Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

9. Income Taxes

The provision for income taxes consists of the following:

	Year Ended December 31,
	2020		2019			2018
	(In thousands)
Current:
Federal	$	30,215	$	28,928		$	31,617
State and local		19,130		7,686			5,928
Foreign		15,538		13,234			8,862
Total current provision		64,883		49,848			46,407
Deferred:
Federal		7,474		2,579			(1,416	)
State and local		1,439		403			(272	)
Foreign		1,186		(308	)		515
Total deferred provision		10,099		2,674			(1,173	)
Provision for income taxes	$	74,982	$	52,522		$	45,234

Pre-tax income from U.S. operations was $288.3 million, $190.4 million and $168.5 million for the years ended December 31, 2020, 2019 and 2018, respectively. Pre-tax income from foreign operations was $86.1 million, $67.0 million and $49.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The difference between the Company’s reported provision for income taxes and the U.S. federal statutory rate of 21% is as follows:

	Year Ended December 31,
	2020				2019				2018
U.S. federal tax at statutory rate		21.0		%		21.0		%		21.0		%
State and local taxes - net of federal benefit		4.4				2.5				2.0
Credits and deductions related to research activities		(0.3	)			(0.3	)			(0.3	)
Foreign rate differential benefit		(0.4	)			(0.5	)			(0.5	)
Excess tax benefit from stock-based compensation		(5.4	)			(3.5	)			(2.1	)
Other, net		0.7				1.2				0.6
Provision for income taxes		20.0		%		20.4		%		20.7		%

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

	As of December 31,
	2020			2019
	(In thousands)
Deferred tax assets:
Stock compensation expense	$	3,682		$	4,926
Operating lease liabilities		19,339			20,227
Other		1,968			892
Total deferred tax assets		24,989			26,045
Valuation allowance		—			—
Net deferred tax assets		24,989			26,045
Deferred tax liabilities:
Depreciation and amortization		(9,729	)		(4,085	)
Capitalized software development costs		(7,828	)		(5,306	)
Goodwill and intangible assets		(2,852	)		(1,120	)
Operating lease right-of-use assets		(15,600	)		(16,515	)
Deferred tax (liability) asset, net	$	(11,020	)	$	(981	)

The Company or one of its subsidiaries files U.S. federal, state and foreign income tax returns. The Company is currently under a New York State income tax examination for tax years 2010 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 New York City and State, the Company is no longer subject to tax examinations by tax authorities for years prior to 2017.

A reconciliation of the unrecognized tax benefits is as follows:

	Year Ended December 31,
	2020		2019		2018
	(In thousands)
Balance at beginning of year	$	6,831	$	4,718	$	2,650
Additions attributable to state and local tax apportionment		9,486		2,113		2,068
Balance at end of year	$	16,317	$	6,831	$	4,718

As of December 31, 2020, the Company recorded $16.3 million of 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 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, 2020, 2019 and 2018, the Company recognized $3.7 million, $0.6 million and $0.4 million, respectively, in penalties and interest. The Company had $4.9 million and $1.2 million accrued for the payment of interest and penalties at December 31, 2020 and 2019, respectively.