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INCOME TAXES | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The provision for income taxes is comprised of the following:
(in thousands) | 2023 | 2022 | 2021
Current taxes: |  |  |
Federal | $ | 329 |  | $ | 1,360 |  | $ | 4,925 |
State | 582 |  | 1,397 |  | 4,067 |
Foreign | 2,817 |  | 4,635 |  | 2,393 |
Total current taxes | 3,728 |  | 7,392 |  | 11,385 |
Deferred taxes: |  |  |
Federal | (8,109) |  | 3,434 |  | 617 |
State | (1,383) |  | 345 |  | 88 |
Foreign | (708) |  | (28) |  | 126 |
Total deferred taxes | (10,200) |  | 3,751 |  | 831 |
Provision for income taxes | $ | (6,472) |  | $ | 11,143 |  | $ | 12,216 |
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) | 2023 | % | 2022 | % | 2021 | %
Income tax expense (benefit) based on statutory rate | $ | (4,335) |  | 21.0 | % | $ | 15,417 |  | 21.0 | % | $ | 15,508 |  | 21.0 | %
Increase (decrease) resulting from: |  |  |  |  |  |
State income taxes, net of federal benefit | (1,384) |  | 6.7 |  | 3,008 |  | 4.1 |  | 3,548 |  | 4.8 |
Hiring tax credits, net | (4,997) |  | 24.2 |  | (7,911) |  | (10.8) |  | (7,582) |  | (10.3) |
CARES Act | — |  | — |  | — |  | — |  | (468) |  | (0.6) |
Uncertain tax positions | (206) |  | 1.0 |  | (1,336) |  | (1.8) |  | (391) |  | (0.5) |
Non-deductible goodwill impairment charge | 2,287 |  | (11.1) |  | — |  | — |  | — |  | — |
Non-deductible and non-taxable items | 1,178 |  | (5.7) |  | 1,377 |  | 1.9 |  | 589 |  | 0.8 |
Foreign taxes | 587 |  | (2.9) |  | 654 |  | 0.9 |  | 211 |  | 0.3 |
Other, net | 398 |  | (1.9) |  | (66) |  | (0.1) |  | 801 |  | 1.0 |
Total income tax expense (benefit) | $ | (6,472) |  | 31.3 | % | $ | 11,143 |  | 15.2 | % | $ | 12,216 |  | 16.5 | %
Our effective tax rate for fiscal 2023 was 31.3%. The difference between the statutory federal income tax rate of 21.0% and our effective income tax rate results primarily from tax benefits from hiring tax credits and state income taxes, partially offset by the non-deductible goodwill impairment charge and other non-deductible and non-taxable items. Of the total goodwill and intangible asset impairment charge of $9.5 million recorded during fiscal 2023, $8.9 million (tax effect of $2.3 million) related to goodwill from a stock acquisition, and accordingly was not deductible for tax purposes. U.S. and foreign components of income (loss) before tax expense (benefit) was as follows:
(in thousands) | 2023 | 2022 | 2021
U.S. | $ | (27,773) |  | $ | 56,964 |  | $ | 61,433 |
Foreign | 7,128 |  | 16,452 |  | 12,417 |
Income (loss) before tax expense (benefit) | $ | (20,645) |  | $ | 73,416 |  | $ | 73,850 |
The components of deferred tax assets and liabilities were as follows:
(in thousands) | December 31, 2023 | December 25, 2022
Deferred tax assets: |  |
Allowance for credit losses | $ | 590 |  | $ | 869 |
Accounts payable and other accrued expenses | 11,242 |  | 9,641 |
Net operating loss carryforwards | 7,535 |  | 1,243 |
Tax credit carryforwards | 16,030 |  | 9,801 |
Accrued wages and benefits | 7,311 |  | 8,877 |
Deferred compensation | 12,356 |  | 8,641 |
Lease liabilities | 17,378 |  | 16,025 |
Other | 371 |  | 368 |
Total | 72,813 |  | 55,465 |
Valuation allowance | (834) |  | (2,152) |
Total deferred tax asset, net of valuation allowance | 71,979 |  | 53,313 |
Deferred tax liabilities: |  |
Prepaid expenses, deposits and other current assets | (655) |  | (583) |
Lease right-of-use assets | (14,052) |  | (12,909) |
Depreciation and amortization | (21,958) |  | (14,100) |
Workers’ compensation | (192) |  | (347) |
Total deferred tax liabilities | (36,857) |  | (27,939) |
Deferred income taxes, net | $ | 35,122 |  | $ | 25,374 |
Since deferred tax assets and liabilities attributable to different jurisdictions cannot be offset, a deferred tax liability of $0.3 million is included in other long-term liabilities on our Consolidated Balance Sheets as of December 31, 2023. Based on our deferred tax asset realizability analysis, we have determined that a valuation allowance is appropriate for certain tax credits and net operating losses (“NOLs”) that we expect will not be utilized within the permitted carryforward periods as of December 31, 2023 and December 25, 2022. Changes to deferred taxes related to foreign currency translation were immaterial for fiscal 2023, 2022 and 2021. The following table summarizes our credit carryforwards and NOLs along with their respective valuation allowance as of December 31, 2023:
(in thousands) | Carryover tax benefit | Valuation allowance | Expected benefit | Year expiration begins
Year-end tax attributes: |  |  |  |
Federal WOTCs | $ | 16,030 |  | $ | — |  | $ | 16,030 |  | 2039
State NOLs | 2,808 |  | (834) |  | 1,974 |  | Various
Federal NOLs | 4,727 |  | — |  | 4,727 |  | Indefinite
Foreign alternative minimum tax credits | 287 |  | — |  | 287 |  | 2033
Total | $ | 23,852 |  | $ | (834) |  | $ | 23,018 |  |
The activity related to the income tax valuation allowance was as follows:
(in thousands) | 2023 | 2022 | 2021
Beginning balance | $ | 2,152 |  | $ | 2,368 |  | $ | 3,072 |
Charged to expense | (58) |  | (216) |  | 26 |
Release of allowance | (1,260) |  | — |  | (730) |
Ending balance | $ | 834 |  | $ | 2,152 |  | $ | 2,368 |
The following table summarizes the activity related to our unrecognized tax benefits:
(in thousands) | 2023 | 2022 | 2021
Beginning balance | $ | 830 |  | $ | 1,881 |  | $ | 1,930 |
Increases for tax positions related to the current year | 124 |  | 53 |  | 188 |
Decreases for tax positions related to prior years | — |  | — |  | (52) |
Reductions due to lapsed statute of limitations | (362) |  | (1,104) |  | (185) |
Ending balance | $ | 592 |  | $ | 830 |  | $ | 1,881 |
As of December 31, 2023, our liability for unrecognized tax benefits was $0.6 million. If recognized, $0.5 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 31, 2023. In general, the tax years 2020 through 2022 remain open to examination by the major taxing jurisdictions where we conduct business. Interest and penalties accrued related to the unrecognized tax benefits noted above were immaterial as of December 31, 2023.

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