Income Taxes

12 Months Ended

Jan. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Provision for Income Taxes

The components of the provision for income taxes are as follows for the fiscal years presented (in thousands):

	2020		2019		2018
Current:
Federal	$	185,197	$	87,263	$	94,729
State	42,537		24,139		22,585
Total current provision	227,734		111,402		117,314
Deferred:
Federal	(37,376)		(606)		(3,943)
State	(8,874)		(554)		(1,315)
Total deferred provision	(46,250)		(1,160)		(5,258)
Total provision	$	181,484	$	110,242	$	112,056

The Company’s effective income tax rate differs from the federal statutory rate as follows for the fiscal years presented:

	2020		2019		2018
Federal statutory rate	21.0	%	21.0	%	21.0	%
State tax, net of federal benefit	3.8	%	4.6	%	3.8	%
Other permanent items	0.7	%	1.4	%	1.1	%
Effective income tax rate	25.5	%	27.0	%	25.9	%

Components of deferred tax assets (liabilities) consist of the following as of the end of the fiscal years presented (in thousands):

	2020		2019
Operating lease liabilities	$	718,349	$	756,660
Inventory	29,744		43,499
Employee benefits and withholdings	56,245		38,554
Stock-based compensation	18,123		19,494
Gift cards	16,474		14,044
Deferred revenue currently taxable	1,948		2,450
Other accrued expenses not currently deductible for tax purposes	12,304		6,343
Net operating loss carryforward	527		1,207
Non income-based tax reserves	4,107		3,675
Capital loss carryforward	920		922
Uncertain income tax positions	497		905
Insurance	2,486		2,175
Convertible senior notes	1,382		—
Other	832		1,043
Total deferred tax assets	863,938		890,971
Operating lease assets	(553,997)		(597,553)
Property and equipment	(217,204)		(232,832)
Inventory valuation	(26,298)		(40,049)
Intangibles	(7,880)		(7,518)
Prepaid expenses	(4,338)		(3,928)
Other	(2,746)		(3,866)
Total deferred tax liabilities	(812,463)		(885,746)
Net deferred tax asset	$	51,475	$	5,225

The deferred tax asset from net operating loss carryforwards of $0.5 million represents state net operating losses, which expire in 2034. In 2020, the $51.5 million net deferred tax asset is included within long-term assets on the Consolidated Balance Sheet. In 2019, of the $5.2 million net deferred tax asset, approximately $14.4 million was included within other long-term assets and approximately $9.2 million was included within long-term liabilities.

Under the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), a one-time transition tax resulted in the elimination of the excess of the amount of financial reporting basis over the tax basis in the foreign subsidiaries and subjected $66.6 million of undistributed foreign earnings to tax. The tax owed on the Company’s deemed repatriation of $4.2 million is payable in uneven annual installments through 2025. No additional income taxes have been provided for any remaining undistributed foreign earnings or foreign withholdings and US state taxes not subject to the one-time transition tax, as the Company intends to permanently reinvest the earnings from foreign subsidiaries outside the United States.

Unrecognized Tax Benefits

The following table provides a reconciliation of the Company’s total balance of unrecognized tax benefits, excluding interest and penalties (in thousands):

	2020		2019		2018
Beginning of fiscal year	$	2,786	$	4,318	$	8,047
Increases as a result of tax positions taken in a prior period	35		422		456
Decreases as a result of tax positions taken in a prior period	—		(1,532)		(411)
Decreases as a result of settlements during the current period	(1,380)		(422)		(2,977)
Reductions as a result of a lapse of statute of limitations during the current period	(383)		—		(797)
End of fiscal year	$	1,058	$	2,786	$	4,318

The balance at January 30, 2021 includes $0.8 million of unrecognized tax benefits that would impact our effective tax rate if recognized. The Company recognizes accrued interest and penalties from unrecognized tax benefits in income tax expense.

As of January 30, 2021, the Company’s total liability for uncertain tax positions, including $1.3 million for interest and penalties, was approximately $2.4 million. During fiscal 2020, 2019 and 2018, the Company recorded $0.1 million, $0.3 million and $0.3 million, respectively, for the accrual of interest and penalties in the Consolidated Statements of Income. The Company does not anticipate that changes in its unrecognized tax benefits will have a material impact on the Consolidated Statements of Income during fiscal 2021.

Audits

The Company participates in the Internal Revenue Service (“IRS”) Compliance Assurance Program (“CAP”). As part of CAP, tax years are audited on a contemporaneous basis so that all or most issues are resolved prior to the filing of the tax return. The IRS has completed examinations of 2018 and all prior tax years. The Company is no longer subject to examination in any of its major state jurisdictions for years prior to 2015.