Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

13.Income Taxes

The following table presents the components of our consolidated income tax (benefit) expense for the years ended December 31, 2020, 2019 and 2018:

	Current		Deferred		Total
Year ended December 31, 2020
U.S. Federal	$	—	$	—	$	—
State and local		589	$	13	$	602
Foreign		1,370		4		1,374
	$	1,959	$	17	$	1,976
Year ended December 31, 2019
U.S. Federal	$	—	$	—	$	—
State and local		716	$	104	$	820
Foreign		1,081		(33)		1,048
	$	1,797	$	71	$	1,868
Year ended December 31, 2018
U.S. Federal	$	(12)	$	(12,664)	$	(12,676)
State and local		183	$	(471)	$	(288)
Foreign		731		—		731
	$	902	$	(13,135)	$	(12,233)

The Company’s income tax provision reconciles to the provision at the statutory U.S. federal income tax rate for each year ended December 31, as follows:

	2020			2019			2018
Statutory amount	$	4,662		$	(733)		$	(22,398)
Valuation allowance on foreign tax credits		1,344			1,081			593
State income tax, net of federal benefit		792			991			(1,922)
Permanent differences, other		558			461			1,550
Permanent differences, stock compensation		328			311			(24)
Valuation allowance, other		(5,795)			(166)			10,384
Other		87			(77)			(416)
Consolidated income tax provision	$	1,976		$	1,868		$	(12,233)
Consolidated effective tax rate		8.9	%		(53.5)	%		11.5	%

In the year ended 2020, the Company’s effective tax rate differed from the statutory rate of 21% primarily due to the movement in the valuation allowance for current year activity, state income taxes and the non-deductibility of other permanent items.

In the year ended 2019, the Company’s effective tax rate differed from the statutory rate of 21% primarily due to the recording of an additional valuation allowance to offset net operating loss carryforwards and foreign tax credits generated during the period, foreign taxes, state income taxes and the non-deductibility of certain permanent items.

In the year ended 2018, the Company’s effective tax rate differed from the statutory rate of 21% primarily due to recording an $11.0 million, or $0.39 per share, valuation allowance against the Company’s net deferred tax assets, including net operating losses and foreign tax credits. The Company also recorded tax expense of $1.2 million related to the $69.5 million goodwill impairment. Additionally, the Company recorded tax expense related to permanent differences from meals and entertainment.

Deferred Taxes

The Company’s deferred tax assets and liabilities are as follows:

	Long Term
	As of December 31,
	2020		2019
Assets related to:
Accrued liabilities	$	1,058	$	1,030
Intangible assets		2,818		3,020
Net operating loss carryforward		10,259		15,246
Stock-based compensation		377		586
Foreign tax credits		3,782		2,570
Goodwill		6,199		7,232
Leases		10,235		9,038
Other		1,518		1,347
Total gross deferred tax assets		36,246		40,069
Less valuation allowance		(12,493)		(16,960)
Total net deferred tax assets		23,753		23,109
Liabilities related to:
Depreciation and amortization		(23,308)		(22,634)
Other		(582)		(595)
Total deferred tax liabilities		(23,890)		(23,229)
Net deferred tax liabilities	$	(137)	$	(120)

The Company has net operating loss carryforwards for federal income tax purposes of $23.1 million as of December 31, 2020, which are available to reduce future taxable income. The Company’s federal net operating losses arose after the 2017 tax year and can be carried forward for an indefinite period of time but are limited to offset 80% of taxable income in any given year. The Company has state net operating losses of $132.6 million that expire beginning in 2027.  A portion of the state losses that arose after the 2017 tax year may be carried forward indefinitely.  Additionally, the Company has foreign tax credits of $3.8 million that can be carried forward for up to ten years.  The Company has foreign tax credits that will expire next year.

The Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to realize the existing deferred tax assets. The Company considers the scheduled reversal of deferred tax liabilities, available carryback periods, and tax-planning strategies in making this assessment. According to ASC subtopic 740-10, the Company’s three-year cumulative loss is a significant piece of objective evidence. This objective evidence is weighed more heavily than the Company’s subjective positive evidence such as our estimated future taxable income and growth. Therefore, as of December 31, 2020, the Company continues to maintain a valuation allowance of $12.5 million. This valuation allowance decreased by $4.5 million during the year ended December 31, 2020 primarily related to the utilization of net operating losses to offset income during the current period.  

Uncertain Tax Benefits

The Company and its subsidiaries file consolidated federal income tax returns in the United States and also file in various states and foreign jurisdictions. With few exceptions, the Company remains subject to federal and state income tax examinations for the years of 2013-2020. As of December 31, 2020, the Company has recorded unrecognized tax benefits of $1.6 million for any uncertain tax positions. The Company does not expect that unrecognized tax benefits as of December 31, 2020 for certain federal income tax matters will significantly change over the next 12 months. The final outcome of these uncertain tax positions is not yet determinable.

The change in the total gross unrecognized tax benefits and prior year audit resolutions of the Company during the years ended December 31, 2020 and 2019 are reconciled in the table below:

	2020		2019
Balances at beginning of the year	$	1,614	$	1,614
Additions based on tax position related to current year		—		—
Additions based on tax positions related to prior years		—		—
Reductions based on tax positions related to current year		—		—
Reductions based on tax positions related to prior years		—		—
Settlements with tax authorities		—		—
Lapse of statute of limitations		—		—
Balance at the end of year	$	1,614	$	1,614

The Company’s policy is to recognize interest and penalties related to any unrecognized tax liabilities as additional tax expense. No interest or penalties have been accrued at December 31, 2020, 2019 and 2018. The Company believes it has appropriate and adequate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter. Although the Company believes its recorded assets and liabilities are reasonable, tax regulations are subject to interpretation and tax litigation is inherently uncertain; therefore the Company’s assessments can involve both a series of complex judgments about future events and rely heavily on estimates and assumptions. Although the Company believes that the estimates and assumptions supporting its assessments are reasonable, the final determination of tax audit settlements and any related litigation could be materially different from that which is reflected in historical income tax provisions and recorded assets and liabilities. If the Company were to settle an audit or a matter under litigation, it could have a material effect on the income tax provision, net income, or cash flows in the period or periods for which that determination is made. Any accruals for tax contingencies are provided for in accordance with U.S. GAAP.

The Company does not believe that its tax positions will significantly change due to any settlement and/or expiration of statutes of limitations prior to December 31, 2021.