Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

13.Income Taxes

The following table presents the components of our consolidated income tax expense for the years ended December 31, 2022, 2021 and 2020:

	Current		Deferred		Total
Year ended December 31, 2022
U.S. Federal	$	—	$	—	$	—
State and local		449	$	(29)		420
Foreign		(34)		43		9
	$	415	$	14	$	429
Year ended December 31, 2021
U.S. Federal	$	—	$	—	$	—
State and local		243		(20)		223
Foreign		268		11		279
	$	511	$	(9)	$	502
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

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:

	2022			2021			2020
Statutory amount	$	(2,558)		$	(2,952)		$	4,662
Valuation allowance on foreign tax credits		(136)			186			1,344
State income tax, net of federal benefit		251			44			792
Permanent differences, other		185			303			558
Permanent differences, stock compensation		217			(262)			328
Valuation allowance, other		2,251			3,108			(5,795)
Other		219			75			87
Consolidated income tax provision	$	429		$	502		$	1,976
Consolidated effective tax rate		(3.5)	%		(3.6)	%		8.9	%

In the year ended 2022, the Company’s effective tax rate differed from the statutory federal rate of 21% primarily due to the tax impact from the valuation allowance for current year activity, state income taxes and the non-deductibility of other permanent items.

In the year ended 2021, the Company’s effective tax rate differed from the statutory federal rate of 21% primarily due to the valuation allowance related to the current year net loss.  

In the year ended 2020, the Company’s effective tax rate differed from the statutory federal 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.

Deferred Taxes

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

	Long Term
	As of December 31,
	2022		2021
Assets related to:
Accrued liabilities	$	1,320	$	1,568
Intangible assets		2,161		2,510
Net operating loss carryforward		16,699		11,966
Stock-based compensation		276		326
Foreign tax credits		3,831		3,968
Goodwill		4,328		5,249
Leases		9,018		8,772
Other		2,301		2,040
Total gross deferred tax assets		39,934		36,399
Less valuation allowance		(17,557)		(15,443)
Total net deferred tax assets		22,377		20,956
Liabilities related to:
Depreciation and amortization		(22,362)		(20,700)
Other		(156)		(384)
Total deferred tax liabilities		(22,518)		(21,084)
Net deferred tax liabilities	$	(141)	$	(128)

The Company has net operating loss carryforwards for federal income tax purposes of $51.3 million as of December 31, 2022, 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 $132.0 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 history of losses 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, 2022, the Company continues to maintain a valuation allowance of $17.6 million. This valuation allowance increased by $2.2 million during the year ended December 31, 2022 primarily to offset net operating losses generated 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 2013-2021. As of December 31, 2022, 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, 2022 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, 2022 and 2021 are reconciled in the table below:

	2022		2021
Balance 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 end of the 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, 2022, 2021 and 2020. 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, 2023.