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INCOME TAXES | 12 Months Ended
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Dec. 26, 2021
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The provision for income taxes is comprised of the following:
(in thousands) | 2021 | 2020 | 2019
Current taxes: |  |  |
Federal | $ | 4,925 |  | $ | (7,318) |  | $ | (933) |
State | 4,067 |  | (382) |  | 3,835 |
Foreign | 2,393 |  | 3,045 |  | 2,806 |
Total current taxes | 11,385 |  | (4,655) |  | 5,708 |
Deferred taxes: |  |  |
Federal | 617 |  | (22,416) |  | 846 |
State | 88 |  | (3,369) |  | 1,216 |
Foreign | 126 |  | (981) |  | (799) |
Total deferred taxes | 831 |  | (26,766) |  | 1,263 |
Provision for income taxes | $ | 12,216 |  | $ | (31,421) |  | $ | 6,971 |
The items accounting for the difference between income taxes computed at the statutory federal income tax rate and income taxes reported on the Consolidated Statements of Operations and Comprehensive Income (Loss) are as follows:
(in thousands, except percentages) | 2021 | % | 2020 | % | 2019 | %
Income tax expense (benefit) based on statutory rate | $ | 15,508 |  | 21.0 | % | $ | (36,385) |  | 21.0 | % | $ | 14,709 |  | 21.0 | %
Increase (decrease) resulting from: |  |  |  |  |  |
State income taxes, net of federal benefit | 3,548 |  | 4.8 |  | (6,631) |  | 3.8 |  | 3,666 |  | 5.3 |
Hiring tax credits, net | (7,582) |  | (10.3) |  | (7,719) |  | 4.5 |  | (13,627) |  | (19.4) |
CARES Act | (468) |  | (0.6) |  | (2,939) |  | 1.7 |  | — |  | — |
Non-deductible goodwill impairment charge | — |  | — |  | 21,849 |  | (12.6) |  | — |  | — |
Non-deductible/non-taxable items | 589 |  | 0.8 |  | 124 |  | (0.1) |  | 1,559 |  | 2.2 |
Foreign taxes | 211 |  | 0.3 |  | (977) |  | 0.5 |  | 282 |  | 0.4 |
Other, net | 410 |  | 0.5 |  | 1,257 |  | (0.7) |  | 382 |  | 0.5 |
Total tax expense (benefit) | $ | 12,216 |  | 16.5 | % | $ | (31,421) |  | 18.1 | % | $ | 6,971 |  | 10.0 | %
Our effective tax rate for fiscal 2021 was 16.5%. The difference between the statutory federal income tax rate of 21.0% and our effective income tax rate results primarily from WOTC. Other differences result from state and foreign income tax, certain non-taxable income and non-deductible expenses, CARES Act and tax effects of stock-based compensation. The non-deductible goodwill and intangible asset impairment charge relates to an impairment charge of the carrying amounts of goodwill and other intangible assets of $175.2 million, recorded in the first quarter of 2020. Of the total impairment loss, $84.7 million (tax-effect $21.8 million) related to reporting units from stock acquisitions and accordingly were not deductible for tax purposes. The remaining impairment loss of $90.5 million (tax-effect $23.3 million) related to reporting units from asset acquisitions and accordingly were deductible for tax purposes. U.S. and international components of income (loss) before tax expense (benefit) was as follows:
(in thousands) | 2021 | 2020 | 2019
U.S. | $ | 61,433 |  | $ | (148,492) |  | $ | 61,610 |
International | 12,417 |  | (24,770) |  | 8,434 |
Income (loss) before tax expense (benefit) | $ | 73,850 |  | $ | (173,262) |  | $ | 70,044 |
The components of deferred tax assets and liabilities were as follows:
(in thousands) | December 26, 2021 | December 27, 2020
Deferred tax assets: |  |
Allowance for credit losses | $ | 1,750 |  | $ | 991 |
Workers’ compensation | 1,653 |  | — |
Accounts payable and other accrued expenses | 8,970 |  | 7,933 |
Net operating loss carryforwards | 2,002 |  | 3,679 |
Tax credit carryforwards | 11,920 |  | 18,461 |
Accrued wages and benefits | 9,227 |  | 7,938 |
Deferred compensation | 9,083 |  | 10,130 |
Lease liabilities | 16,762 |  | 21,771 |
Other | 137 |  | 1,047 |
Total | 61,504 |  | 71,950 |
Valuation allowance | (2,368) |  | (3,072) |
Total deferred tax asset, net of valuation allowance | 59,136 |  | 68,878 |
Deferred tax liabilities: |  |
Prepaid expenses, deposits and other current assets | (515) |  | (1,840) |
Lease right-of-use assets | (13,638) |  | (20,692) |
Depreciation and amortization | (15,653) |  | (13,274) |
Workers’ compensation | — |  | (3,053) |
Total deferred tax liabilities | (29,806) |  | (38,859) |
Deferred income taxes, net | $ | 29,330 |  | $ | 30,019 |
Deferred taxes related to our foreign currency translation were immaterial for fiscal 2021, 2020 and 2019. The activity related to the income tax valuation allowance was as follows:
(in thousands) | 2021 | 2020 | 2019
Beginning balance | $ | 3,072 |  | $ | 1,780 |  | $ | 2,079 |
Charged to expense | 26 |  | 1,292 |  | — |
Release of allowance | (730) |  | — |  | (299) |
Ending balance | $ | 2,368 |  | $ | 3,072 |  | $ | 1,780 |
The following table summarizes our NOLs and credit carryforwards along with their respective valuation allowance as of December 26, 2021:
(in thousands) | Carryover tax benefit | Valuation allowance | Expected benefit | Year expiration begins
Year-end tax attributes: |  |  |  |
Federal WOTCs | $ | 10,508 |  | $ | — |  | $ | 10,508 |  | 2039
State NOLs | 2,002 |  | (957) |  | 1,045 |  | Various
California Enterprise Zone credits | 1,411 |  | (1,411) |  | — |  | 2026
Foreign alternative minimum tax credits | 359 |  | — |  | 359 |  | 2032
Total | $ | 14,280 |  | $ | (2,368) |  | $ | 11,912 |  |
As of December 26, 2021, our liability for unrecognized tax benefits was $1.9 million. If recognized, $1.5 million would impact our effective tax rate. We do not believe the amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of the fiscal year ended December 26, 2021. This liability is recorded in other long-term liabilities on our Consolidated Balance Sheets. In general, the tax years 2018 through 2020 remain open to examination by the major taxing jurisdictions where we conduct business. The following table summarizes the activity related to our unrecognized tax benefits:
(in thousands) | 2021 | 2020 | 2019
Beginning balance | $ | 1,930 |  | $ | 2,078 |  | $ | 2,190 |
Increases for tax positions related to the current year | 188 |  | 218 |  | 318 |
Decreases for tax positions related to prior years | (52) |  | — |  | — |
Reductions due to lapsed statute of limitations | (185) |  | (366) |  | (430) |
Ending balance | $ | 1,881 |  | $ | 1,930 |  | $ | 2,078 |
We recognize interest and penalties related to unrecognized tax benefits within income tax expense on the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss). Accrued interest and penalties are included within other long-term liabilities on the Consolidated Balance Sheets. Related to the unrecognized tax benefits noted above, we accrued an immaterial amount for interest and penalties during fiscal 2021 and, in total, as of December 26, 2021, have recognized a liability for penalties of $0.1 million and interest of $0.6 million.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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