.9 million and state tax receivables of $0.7 million. The federal and state income tax receivable is included in other current assets on the accompanying consolidated balance sheets.


The differences between the federal tax rate and the Company’s effective tax rate for the years ended December 31, 2022, 2021 and 2020 were as follows (in thousands):

 
December 31, 2022
    
December 31, 2021
     December 31, 2020  
U. S. tax at statutory rate
  
$
9,307
      
21.0
%
  
$
11,782
      
21.0
%
  
$
10,125
      
21.0
%
State income taxes, net of federal benefit
    
2,079
      
4.7
%
    
2,478
      
4.4
%
    
1,956
      
3.9
%
Shortfall (excess) equity compensation deduction
    
149
      
0.3
%
    
(246
)
    
-0.4
%
    
(99
)
    
0.0
%
Non-deductible expenses
    
629
      
1.4
%
    
1,258
      
2.2
%
    
1,040
      
2.1
%
   
$
12,164
      
27.4
%
  
$
15,272
      
27.2
%
  
$
13,022
      
27.0
%


Significant components of the provision for income taxes for the years ended December 31, 2022, 2021 and 2020 were as follows (in thousands):

 
December 31, 2022
    
December 31, 2021
    
December 31, 2020
  
Current:
                  
Federal
  
$
(770
)
  
$
7,477
    
$
10,506
  
State
    
518
      
2,107
      
2,774
  
Total current
    
(252
)
    
9,584
      
13,280
  
Deferred:
                        
Federal
    
9,933
      
4,866
      
(38
)
State
    
2,483
      
822
      
(220
)
Total deferred
    
12,416
      
5,688
      
(258
)
Total income tax provision
  
$
12,164
    
$
15,272
    
$
13,022
  


For 2022, 2021 and 2020, the Company performed a detailed reconciliation of its federal and state taxes payable and receivable accounts along with its federal and state deferred tax asset and liability accounts. The adjustments were immaterial. The Company considers this reconciliation process to be an annual control.


The Company is required to establish a valuation allowance for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income in the periods which the deferred tax assets are deductible, management believes that a valuation allowance is not required, as it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets.


The Company’s U.S. federal returns remain open to examination for 2019 through 2021 and U.S. state jurisdictions are open for periods ranging from 2018 through 2021.


The Company does not believe that it has any significant uncertain tax positions at December 31, 2022 and December 31, 2021, nor is this expected to change within the next twelve months due to the settlement and expiration of statutes of limitation.


The Company did not have any accrued interest or penalties associated with any unrecognized tax benefits nor was any interest expense recognized during the years ended December 31, 2022, 2021 and 2020.