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Income Taxes
 12 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

13.

Income Taxes

The provision for income taxes consists of the following:

 

 

 

Years Ended September 30,

 

 

 

2022

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

—

 

 

$

(39

)

 

$

—

 

State

 

 

231

 

 

 

202

 

 

 

297

 

 

 

$

231

 

 

$

163

 

 

$

297

 

Deferred

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

(47,879

)

 

 

4,494

 

 

 

8,404

 

State

 

 

(4,342

)

 

 

1,171

 

 

 

830

 

 

 

$

(52,221

)

 

$

5,665

 

 

$

9,234

 

(Benefit) provision for income taxes

 

$

(51,990

)

 

$

5,828

 

 

$

9,531

 

 

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

 

 

 

Years Ended September 30,

 

 

 

2022

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Income tax (benefit) provision at federal statutory rate

 

$

(49,280

)

 

$

4,707

 

 

$

7,769

 

(Reduction) increase in income taxes resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

State taxes, net of federal tax benefit

 

 

(3,953

)

 

 

669

 

 

 

968

 

Nondeductible stock compensation expenses

 

 

251

 

 

 

(241

)

 

 

524

 

Permanent items

 

 

206

 

 

 

292

 

 

 

314

 

Change in valuation allowances

 

 

(22

)

 

 

(140

)

 

 

1,173

 

162(m) limitation

 

 

11

 

 

 

12

 

 

 

14

 

Impact of changing rates on deferred tax assets

 

 

(247

)

 

 

509

 

 

 

(2,313

)

Expired tax attributes

 

 

964

 

 

 

152

 

 

 

633

 

Other

 

 

80

 

 

 

(132

)

 

 

449

 

Income tax (benefit) provision

 

$

(51,990

)

 

$

5,828

 

 

$

9,531

 

 

 

The components of the Company's deferred taxes as of September 30, 2022 and 2021 are as follows:

 

 

 

Years Ended September 30,

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

Net operating loss carryforwards

 

$

131,897

 

 

$

121,604

 

Deferred credits

 

 

703

 

 

 

899

 

Other accrued expenses

 

 

1,769

 

 

 

2,682

 

Prepaids and other

 

 

1,175

 

 

 

1,969

 

Warrant liabilities

 

 

5,725

 

 

 

5,018

 

State alternative minimum tax

 

 

1

 

 

 

1

 

Other reserves and estimated losses

 

 

873

 

 

 

729

 

Operating lease liabilities

 

 

8,012

 

 

 

15,226

 

Deferred revenue

 

 

5,506

 

 

 

1,439

 

Gross deferred tax assets

 

$

155,661

 

 

$

149,567

 

Less: valuation allowance

 

 

(2,901

)

 

 

(2,922

)

Total net deferred tax assets

 

$

152,760

 

 

$

146,645

 

 

 

 

 

 

 

 

 

 

Intangible assets

 

 

(877

)

 

 

(1,552

)

Operating lease right-of-use assets

 

 

(2,055

)

 

 

(11,467

)

Property and equipment

 

 

(166,586

)

 

 

(200,105

)

Unrealized gain on equity investments

 

 

(961

)

 

 

(3,461

)

Total deferred tax liabilities

 

$

(170,479

)

 

$

(216,585

)

Net deferred tax liability

 

$

(17,719

)

 

$

(69,940

)

 

The Company has federal and state income tax net operating losses (“NOL”) carryforwards of $591.4 million and $247.0 million, which expire in fiscal years 2027-2038 and 2022-2042, respectively. Approximately $180.9 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, 2022 and $2.9 million as of September 30, 2021 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, 2022. 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,

 

 

 

2022

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Unrecognized tax benefits — October 1

 

$

4,866

 

 

$

4,866

 

 

$

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

 

 

$

4,866

 

 

 

The Company’s unrecognized tax benefits of $4.9 million, $4.9 million and $4.9 million as of September 30, 2022, 2021, and 2020, 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, 2022, the Company is no longer subject to U.S. federal or state examinations by taxing authorities for fiscal years prior to 2002.