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Income Taxes
 12 Months Ended
Sep. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

12.

Income Taxes

The provision for income taxes consists of the following:

 

 

 

Years Ended September 30,

 

 

 

2021

 

 

2020

 

 

2019

 

 

 

(in thousands)

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

(39

)

 

$

—

 

 

$

(138

)

State

 

 

202

 

 

 

297

 

 

 

341

 

 

 

$

163

 

 

$

297

 

 

$

203

 

Deferred

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

4,494

 

 

 

8,404

 

 

 

13,238

 

State

 

 

1,171

 

 

 

830

 

 

 

2,265

 

 

 

$

5,665

 

 

$

9,234

 

 

$

15,503

 

Provision for income taxes

 

$

5,828

 

 

$

9,531

 

 

$

15,706

 

 

The reconciliation between the effective tax rate on income from continuing operations and the statutory tax rate is as follows:

 

 

 

Years Ended September 30,

 

 

 

2021

 

 

2020

 

 

2019

 

 

 

(in thousands)

 

Income tax expense at federal statutory rate

 

$

4,707

 

 

$

7,769

 

 

$

13,290

 

Increase (reduction) in income taxes resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

State taxes, net of federal tax benefit

 

 

669

 

 

 

968

 

 

 

1,785

 

Nondeductible stock compensation expenses

 

 

(241

)

 

 

524

 

 

 

(21

)

Permanent items

 

 

292

 

 

 

314

 

 

 

261

 

Change in valuation allowances

 

 

(140

)

 

 

1,173

 

 

 

(50

)

162(m) limitation

 

 

12

 

 

 

14

 

 

 

119

 

Impact of changing rates on deferred tax assets

 

 

509

 

 

 

(2,313

)

 

 

484

 

Expired tax attributes

 

 

152

 

 

 

633

 

 

 

111

 

Other

 

 

(132

)

 

 

449

 

 

 

(273

)

Income tax expense

 

$

5,828

 

 

$

9,531

 

 

$

15,706

 

 

The components of the Company's deferred taxes as of September 30, 2021 and 2020 are as follows:

 

 

 

Years Ended September 30,

 

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Net operating loss carryforwards

 

$

121,604

 

 

$

113,402

 

Deferred credits

 

 

899

 

 

 

1,485

 

Other accrued expenses

 

 

2,682

 

 

 

2,842

 

Prepaids and other

 

 

1,969

 

 

 

1,632

 

Warrant liabilities

 

 

5,018

 

 

 

—

 

State alternative minimum tax

 

 

1

 

 

 

1

 

Other reserves and estimated losses

 

 

729

 

 

 

641

 

Operating lease liabilities

 

 

15,226

 

 

 

24,263

 

Deferred revenue

 

 

1,439

 

 

 

—

 

Gross deferred tax assets

 

$

149,567

 

 

$

144,266

 

Less: valuation allowance

 

 

(2,922

)

 

 

(3,063

)

Total net deferred tax assets

 

$

146,645

 

 

$

141,203

 

 

 

 

 

 

 

 

 

 

Intangible assets

 

 

(1,552

)

 

 

(1,830

)

Operating lease right-of-use assets

 

 

(11,467

)

 

 

(19,210

)

Property and equipment

 

 

(200,105

)

 

 

(184,438

)

Unrealized losses on equity investments

 

 

(3,461

)

 

 

—

 

Total deferred tax liabilities

 

$

(216,585

)

 

$

(205,478

)

Net deferred tax liability

 

$

(69,940

)

 

$

(64,275

)

 

The Company has federal and state income tax NOL carryforwards of $541.3 million and $235.7 million, which expire in fiscal years 2027-2038 and 2021-2041, respectively. Approximately $130.7 million of our federal NOL carryforwards are not subject to expiration. These NOL carryovers are only available to offset 80% of taxable income in years in which they are utilized due to tax law changes as a result of the Tax Cuts and Jobs Act.

The Company believes that it is more likely than not that the benefit from certain state NOL carryforwards will not be realized. In recognition of this risk, the Company has provided a valuation allowance of $2.9 million as of September 30, 2021 and $3.1 million as of September 30, 2020 on the deferred tax assets related to these state NOL carryforwards. If or when recognized, the tax benefits related to any reversal of the valuation allowance on deferred tax assets will be recognized as a reduction of income tax expense.

The federal and state NOL carryforwards in the income tax returns filed included unrecognized tax benefits. The deferred tax assets recognized for those NOLs are presented net of these unrecognized tax benefits.

Because of the change of ownership provisions of the Tax Reform Act of 1986, the use of a portion of our NOL and tax credit carryforwards may be limited in future periods. Further, a portion of the carryforwards may expire before being applied to reduce future income tax liabilities. The Company determined it had an ownership change in February of 2009.  Based on the study conducted at that time, a portion of the federal NOLs were determined to be limited by IRC Section 382, resulting in the Company writing off a portion of its NOLs at that time. Additionally, the Company’s initial public offering in August of 2018 resulted in a change in ownership under Section 382 of the Internal Revenue Code. The Company completed an update to the analysis of any potential limitation on the use of its net operating losses under Section 382 for the fiscal year ended September 30, 2021. Based on such analysis, the Company does not believe any ownership changes during the review period will further limit its ability to use its current net operating losses to offset future taxable income, if any.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:

 

 

 

Years Ended September 30,

 

 

 

2021

 

 

2020

 

 

2019

 

 

 

(in thousands)

 

Unrecognized tax benefits — October 1

 

$

4,866

 

 

$

4,688

 

 

$

4,688

 

Gross decreases — tax positions in prior period

 

 

—

 

 

 

—

 

 

 

—

 

Gross increases —  tax positions in prior period

 

 

—

 

 

 

178

 

 

 

—

 

Unrecognized tax benefits — September 30

 

$

4,866

 

 

$

4,866

 

 

$

4,688

 

 

The Company’s unrecognized tax benefits of $4.9 million, $4.9 million and $4.7 million as of September 30, 2021, 2020 and 2019, respectively, is included as an offset to the net deferred tax asset balance. If recognized, the balance of the uncertain tax benefits would impact the effective tax rate.

We recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense. We have not recorded accrued penalties or interest related to the unrecognized tax benefits noted above as the amounts would result in an adjustment to NOL carryforwards.

We are subject to taxation in the United States and various states.  As of September 30, 2021, the Company is no longer subject to U.S. federal or state examinations by taxing authorities for fiscal years prior to 2001.