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Income Taxes
 12 Months Ended
Sep. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

15) Income Taxes

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. The CARES Act allows employers to defer the payment of the employer's portion of Social Security taxes for period beginning March 27, 2020 and ending December 31, 2020 to years 2021 and 2022. The company elected to defer the payment of its portion of Social Security taxes through September 30, 2022 of $5.2 million and recorded a related deferred tax asset of $1.5 million at September 30, 2022. No amount is deferred as of September 30, 2023.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted into law. The Tax Reform Act allows for the full depreciation, in the year acquired, for certain fixed assets purchased between September 28, 2017 and December 31, 2022 (also known as 100% bonus depreciation).

Income tax expense is comprised of the following for the indicated periods (in thousands):

 

 

 

Years Ended September 30,

 

 

 

2023

 

 

2022

 

 

2021

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

9,902

 

 

$

11,900

 

 

$

16,077

 

State

 

 

4,583

 

 

 

5,019

 

 

 

6,237

 

Deferred

 

 

 

 

 

 

 

 

 

Federal

 

 

(843

)

 

 

(2,563

)

 

 

8,263

 

State

 

 

342

 

 

 

(618

)

 

 

3,098

 

 

 

$

13,984

 

 

$

13,738

 

 

$

33,675

 

 

The provision for income taxes differs from income taxes computed at the Federal statutory rate as a result of the following (in thousands):

 

 

 

Years Ended September 30,

 

 

 

2023

 

 

2022

 

 

2021

 

Income from continuing operations before taxes

 

$

45,929

 

 

$

49,026

 

 

$

121,412

 

Provision for income taxes:

 

 

 

 

 

 

 

 

 

Tax at Federal statutory rate

 

$

9,645

 

 

$

10,295

 

 

$

25,496

 

State taxes net of federal benefit

 

 

3,401

 

 

 

3,251

 

 

 

7,927

 

Permanent differences

 

 

520

 

 

 

249

 

 

 

196

 

Change in valuation allowance

 

 

252

 

 

 

208

 

 

 

86

 

Other

 

 

166

 

 

 

(265

)

 

 

(30

)

 

 

$

13,984

 

 

$

13,738

 

 

$

33,675

 

 

The components of the net deferred taxes for the years ended September 30, 2023 and September 30, 2022 using current tax rates are as follows (in thousands):

 

 

 

September 30,

 

 

 

2023

 

 

2022

 

Deferred tax assets:

 

 

 

 

 

 

Operating lease liabilities

 

$

27,473

 

 

$

28,591

 

Net operating loss carryforwards

 

 

5,178

 

 

 

5,432

 

Vacation accrual

 

 

2,775

 

 

 

3,050

 

Pension accrual

 

 

3,696

 

 

 

3,666

 

Allowance for bad debts

 

 

2,285

 

 

 

2,155

 

Insurance accrual

 

 

1,870

 

 

 

1,934

 

Inventory capitalization

 

 

955

 

 

 

(580

)

Other, net

 

 

198

 

 

 

1,319

 

Total deferred tax assets

 

 

44,430

 

 

 

45,567

 

Valuation allowance

 

 

(4,437

)

 

 

(4,184

)

Net deferred tax assets

 

$

39,993

 

 

$

41,383

 

Deferred tax liabilities:

 

 

 

 

 

 

Operating lease right-of-use assets

 

$

26,025

 

 

$

27,097

 

Property and equipment

 

 

14,937

 

 

 

15,012

 

Intangibles

 

 

19,897

 

 

 

19,936

 

Fair value of derivative instruments

 

 

1,270

 

 

 

1,851

 

Other, net

 

 

3,635

 

 

 

3,107

 

Total deferred tax liabilities

 

$

65,764

 

 

$

67,003

 

Net deferred taxes

 

$

(25,771

)

 

$

(25,620

)

 

In order to fully realize the net deferred tax assets, the Company’s corporate subsidiaries will need to generate future taxable income. A valuation allowance is recognized if, based on the weight of available evidence including historical tax losses, it is more likely than not that some or all of deferred tax assets will not be realized. The net change in the total valuation allowance for the fiscal year ended September 30, 2023 was $0.3 million. The net change in the total valuation allowance for the fiscal year ended September 30, 2022 was $0.2 million. Based upon a review of a number of factors and all available evidence, including recent historical operating performance, the expectation of sustainable earnings, and the confidence that sufficient positive taxable income will continue in all tax jurisdictions for the foreseeable future, management concludes, it is more likely than not that the Company will realize the full benefit of its deferred tax assets, net of existing valuation allowance related to State net operating loss carryforwards at September 30, 2023.

 

As of January 1, 2023, the Company had State tax effected net operating loss carry forwards (“NOLs”) of approximately $0.8 million after consideration of valuation allowances. The State NOLs, which will expire between 2023 and 2037, are generally available to offset any future taxable income in certain states

At September 30, 2023, we did not have unrecognized income tax benefits.

We file U.S. Federal income tax returns and various state and local returns. A number of years may elapse before an uncertain tax position is audited and finally resolved. For our Federal income tax returns we have four tax years subject to examination. In our major state tax jurisdictions of New York, Connecticut, and Pennsylvania we have four years that are subject to examination. In the state tax jurisdiction of New Jersey we have five tax years that are subject to examination. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, based on our assessment of many factors including past experience and interpretation of tax law, we believe that our provision for income taxes reflect the most probable outcome. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events.