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Note 11 - Income Taxes
 6 Months Ended
Jan. 01, 2023
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

Note 11 – Income Taxes

 

At the end of each interim reporting period, the Company estimates its effective income tax rate expected to be applicable for the full year. This estimate is used in providing for income taxes on a year-to-date basis and may change in subsequent interim periods. The Company’s effective tax rate for the three and six months ended January 1, 2023 was 25.5% and 25.7% respectively, compared to 24.0% and 20.9% in the same periods of the prior year. The effective rates for fiscal 2023 differed from the U.S. federal statutory rate of 21.0% due to state income taxes, nondeductible expenses for executive compensation and tax shortfalls related to stock-based compensation, partially offset by various permanent differences and tax credits. The effective tax rates for fiscal 2022 differed from the U.S. federal statutory rate of 21.0% due to state income taxes and nondeductible expenses for executive compensation, partially offset by various permanent differences and tax credits, including tax windfalls from stock-based compensation.

 

The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and various foreign countries. The Company completed its U.S. federal examination for fiscal 2018, however, fiscal years 2019, 2020 and 2021 remain subject to U.S. federal examination. Due to ongoing state examinations and nonconformity with the U.S. federal statute of limitations for assessment, certain states remain open from fiscal 2016. The Company's foreign income tax filings from fiscal 2017 are open for examination by its respective foreign tax authorities, mainly Canada, Brazil, and the United Kingdom.

 

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. At January 1, 2023, the Company has an unrecognized tax benefit, including accrued interest and penalties, of approximately $1.4 million. The Company believes that $0.1 million of unrecognized tax positions will be resolved over the next twelve months.