12.	INCOME TAXES

Components of the (benefit) provision for income taxes were as follows:

	Year Ended December 31,
	2020			2019
Current:
Federal	$	-		$	-
State		802			115
Total		802			115

Deferred:
Federal		(21,743	)		120
State		(14,118	)		33
Total		(35,861	)		153

Total (benefit) provision	$	(35,059	)	$	268

Effective Tax rate

The reconciliation of the effective tax rate to the U.S. Statutory Federal Income tax rate was:

	Year Ended December 31,
	2020					2019
Income before taxes	$	13,506				$	2,283

Expected tax	$	2,836		21.0	%	$	479		21.0	%
State tax benefit (net of federal)		(10,513	)	-77.8	%		148		6.5
Valuation allowance		(27,420	)	-203.0	%		(428	)	(18.8	)
Other		38		0.2	%		69		3.0
Total	$	(35,059	)	-259.6	%	$	268		11.7	%

Our income tax benefit for the year ended December 31, 2020 was $35.1 million compared to an income tax provision of $0.3 million in the prior year. The 2020 tax benefit primarily relates to a release of the valuation allowance on deferred tax assets. After weighing all the evidence, management determined that it was more likely than not that the deferred tax assets were realizable and, therefore, the valuation allowance was no longer required. As a result, the Company released the full valuation allowance as of December 31, 2020.

Deferred Taxes and Valuation Allowance

The components of the non-current deferred tax assets/(liabilities) were as follows:

	At December 31,
	2020			2019
Gross noncurrent deferred tax assets (liabilities)
Allowance for bad debts	$	7,659		$	5,461
Accrued benefits		1,208			-
Stock-based compensation		317			178
Lease liability		16,369			14,822
Right-of-use asset		(14,759	)		(13,156	)
Depreciation		11,298			10,981
Goodwill		(1,091	)		(766	)
Other intangibles		100			135
Pension plan liabilities		1,137			1,286
Net operating loss carryforwards		13,480			18,261
Gross noncurrent deferred tax assets, net		35,718			37,202
Less valuation allowance		-			(37,355	)
Noncurrent deferred tax assets (liabilities), net	$	35,718		$	(153	)

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets.

As of December 31, 2019, the Company recorded a valuation allowance of $37.4 million against its net deferred tax assets.

As of December 31, 2020, the Company has net operating loss (“NOL”) carryforwards of $43.1 million. Of the $43.1 million NOL carryforwards, $29.3 million will start expiring in 2034 and ending in 2037 if unused.

The net operating losses generated in 2018 and beyond can be carried over indefinitely under the Tax Act. Utilization of the NOL carryforwards may be subject to a substantial limitation due to ownership change limitations that may occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), as well as similar state and foreign provisions. These ownership changes may limit the amount of NOL and tax credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain shareholders or public groups.

As of December 31, 2020 and 2019, the Company no longer has any liability for uncertain tax positions. The Company recognizes accrued interest and penalties related to uncertain tax positions in income tax expense.

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states. The Company is no longer subject to U.S. federal income tax examinations for years before 2017 and, generally, is no longer subject to state and local income tax examinations by tax authorities for years before 2017 with few exceptions.