Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.24.0.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
For the years ended December 31, income (loss) from continuing operations before income taxes consisted of the following:
(in thousands) 2023 2022 2021
Income before income taxes
Domestic $ 548,428  $ 465,991  $ 449,985 
Foreign 37,829  32,926  32,500 
Total income from continuing operations before income taxes $ 586,257  $ 498,917  $ 482,485 
For the years ended December 31, the Company’s income tax provision consisted of the following:
2023 2022 2021
(in thousands)
Current:
Federal $ 112,647  $ 92,793  $ 87,888 
State 33,516  26,786  24,131 
Foreign 12,781  9,144  10,480 
Total current tax 158,944  128,723  122,499 
Deferred:
Federal (2,349) (333) 1,735 
State (2,925) 2,011  1,795 
Foreign (2,370) (83) (109)
Total deferred tax (7,644) 1,595  3,421 
Total income tax provision $ 151,300  $ 130,318  $ 125,920 

The following table presents the principal components of the difference between the effective tax rate and the U.S. federal statutory income tax rate for the years ended December 31,:
2023 2022 2021
(in thousands)
Income tax at statutory rate $ 123,114  $ 104,773  $ 101,485 
State income tax expense (net of federal benefit) 24,167  22,750  20,482 
Foreign tax rate differential 1,948  1,907  2,837 
Tax on unremitted earnings 1,408  549  — 
Federal tax credits (1,362) (616) (548)
Permanent items 2,239  445  311 
Other reconciling items (214) 510  1,353 
Total income tax provision $ 151,300  $ 130,318  $ 125,920 
Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. The Company’s deferred tax assets and liabilities as of December 31, 2023 and 2022 are as follows:
2023 2022
(in thousands)
Deferred tax assets:
Employee compensation and benefits $ 15,451  $ 15,547 
Unearned revenues 13,998  13,060 
Insurance reserves 24,152  19,938 
Lease liabilities 90,486  78,389 
Non-amortizable intangible assets 6,883  — 
Other deferred tax assets 14,944  14,771 
Total deferred tax assets 165,914  141,705 
Valuation allowance (6,883) — 
Net deferred tax assets $ 159,031  $ 141,705 
Deferred tax liabilities:
Fixed assets and depreciation $ 12,430  $ 17,999 
Intangible assets 81,194  72,752 
Right of use assets 81,971  72,767 
Other deferred tax liabilities —  549 
Total deferred tax liabilities $ 175,595  $ 164,067 
Net deferred taxes
Deferred tax assets 2,294  1,792 
Deferred tax liabilities (18,858) (24,154)
Net deferred taxes $ (16,564) $ (22,362)
Certain income tax disclosures for prior periods have been restated to conform to current period presentation. Subsequent to the issuance of the Company's 2022 financial statements, management determined that certain deferred tax assets and deferred tax liabilities presented on a net basis as of December 31, 2022 should have been presented as separate deferred tax assets and deferred tax liabilities in the disclosure. As a result, the presentation of deferred tax assets and deferred tax liabilities as of December 31, 2022 have been restated from the amounts previously reported to separately present certain deferred tax assets and deferred tax liabilities.
Deferred tax assets are included in "Other assets" and deferred tax liabilities are included in "Other long-term accrued liabilities" on the balance sheet.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will not be realized. As of December 31, 2023, the Company increased its valuation allowance by approximately $6.9 million related to deferred tax assets on intangible assets held in Australia. The Company does not expect to recognize such deferred tax assets as it expects to continue its operations in Australia for the foreseeable future and the related intangible assets are not amortizable for tax purposes in Australia.
The changes in the Company’s valuation allowance for deferred tax assets are as follows:
(in thousands)
December 31, 2021 $ 192 
Charged to income tax expense — 
Charged to other accounts (192)
December 31, 2022 — 
Charged to income tax expense 962 
Charged to other accounts 5,921 
December 31, 2023 $ 6,883 
As of December 31, 2023, the Company has no net operating loss carryforwards in any federal, state, or foreign jurisdictions. The Company has a $1.4 million foreign tax credit carryforward which if not fully utilized will expire in 2026. The Company also has state tax credit carryforwards of $1.8 million which will expire in 2026 if not fully utilized.
We intend to continue to grow the business in the international markets where we have a presence. As of December 31, 2023, we assert that foreign cash earnings in excess of working capital and cash needed for strategic investments and acquisitions are not intended to be indefinitely reinvested offshore and we have included the tax effects of such current and/or future repatriations, including applicable state taxes and foreign withholding tax of such cash earnings in these financial statements. Any non-cash unremitted earnings in our foreign subsidiaries are considered to be permanently reinvested and deferred taxes have not been provided on these earnings.
The total amount of unrecognized tax benefits as of December 31, 2023 that, if recognized, would affect the effective tax rate is $1.8 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
December 31, 2023 2022 2021
(in thousands)
Unrecognized tax benefits at beginning of year $ 1,394  $ 1,018  $ 844 
Additions for tax positions of prior years 653  376  174 
Reductions for tax positions of prior years (263) —  — 
Unrecognized tax benefits at end of year $ 1,784  $ 1,394  $ 1,018 

As of December 31, 2023, the Company believes it is reasonably possible that the amount of unrecognized tax benefits may decrease by $0.6 million over the next 12 months as it relates to foreign jurisdictions.
The Company’s policy is to record interest and penalties related to income tax matters in income tax expense. Accrued interest and penalties were $0.6 million, $0.2 million and $0.2 million as of December 31, 2023, 2022 and 2021, respectively.
The Company files U.S. federal income tax returns, as well as separate and combined income tax returns in numerous state and foreign jurisdictions. The Company is under examination in certain state jurisdictions for years ranging from 2016 through 2021. The Company regularly assesses the outcomes of both ongoing and future examinations for the current or prior years to ensure the Company’s provision for income taxes is sufficient. The Company recognizes liabilities based on estimates of whether additional taxes will be due and believes its reserves are adequate in relation to any potential assessments. The outcome of any one examination, some of which may conclude during the next 12 months, is not expected to have a material impact on the Company’s financial position or results of operations.