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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

(4) Income Taxes

The provisions for income taxes are:

 

 

 

2022

 

 

2021

 

 

2020

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

7,439

 

 

$

6,684

 

 

$

(1,197

)

State

 

 

2,173

 

 

 

2,149

 

 

 

(3

)

Foreign

 

 

3,943

 

 

 

1,106

 

 

 

2,831

 

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

 

(2,763

)

 

 

(2,369

)

 

 

2,177

 

State

 

 

(1,243

)

 

 

(1,039

)

 

 

403

 

Foreign

 

 

(988

)

 

 

1,635

 

 

 

(1,131

)

Total

 

$

8,561

 

 

$

8,166

 

 

$

3,080

 

 

Total income tax expense differed from the amounts computed by applying the U.S. Federal income tax rate of 21.0% to income before income tax expense, as a result of the following:

 

 

 

2022

 

 

2021

 

 

2020

 

Computed tax expense at statutory federal rates

 

$

7,553

 

 

$

5,619

 

 

$

3,874

 

Increase (decrease) in taxes resulting from:

 

 

 

 

 

 

 

 

 

State taxes, net of federal income tax benefit

 

 

1,493

 

 

 

1,485

 

 

 

559

 

Unrecognized tax benefits

 

 

(1,441

)

 

 

(1,783

)

 

 

(2,092

)

Bargain purchase gain on business acquisition

 

 

—

 

 

 

(35

)

 

 

(978

)

Income tax credits

 

 

(1,342

)

 

 

(1,206

)

 

 

(812

)

Foreign tax rate differential

 

 

785

 

 

 

262

 

 

 

2,145

 

Stock based compensation

 

 

55

 

 

 

208

 

 

 

377

 

Global intangible low-taxed income

 

 

—

 

 

 

162

 

 

 

—

 

Change in valuation allowance

 

 

379

 

 

 

3,304

 

 

 

—

 

Return to provision

 

 

(693

)

 

 

(651

)

 

 

71

 

Nondeductible / (deductible) expenses

 

 

989

 

 

 

(103

)

 

 

(111

)

Gross receipts taxes

 

 

602

 

 

 

567

 

 

 

—

 

Other

 

 

181

 

 

 

337

 

 

 

48

 

Total

 

$

8,561

 

 

$

8,166

 

 

$

3,080

 

 

Income before provision for income taxes and losses on equity investments are:

 

 

 

2022

 

 

2021

 

 

2020

 

Domestic

 

$

28,739

 

 

$

21,212

 

 

$

11,858

 

International

 

 

7,226

 

 

 

5,929

 

 

 

6,589

 

Total

 

$

35,965

 

 

$

27,141

 

 

$

18,447

 

 

Temporary differences between the consolidated financial statements’ carrying amounts and tax bases of assets and liabilities that give rise to significant portions of the net deferred tax liability at December 31, 2022 and 2021 relate to the following:

 

 

 

2022

 

 

2021

 

Deferred tax assets

 

 

 

 

 

 

Inventories

 

$

2,401

 

 

$

1,777

 

Program accrual

 

 

8,277

 

 

 

9,098

 

Vacation pay accrual

 

 

772

 

 

 

792

 

Accrued bonuses

 

 

1,707

 

 

 

1,250

 

Bad debt expense

 

 

1,450

 

 

 

1,361

 

Stock compensation

 

 

1,414

 

 

 

1,532

 

Domestic NOL carryforward

 

 

609

 

 

 

675

 

Foreign NOL carryforward

 

 

2,554

 

 

 

1,718

 

Tax credits

 

 

842

 

 

 

807

 

Lease liability

 

 

6,209

 

 

 

6,718

 

Accrued expenses

 

 

570

 

 

 

723

 

Unrealized foreign exchange loss

 

 

3,220

 

 

 

3,847

 

Section 174 capitalized costs

 

 

4,600

 

 

 

—

 

Other

 

 

—

 

 

 

744

 

Deferred tax assets

 

$

34,625

 

 

$

31,042

 

Less valuation allowance

 

 

(3,853

)

 

 

(4,262

)

Deferred tax assets, net

 

$

30,772

 

 

$

26,780

 

Deferred tax liabilities

 

 

 

 

 

 

Plant and equipment, principally due to differences in depreciation and capitalized interest

 

$

36,158

 

 

$

37,113

 

Lease assets

 

 

6,079

 

 

 

6,600

 

Prepaid expenses

 

 

1,685

 

 

 

1,666

 

Deferred revenue

 

 

777

 

 

 

1,014

 

Other

 

 

529

 

 

 

123

 

Deferred tax liabilities

 

$

45,228

 

 

$

46,516

 

 

 

 

 

 

 

 

Total net deferred tax liabilities

 

$

14,456

 

 

$

19,736

 

 

As of December 31, 2022, the Company maintained a full valuation allowance against its net deferred income tax assets related to the Company’s operations in Brazil, Spain, and Ukraine totaling $3,853. The valuation allowance decreased by $409 for the year ended December 31, 2022, of which $788 relates to unrealized foreign exchange losses and foreign currency translation included in other comprehensive income for 2022, partially offset by $379 included in the provision for income taxes for 2022. As of December 31, 2021, the Company recorded a full valuation allowance against the net deferred income tax assets related to the Company’s operations in Brazil totaling $4,262, of which $3,304 is included in the provision for income taxes for 2021 and $958 related to unrealized foreign exchange losses included in other comprehensive income for 2021.

Gross foreign NOLs related to the Company's foreign operations were $8,342 and $5,491 for the years ended December 31, 2022 and 2021, respectively. Substantially all of the Company’s foreign NOLs can be carried forward indefinitely.

Gross domestic federal and state NOLs available across all jurisdictions in which we operate were $3,622 and $3,733 as of December 31, 2022 and 2021, respectively. The Company’s federal and state NOLs expire over varying intervals in the future and are subject to annual limitation in accordance with IRC Section 382.

 

The following is a roll-forward of the Company’s total gross unrecognized tax benefits, not including interest and penalties, for the years ended December 31, 2022 and 2021 included in other liabilities, excluding current installments on the Company’s consolidated balance sheets:

 

 

 

2022

 

 

2021

 

Balance at beginning of year

 

$

2,426

 

 

$

3,222

 

Additions for tax positions related to the current year

 

 

225

 

 

 

223

 

Additions for tax positions related to the prior years

 

 

5

 

 

 

56

 

Reduction for tax positions related to the prior years

 

 

(745

)

 

 

(971

)

Effect of exchange rate changes

 

 

95

 

 

 

(104

)

Balance at end of year

 

$

2,006

 

 

$

2,426

 

 

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Company’s consolidated financial statements. As of December 31, 2022, 2021, and 2020 the Company had $2,161, $2,909, and $4,195, respectively in interest and penalties related to unrecognized tax benefits on its consolidated balance sheets.

It is expected that the amount of unrecognized tax benefits will change and $1,680 of unrecognized tax benefits is expected to be released within the next twelve months due to expiration of the statute of limitations.

The Company believes it is more likely than not that the deferred tax assets detailed in the table above, exclusive of those in Brazil, Spain and Ukraine with the previously mentioned full valuation allowances, will be realized in the normal course of business. It is the intent of the Company that undistributed earnings of foreign subsidiaries are permanently reinvested. The amount of undistributed earnings was $17,012 as of December 31, 2022. Upon distribution of earnings in the form of dividends or otherwise, the Company may still be subject to state income taxes and withholding taxes payable to the various foreign countries. Determination of the unrecognized deferred tax liability is not practical due to the complexities of a hypothetical calculation.

The Company is subject to U.S. federal income tax as well as to income tax in multiple state jurisdictions. Federal income tax returns of the Company are subject to Internal Revenue Service (“IRS”) examination for the 2019 through 2021 tax years. State income tax returns are subject to examination for the 2018 through 2021 tax years. The Company has foreign income tax returns subject to examination.

Beginning in 2022, The Tax Cuts and Jobs Act of 2017 ("TCJA"), requires taxpayers to capitalize and amortize research and development expenditures pursuant to Internal Revenue Code, or IRC, Section 174, which resulted in increases in the Company’s deferred tax asset balance and cash tax payments in the amount of $4,600 and $6,180 for the year ended December 31, 2022, respectively.