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

Note 12 – Income Tax

The income tax provision for continuing operations is made up of the following components:

 

2022

 

 

2021

 

 

2020

 

(In thousands)

(52 Weeks)

 

 

(52 Weeks)

 

 

(53 Weeks)

 

Current income tax expense:

 

 

 

 

 

 

 

 

 

 

 

Federal

$

 

8,585

 

 

$

 

5,436

 

 

$

 

1,844

 

State

 

 

2,397

 

 

 

 

1,867

 

 

 

 

5,149

 

Total current income tax expense

 

 

10,982

 

 

 

 

7,303

 

 

 

 

6,993

 

Deferred income tax expense (benefit):

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

46

 

 

 

 

14,877

 

 

 

 

5,637

 

State

 

 

1,369

 

 

 

 

2,726

 

 

 

 

(3,180

)

Total deferred income tax expense

 

 

1,415

 

 

 

 

17,603

 

 

 

 

2,457

 

Total income tax expense

$

 

12,397

 

 

$

 

24,906

 

 

$

 

9,450

 

A reconciliation of the statutory federal rate to the effective rate is as follows:

 

2022

 

2021

 

2020

 

(52 Weeks)

 

(52 Weeks)

 

(53 Weeks)

Federal statutory income tax rate

 

21.0

 

%

 

 

21.0

 

%

 

 

21.0

 

%

Stock compensation

 

(2.8

)

 

 

 

0.0

 

 

 

 

0.7

 

 

Non-deductible expenses

 

5.5

 

 

 

 

1.7

 

 

 

 

1.9

 

 

Change in tax contingencies

 

(0.1

)

 

 

 

0.0

 

 

 

 

0.9

 

 

Charitable product donations

 

(0.3

)

 

 

 

(0.1

)

 

 

 

(0.2

)

 

Other, net

 

0.1

 

 

 

 

(0.3

)

 

 

 

(1.0

)

 

Federal loss carryback (a)

 

—

 

 

 

 

—

 

 

 

 

(11.9

)

 

State taxes, net of federal income tax benefit

 

6.7

 

 

 

 

3.8

 

 

 

 

1.7

 

 

Tax credits

 

(3.7

)

 

 

 

(0.9

)

 

 

 

(2.0

)

 

Effective income tax rate

 

26.4

 

%

 

 

25.2

 

%

 

 

11.1

 

%
(a)
On March 27, 2020, the U.S. government enacted tax legislation to provide economic stimulus and support businesses and individuals during the COVID-19 pandemic, referred to as the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. In connection with the CARES Act, the Company recorded net discrete income tax benefits of $10.1 million in 2020 associated with the additional deductibility of certain expenses combined with provisions which enable companies to carry back tax losses to years prior to the enactment of the Tax Cuts and Jobs Act (“Tax Reform”), where the federal statutory income tax rate was 35%. As a result of carrying back losses to previous tax years, the Company recorded $0.8 million in expense to reinstate tax contingencies which had previously expired, included in the “Change in tax contingencies” line in the table above.

Deferred tax assets and liabilities resulting from temporary differences as of December 31, 2022 and January 1, 2022 are as follows:

 

December 31,

 

 

January 1,

 

(In thousands)

2022

 

 

2022

 

Deferred tax assets:

 

 

 

 

 

 

 

Employee benefits

$

 

27,387

 

 

$

 

25,358

 

Accrued workers' compensation

 

 

2,126

 

 

 

 

1,943

 

Allowance for credit losses

 

 

1,823

 

 

 

 

1,317

 

Restructuring

 

 

655

 

 

 

 

333

 

Deferred revenue

 

 

1,266

 

 

 

 

2,083

 

Stock warrant

 

 

626

 

 

 

 

1,258

 

Lease liabilities

 

 

82,284

 

 

 

 

85,781

 

Accrued insurance

 

 

985

 

 

 

 

893

 

State net operating loss carryforwards (a)

 

 

5,608

 

 

 

 

6,576

 

All other

 

 

4,433

 

 

 

 

2,338

 

Total deferred tax assets

 

 

127,193

 

 

 

 

127,880

 

Valuation allowances

 

 

(357

)

 

 

 

—

 

Net deferred tax assets

 

 

126,836

 

 

 

 

127,880

 

 

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

 

 

Property and equipment

 

 

48,251

 

 

 

 

47,240

 

Lease assets

 

 

73,986

 

 

 

 

76,589

 

Inventory

 

 

33,290

 

 

 

 

35,382

 

Goodwill

 

 

33,606

 

 

 

 

30,044

 

Intangible assets

 

 

1,195

 

 

 

 

187

 

All other

 

 

2,801

 

 

 

 

2,130

 

Total deferred tax liabilities

 

 

193,129

 

 

 

 

191,572

 

Net deferred tax liability

$

 

66,293

 

 

$

 

63,692

 
(a)
As of December 31, 2022, the Company’s state net operating loss carryforwards in various taxing jurisdictions expire in tax years 2023 through 2042 if not utilized.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(In thousands)

2022

 

 

2021

 

Balance at beginning of year

 $

 

1,220

 

 

 $

 

1,317

 

Gross increases - tax positions taken in prior years

 

 

—

 

 

 

 

84

 

Gross decreases - tax positions taken in prior years

 

 

—

 

 

 

 

(11

)

Lapsed statutes of limitations

 

 

(55

)

 

 

 

(170

)

Balance at end of year

$

 

1,165

 

 

$

 

1,220

 

 

Unrecognized tax benefits of $1.0 million are set to expire prior to December 30, 2023. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. The amount recognized due to a lapse in the statute of limitations that reduced the Company’s effective income tax rate in 2022 and 2021 was immaterial in both years. The amount of unrecognized tax benefits, including interest and penalties, that would reduce the Company’s effective income tax rate if recognized in future periods was $1.0 million as of December 31, 2022.

SpartanNash or its subsidiaries file income tax returns with federal, state and local tax authorities within the United States. With few exceptions, SpartanNash is no longer subject to examinations by U.S. federal tax authorities for fiscal years before the year ended January 3, 2015, and state or local tax authorities for fiscal years before the year ended December 31, 2018.