Income Taxes

12 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

15) Income Taxes

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. The CARES Act allows employers to defer the payment of the employer's portion of Social Security taxes for period beginning March 27, 2020 and ending December 31, 2020 to years 2021 and 2022. The company elected to defer the payment of its portion of Social Security taxes through September 30, 2023 of $5.2 million and recorded a related deferred tax asset of $1.5 million at September 30, 2023. No amount is deferred as of September 30, 2024.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted into law. The Tax Reform Act allows for the full depreciation, in the year acquired, for certain fixed assets purchased between September 28, 2017 and December 31, 2023.

Income tax expense is comprised of the following for the indicated periods (in thousands):

	Years Ended September 30,
	2024			2023			2022
Current:
Federal	$	11,964		$	9,902		$	11,900
State		5,356			4,583			5,019
Deferred
Federal		(2,719	)		(843	)		(2,563	)
State		(1,270	)		342			(618	)
	$	13,331		$	13,984		$	13,738

The provision for income taxes differs from income taxes computed at the Federal statutory rate as a result of the following (in thousands):

	Years Ended September 30,
	2024			2023		2022
Income from continuing operations before taxes	$	48,554		$	45,929	$	49,026
Provision for income taxes:
Tax at Federal statutory rate	$	10,196		$	9,645	$	10,295
State taxes net of federal benefit		3,145			3,401		3,251
Permanent differences		286			520		249
Expiration of State NOL		2,160			—		—
Change in valuation allowance		(2,328	)		252		208
Other		(128	)		166		(265	)
	$	13,331		$	13,984	$	13,738

The components of the net deferred taxes for the years ended September 30, 2024 and September 30, 2023 using current tax rates are as follows (in thousands):

	September 30,
	2024			2023
Deferred tax assets:
Operating lease liabilities	$	26,534		$	27,473
Net operating loss carryforwards		2,516			5,178
Vacation accrual		2,785			2,775
Pension accrual		3,507			3,696
Allowance for bad debts		1,687			2,285
Insurance accrual		1,628			1,870
Inventory capitalization		—			955
Fair value of derivative instruments		4,261			—
Other, net		350			198
Total deferred tax assets		43,268			44,430
Valuation allowance		(2,109	)		(4,437	)
Net deferred tax assets	$	41,159		$	39,993
Deferred tax liabilities:
Operating lease right-of-use assets	$	25,257		$	26,025
Property and equipment		14,502			14,937
Intangibles		20,152			19,897
Fair value of derivative instruments		—			1,270
Other, net		3,170			3,635
Total deferred tax liabilities	$	63,081		$	65,764
Net deferred taxes	$	(21,922	)	$	(25,771	)

In order to fully realize the net deferred tax assets, the Company’s corporate subsidiaries will need to generate future taxable income. A valuation allowance is recognized if, based on the weight of available evidence including historical tax losses, it is more likely than not that some or all of deferred tax assets will not be realized. The net change in the total valuation allowance for the fiscal year ended September 30, 2024 was $(2.3) million. The net change in the total valuation allowance for the fiscal year ended September 30, 2023 was $0.3 million. Based upon a review of a number of factors and all available evidence, including recent historical operating performance, the expectation of sustainable earnings, and the confidence that sufficient positive taxable income will continue in all tax jurisdictions for the foreseeable future, management concludes, it is more likely than not that the Company will realize the full benefit of its deferred tax assets, net of existing valuation allowance related to State net operating loss carryforwards at September 30, 2024.

As of January 1, 2024, the Company had State tax effected net operating loss carry forwards (“NOLs”) of approximately $0.6 million after consideration of valuation allowances. The State NOLs, which will expire between 2024 and 2038, are generally available to offset any future taxable income in certain states

At September 30, 2024, we did not have unrecognized income tax benefits.

We file U.S. Federal income tax returns and various state and local returns. A number of years may elapse before an uncertain tax position is audited and finally resolved. For our Federal income tax returns we have four tax years subject to examination. In our major state tax jurisdictions of New York, Connecticut, and Pennsylvania we have four years that are subject to examination. In the state tax jurisdiction of New Jersey we have five tax years that are subject to examination. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, based on our assessment of many factors including past experience and interpretation of tax law, we believe that our provision for income taxes reflect the most probable outcome. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events.