Income Taxes

9 Months Ended

Sep. 30, 2021

Income Taxes

Income Taxes

11. Income Taxes

During the three months ended September 30, 2021, the Company recognized an income tax expense of $2,887 on pre-tax income of $9,513, compared to income tax expense of $1,402 on pre-tax income of $7,211 for the prior year period. During the nine months ended September 30, 2021, the Company recognized income tax expense of $6,769 on pre-tax income of $22,037, representing an effective income tax rate of 30.7%.  For the nine months ended September 30, 2020, the Company recognized an income tax benefit of $2,178 on pre-tax income from continuing operations of $6,696, representing an effective income tax rate of (32.5%).

For the nine months ended September 30, 2021 and 2020, the effective tax rate differs from the U.S. federal statutory income tax rate as follows:

	September 30,
	2021		2020
Tax at federal statutory rate	21.0	%	21.0	%
State taxes, net	6.2		7.4
Valuation allowance	0.0		(18.1)
Permanent items	2.8		7.2
Tax benefit CARES Act	0.0		(54.7)
Other	0.7		4.7
Effective income tax rate	30.7	%	(32.5)	%

During the nine months ended September 30, 2021, the Company received cash income tax refunds of $9,846 related primarily to U.S. federal income taxes for prior tax years, including net operating loss (“NOL”) carrybacks relating to the CARES Act.

In March 2020, the CARES Act was signed into law. The CARES Act allowed companies with NOLs originating in 2018, 2019, or 2020 to carry back those losses for five years and temporarily eliminated the tax law provision that limits the use of NOLs to 80% of taxable income. The CARES Act increased the Internal Revenue Code Section 163(j) interest deduction limit for 2019 and 2020, and allowed for the acceleration of refunds of alternative

minimum tax credits. For the nine months ended September 30, 2020, the Company recorded an estimated tax benefit for certain provisions in the CARES Act including the carryback of losses and the increase to the interest deduction limitation, resulting in a tax rate benefit of 54.7%.

The Company believes that it is reasonably possible that approximately $208 of its unrecognized tax benefits may be recognized within a year as a result of settlement with the taxing authorities. As such, this balance is reflected in “Accrued Expenses” in the Company’s consolidated balance sheet as of September 30, 2021.