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INCOME TAX PROVISION | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
INCOME TAX PROVISION | Income (loss) before income taxes was comprised of the following for the years ended December 31:
(in thousands) |  | 2021 |  | 2020 |  | 2019
U.S. |  | $ | 62,361 |  |  | $ | 7,130 |  |  | $ | (191,843) |
Foreign |  | 31,442 |  |  | 19,673 |  |  | (23,897) |
Income (loss) income before income taxes |  | $ | 93,803 |  |  | $ | 26,803 |  |  | $ | (215,740) |
The components of the income tax provision were as follows for the years ended December 31:
(in thousands) |  | 2021 |  | 2020 |  | 2019
Current tax provision: |  |  |  |  |  |
Federal |  | $ | (61) |  |  | $ | 17,643 |  |  | $ | 36,967 |
State |  | 2,389 |  |  | 4,502 |  |  | 7,400 |
Foreign |  | 10,945 |  |  | 4,779 |  |  | 4,850 |
Total current tax provision |  | 13,273 |  |  | 26,924 |  |  | 49,217 |
Deferred tax provision: |  |  |  |  |  |
Federal |  | 15,889 |  |  | (4,480) |  |  | (35,154) |
State |  | 1,958 |  |  | (1,232) |  |  | (8,239) |
Foreign |  | (89) |  |  | 256 |  |  | 2,215 |
Total deferred tax provision |  | 17,758 |  |  | (5,456) |  |  | (41,178) |
Income tax provision |  | $ | 31,031 |  |  | $ | 21,468 |  |  | $ | 8,039 |
The effective tax rate on pretax income (loss) reconciles to the U.S. federal statutory tax rate for the years ended December 31 as follows:
|  | 2021 |  | 2020 |  | 2019
Income tax at federal statutory rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Goodwill impairment charges (Note 8) |  | — |  |  | 46.8 | % |  | (25.6 | %)
Tax on repatriation of foreign earnings |  | 4.9 | % |  | — |  |  | — |
State income tax expense, net of federal income tax benefit |  | 2.4 | % |  | 2.1 | % |  | 4.7 | %
Foreign tax rate differences |  | 1.7 | % |  | 4.3 | % |  | 1.1 | %
Non-deductible executive compensation |  | 1.7 | % |  | 2.2 | % |  | (0.6 | %)
Non-deductible acquisition costs |  | 1.5 | % |  | — |  |  | — |
Tax impact of share-based compensation |  | 0.9 | % |  | 8.5 | % |  | (1.0 | %)
Payables and receivables for prior year tax returns |  | 0.2 | % |  | 3.2 | % |  | 0.2 | %
Change in valuation allowances(1) |  | 0.1 | % |  | 0.9 | % |  | (3.9 | %)
Research and development tax credit |  | (0.9 | %) |  | (3.7 | %) |  | 0.5 | %
Change in unrecognized tax benefits, including interest and penalties |  | (0.6 | %) |  | (3.3 | %) |  | (0.2 | %)
Non-taxable income from employee life insurance policies |  | (0.3 | %) |  | (1.1 | %) |  | 0.1 | %
Return to provision adjustments |  | — |  |  | (2.6 | %) |  | 0.3 | %
Other |  | 0.5 | % |  | 1.8 | % |  | (0.3 | %)
Effective tax rate |  | 33.1 | % |  | 80.1 | % |  | (3.7 | %)
(1) During the quarter ended September 30, 2019, we recorded asset impairment charges related to certain intangible assets located in Australia (Note 8). As a result, we placed a full valuation allowance on the intangible-related deferred tax asset of $8,432, as we do not expect that we will realize the benefit of this deferred tax asset. During the fourth quarter of 2021, we repatriated accumulated foreign earnings of $85,285 held in cash by our Canadian subsidiaries. We decided to complete the repatriation due, in part, to changes in Canadian law announced during 2021 and the reorganization of our capital structure in June 2021 (Note 14). The associated tax expense of $4,555 was included in the income tax provision for the fourth quarter of 2021. During 2022, we will begin repatriating Canadian current year earnings on an annual basis, as we believe the accumulated and remaining cash of our Canadian subsidiaries is sufficient to meet their working capital needs. We intend to utilize the repatriated earnings to reduce our outstanding debt. The historical unremitted Canadian earnings as of December 31, 2021, as well as the accumulated and future unremitted earnings of our non-Canadian foreign subsidiaries, will continue to be reinvested indefinitely in the operations of those subsidiaries. Deferred income taxes have not been recognized on these earnings as of December 31, 2021. If we were to repatriate all foreign cash and cash equivalents into the U.S. at one time, the tax effects would generally be limited to foreign withholding taxes on any such distribution. As of December 31, 2021, the amount of cash and cash equivalents held by our foreign subsidiaries was $47,779, primarily in Canada. A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties and the federal benefit of deductible state income tax, was as follows:
(in thousands) |  | 2021 |  | 2020 |  | 2019
Balance, beginning of year |  | $ | 3,361 |  |  | $ | 4,169 |  |  | $ | 4,801 |
Additions for tax positions of current year |  | 169 |  |  | 237 |  |  | 364 |
Additions for tax positions of prior years |  | 8 |  |  | 30 |  |  | 546 |
Reductions for tax positions of prior years |  | (673) |  |  | (414) |  |  | (887) |
Settlements |  | — |  |  | — |  |  | (341) |
Lapse of statutes of limitations |  | (314) |  |  | (661) |  |  | (314) |
Balance, end of year |  | $ | 2,551 |  |  | $ | 3,361 |  |  | $ | 4,169 |
If the unrecognized tax benefits as of December 31, 2021 were recognized in the consolidated financial statements, income tax expense would decrease $2,551. Accruals for interest and penalties, excluding the tax benefits of deductible interest, were $635 as of December 31, 2021 and $551 as of December 31, 2020. Our income tax provision included expense for interest and penalties of $84 in 2021 and $605 in 2019 and included a reduction for interest and penalties of $384 in 2020. We believe that it is reasonably possible that a decrease of up to $1,400 in unrecognized tax benefits related to state tax exposures may be necessary within the next 12 months, with the majority related to the lapse of statutes of limitations. We believe it is reasonably possible that an increase of up to $2,000 in unrecognized tax benefits may be necessary within the next 12 months, related to legislative and regulatory changes in certain state and local jurisdictions. Due to the nature of the underlying liabilities and the extended time frame often needed to resolve income tax uncertainties, we cannot provide reliable estimates of the amount or timing of cash payments that may be required to settle these liabilities. The statute of limitations for federal tax assessments for 2017 and prior years has expired. Audits of our federal income tax returns through 2015 have been completed by the Internal Revenue Service (IRS). Our 2018 through 2020 returns and our 2021 return, when filed, are subject to IRS examination. In general, income tax returns for the years 2018 through 2021 remain subject to examination by foreign, state and city tax jurisdictions. In the event that we have determined not to file income tax returns with a particular state or city, all years remain subject to examination by the tax jurisdiction. The ultimate outcome of tax matters may differ from our estimates and assumptions. Unfavorable settlement of any particular issue would require the use of cash and could result in increased income tax expense. Favorable resolution would result in reduced income tax expense. Tax-effected temporary differences that gave rise to deferred tax assets and liabilities as of December 31 were as follows:
|  | 2021 |  | 2020
(in thousands) |  | Deferred tax assets |  | Deferred tax liabilities |  | Deferred tax assets |  | Deferred tax liabilities
Intangible assets |  | $ | — |  |  | $ | 37,170 |  |  | $ | 26,686 |  |  | $ | — |
Goodwill |  | — |  |  | 21,190 |  |  | — |  |  | 13,694 |
Cloud computing arrangements |  | — |  |  | 16,646 |  |  | — |  |  | 7,532 |
Employee benefit plans |  | — |  |  | 10,093 |  |  | — |  |  | 7,140 |
Prepaid assets |  | — |  |  | 4,844 |  |  | — |  |  | 3,456 |
Revenue recognition |  | — |  |  | 5,496 |  |  | — |  |  | 2,659 |
Operating leases |  | 18,388 |  |  | 14,996 |  |  | 11,202 |  |  | 9,043 |
Deductible interest carryforward |  | 8,352 |  |  | — |  |  | — |  |  | — |
Net operating loss, tax credit and capital loss carryforwards |  | 8,083 |  |  | — |  |  | 7,026 |  |  | — |
Reserves and accruals |  | 7,320 |  |  | — |  |  | 5,848 |  |  | — |
Payroll tax deferral under the CARES Act |  | 2,175 |  |  | — |  |  | 3,692 |  |  | — |
Inventories |  | 1,661 |  |  | — |  |  | 4,153 |  |  | — |
Property, plant and equipment |  | 1,347 |  |  | — |  |  | — |  |  | 3,366 |
All other |  | 3,780 |  |  | 2,619 |  |  | 4,003 |  |  | 3,026 |
Total deferred taxes |  | 51,106 |  |  | 113,054 |  |  | 62,610 |  |  | 49,916 |
Valuation allowances |  | (10,993) |  |  | — |  |  | (11,453) |  |  | — |
Net deferred taxes |  | $ | 40,113 |  |  | $ | 113,054 |  |  | $ | 51,157 |  |  | $ | 49,916 |
The valuation allowances as of December 31, 2021 and December 31, 2020 related primarily to intangible-related deferred tax assets of our Australian operations, capital loss carryforwards in Canada and net operating loss carryforwards in various state jurisdictions that we do not currently expect to fully realize. Changes in our valuation allowances for the years ended December 31 were as follows:
(in thousands) |  | 2021 |  | 2020 |  | 2019
Balance, beginning of year |  | $ | (11,453) |  |  | $ | (10,349) |  |  | $ | (1,689) |
Expense from change in allowances |  | (65) |  |  | (244) |  |  | (8,336) |
Foreign currency translation |  | 525 |  |  | (860) |  |  | (324) |
Balance, end of year |  | $ | (10,993) |  |  | $ | (11,453) |  |  | $ | (10,349) |
As of December 31, 2021, we had the following net operating loss, deductible interest, capital loss and tax credit carryforwards: •state net operating loss carryforwards and tax credit carryforwards of $115,199 that expire at various dates between 2022 and 2050; •federal deductible interest carryforwards of $32,078 that do not expire; •foreign capital loss carryforwards of $5,027 that do not expire; •federal net operating loss carryforwards of $937 that expire at various dates between 2025 and 2029; and •federal capital loss carryforwards of $912 that expire in 2025.

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