Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

9. Income Taxes

The provision for income taxes consists of the following:

	Year Ended December 31,
	2022			2021		2020
	(In thousands)
Current:
Federal	$	52,865		$	36,661	$	30,215
State and local		20,716			17,238		19,130
Foreign		21,030			19,018		15,538
Total current provision		94,611			72,917		64,883
Deferred:
Federal		(5,830	)		2,249		7,474
State and local		(1,350	)		778		1,439
Foreign		633			91		1,186
Total deferred provision		(6,547	)		3,118		10,099
Provision for income taxes	$	88,064		$	76,035	$	74,982

Pre-tax income from U.S. operations was $236.4 million, $234.6 million and $288.3 million for the years ended December 31, 2022, 2021 and 2020, respectively. Pre-tax income from foreign operations was $101.9 million, $99.3 million and $86.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The difference between the U.S. federal statutory tax rate of 21% and the Company's effective tax rate is as follows:

	Year Ended December 31,
	2022				2021				2020
U.S. federal statutory tax rate		21.0		%		21.0		%		21.0		%
State and local taxes - net of federal benefit		4.6				4.4				4.4
Credits and deductions related to research activities		(0.4	)			(0.4	)			(0.3	)
Foreign rate differential benefit		(0.1	)			(0.2	)			(0.4	)
Excess tax benefit from stock-based compensation		(0.1	)			(2.9	)			(5.4	)
Other, net		1.0				0.9				0.7
Effective tax rate		26.0		%		22.8		%		20.0		%

The following is a summary of the Company’s net deferred tax assets:

	As of December 31,
	2022			2021
	(In thousands)
Deferred tax assets:
Stock compensation expense	$	3,451		$	2,683
Operating lease liabilities		17,842			18,688
Deferred Compensation		2,425			2,876
Other		1,774			128
Total deferred tax assets		25,492			24,375
Valuation allowance		—			—
Net deferred tax assets		25,492			24,375
Deferred tax liabilities:
Depreciation		(9,956	)		(9,847	)
Capitalized software development costs		(3,923	)		(9,417	)
Goodwill and intangible assets		(4,829	)		(4,311	)
Operating lease right-of-use assets		(14,176	)		(14,940	)
Deferred tax (liability) asset, net	$	(7,392	)	$	(14,140	)

The Company or one of its subsidiaries files U.S. federal, state and foreign income tax returns. During the year ended December 31, 2022, the Company's provision for income taxes included $3.2 million of expense related to a settlement with New York State to resolve the 2010 to 2014 audits. The Company is currently under a New York State income tax examination for tax years 2015 through 2017 and a New York City income tax examination for the tax years 2016 through 2018. At this time, the Company cannot estimate when the examinations will conclude or the impact such examinations will have on the Company’s Consolidated Financial Statements, if any. Generally, other than the New York City and New York State audits, the Company is no longer subject to tax examinations by tax authorities for years prior to 2019.

A reconciliation of the unrecognized tax benefits is as follows:

	Year Ended December 31,
	2022			2021			2020
	(In thousands)
Balance at beginning of year	$	15,089		$	16,317		$	6,831
Increases based on tax positions related to the current period		—			—			—
Increases based on tax positions related to prior periods		160			—			9,486
(Decreases) based on tax positions related to prior periods		—			(1,228	)		—
(Decreases) related to cash settlements with taxing authorities		(5,414	)		—			—
Balance at end of year	$	9,835		$	15,089		$	16,317

As of December 31, 2022, the Company recorded $9.8 million of net unrecognized tax benefits which, if recognized, would affect the Company’s effective tax rate. Due to the uncertainty related to the timing and potential outcome of the audits, the Company cannot reasonably estimate the amount of the unrecognized tax benefit that could be adjusted in the next 12 months. During the years ended December 31, 2022, 2021 and 2020, the Company recognized gross expenses of $5.8 million, $3.3 million and $3.7 million, respectively, in penalties and interest. The Company had $7.9 million and $8.3 million accrued for the payment of interest and penalties at December 31, 2022 and 2021, respectively.

The Company will recognize any U.S. income tax expense the Company may incur on global intangible low-taxed income as income tax expense in the period in which the tax is incurred.