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INCOME TAXES
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES

10. INCOME TAXES

 

Income tax expense (benefit) of the Company consisted of:

 

 

 

For the years ended

 

 

 

December 31, 2021

 

 

December 31, 2020

 

 

December 31, 2019

 

Current income tax expense (benefit):

 

 

 

 

 

 

 

 

 

Federal

 

$

7,422

 

 

$

(530

)

 

$

4,420

 

State

 

 

323

 

 

 

1,174

 

 

 

302

 

Foreign

 

 

2,602

 

 

 

1,668

 

 

 

1,894

 

Total current income tax expense (benefit)

 

 

10,347

 

 

 

2,312

 

 

 

6,616

 

Deferred income tax expense (benefit):

 

 

 

 

 

 

 

 

 

Federal

 

 

823

 

 

 

7,136

 

 

 

(9,663

)

State

 

 

(552

)

 

 

(622

)

 

 

(1,826

)

Foreign

 

 

(189

)

 

 

—

 

 

 

—

 

Total deferred income tax expense (benefit)

 

 

82

 

 

 

6,514

 

 

 

(11,489

)

Total income tax expense (benefit)

 

$

10,429

 

 

$

8,826

 

 

$

(4,873

)

 

The Company’s income before income taxes was subject to taxes in the following jurisdictions:

 

 

 

For the years ended

 

 

 

December 31, 2021

 

 

December 31, 2020

 

 

December 31, 2019

 

United States

 

$

(24,772

)

 

$

37,548

 

 

$

(7,879

)

Foreign

 

 

8,062

 

 

 

4,135

 

 

 

3,567

 

Income (loss) before income taxes

 

$

(16,710

)

 

$

41,683

 

 

$

(4,312

)

 

Reported income tax expense (benefit) for the year ended December 31, 2021, 2020 and 2019 differs from the “expected” tax expense (benefit), computed by applying the U.S. Federal statutory income tax rate of 21% to income before income taxes as follows:

 

 

 

For the years ended

 

 

 

December 31, 2021

 

 

December 31, 2020

 

 

December 31, 2019

 

Expected tax expense (benefit) at U.S. Federal statutory rates

 

$

(3,510

)

 

$

8,753

 

 

$

(906

)

State income tax expense (benefit)

 

 

(180

)

 

 

335

 

 

 

(1,005

)

Permanent tax differences

 

 

825

 

 

 

(53

)

 

 

494

 

Global intangible low-taxed income

 

 

375

 

 

 

220

 

 

 

—

 

Foreign rate differential

 

 

719

 

 

 

389

 

 

 

369

 

Tax credit

 

 

(1,620

)

 

 

(646

)

 

 

(750

)

Earn-outs

 

 

5,470

 

 

 

—

 

 

 

—

 

Change in fair value of warrants

 

 

6,842

 

 

 

—

 

 

 

—

 

Transaction costs

 

 

1,465

 

 

 

280

 

 

 

—

 

Other differences, net

 

 

43

 

 

 

(452

)

 

 

(3,075

)

Total income tax expense (benefit)

 

$

10,429

 

 

$

8,826

 

 

$

(4,873

)

 

 

The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and deferred tax liabilities consisted of the following:

 

 

 

December 31,

 

 

 

2021

 

 

2020

 

Deferred tax assets:

 

 

 

 

 

 

Reserves on assets

 

$

8,140

 

 

$

6,435

 

Liabilities not yet deductible

 

 

3,040

 

 

 

3,786

 

Interest expense limitation

 

 

7,863

 

 

 

5,491

 

Other

 

 

1,764

 

 

 

2,570

 

Total gross deferred tax assets

 

 

20,807

 

 

 

18,282

 

Deferred tax liabilities:

 

 

 

 

 

 

Tradename

 

 

32,713

 

 

 

31,962

 

Intangible assets

 

 

43,965

 

 

 

45,956

 

Goodwill

 

 

7,969

 

 

 

5,743

 

Inventory

 

 

—

 

 

 

832

 

Property, plant and equipment

 

 

6,205

 

 

 

5,125

 

Total gross deferred tax liabilities

 

 

90,852

 

 

 

89,618

 

Net deferred tax liabilities

 

$

70,045

 

 

$

71,336

 

 

Based on the Company’s projected pretax earnings, reversal of deferred tax liabilities and other relevant factors, management believes that it is more likely than not that the Company’s deferred tax assets at December 31, 2021 and 2020 will be realized.

 

As of December 31, 2021, the Company's federal and state net operating loss carryforwards for income tax purposes were immaterial. A majority of the U.S. net operating loss carryforwards have no expiration date. The remaining state net operating loss carryforwards expire at various dates through 2035. The entire amount of federal net operating loss carryforward of $865 and a significant portion of state net operating loss carryforward of $566 relate to acquisitions, and, as a result, are limited in the amount that can be recognized in any one year.

 

Uncertain Tax Positions

 

Under the accounting rules for income taxes, the Company is not permitted to recognize the tax benefit attributable to a tax position unless such position is more likely than not to be sustained upon examination by taxing authorities, including resolution of any related appeals and litigation processes, based solely on the technical merits of the position. The Company did not have any uncertain tax positions for the year ended December 31, 2021.

 

The Company recognizes interest on liabilities for uncertain tax positions in interest expense and would recognize penalties, if any, in operating expenses in its consolidated statements of comprehensive income (loss). In 2021 and 2020, the Company has not recognized any amount of interest and penalties for uncertain tax positions in its consolidated statements of comprehensive income (loss).

 

The Company files federal, state, and non-U.S. tax returns in various foreign jurisdictions. For state and non-U.S. tax returns, the Company is generally no longer subject to tax examinations for years prior to 2012. For federal tax returns, the Company is no longer subject to tax examination for years prior to 2018. The federal tax returns for 2018 through 2020 remain open for examinations. State income tax returns remain open for examination in various states for tax years 2012 through 2020.

 

The Company's tax policy is to comply with the laws, regulations, and filing requirements of all jurisdictions in which it conducts business. Management regularly engages in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. Although the timing of the resolutions and/or closures of audits is highly uncertain, it is reasonably possible, that certain U.S. federal and non-U.S. tax audits may be concluded within the next 12 months, which could significantly increase or decrease the balance of our gross unrecognized tax benefits. However, the estimated impact of income tax expense and net income is not expected to be significant.