INCOME TAXES

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The Company files income tax returns for U.S. federal and various U.S. states, as well as various foreign jurisdictions. The liabilities for unrecognized tax benefits are carried in Other long-term liabilities on the consolidated balance sheets because the payment of cash is not anticipated within one year of the balance sheet date.

The components of income before income taxes consisted of the following (in thousands):

	Year Ended December 31,
	2023		2022		2021
Domestic	$	312,870	$	260,564	$	187,535
Foreign jurisdictions	22,812		22,296		14,317
Income before income taxes	$	335,682	$	282,860	$	201,852

Income tax provision consisted of the following (in thousands):

	Current		Deferred		Total
Year ended December 31, 2023
U.S. Federal	$	64,381	$	(24,117)	$	40,264
U.S. state and local	8,848		(1,869)		6,979
Foreign jurisdictions	4,622		1,007		5,629
	$	77,851	$	(24,979)	$	52,872
Year ended December 31, 2022
U.S. Federal	$	49,991	$	(19,705)	$	30,286
U.S. state and local	7,160		(3,297)		3,863
Foreign jurisdictions	3,330		13		3,343
	$	60,481	$	(22,989)	$	37,492
Year ended December 31, 2021
U.S. Federal	$	46,138	$	(32,677)	$	13,461
U.S. state and local	8,405		(3,622)		4,783
Foreign jurisdictions	2,580		(820)		1,760
	$	57,123	$	(37,119)	$	20,004

The difference between the statutory rate for federal income tax and the effective income tax rate was as follows (in thousands):

	Year Ended December 31,
	2023				2022				2021
Income tax expense calculated at the federal statutory rate	$	70,493	21.0	%	$	59,401	21.0	%	$	42,389	21.0	%
Effect of:
State and local taxes, net of federal benefit	5,146		1.5		4,235		1.5		3,698		1.8
Tax on foreign earnings, net of tax credits and deductions	(1,305)		(0.4)		(3,277)		(1.2)		(3,113)		(1.5)
Deferred credit	(596)		(0.2)		(621)		(0.2)		(667)		(0.3)
Permanent items:
Stock-based awards	(14,692)		(4.4)		(18,738)		(6.6)		(19,042)		(9.5)
Deduction for FDII	(9,358)		(2.8)		(4,983)		(1.8)		(4,860)		(2.4)
Other	63		—		595		0.2		(364)		(0.2)
State/Local tax credits	(2,536)		(0.8)		(1,294)		(0.5)		(976)		(0.5)
Change in liability for uncertain tax positions	4,784		1.4		1,560		0.6		2,349		1.2
Other	873		0.5		614		0.3		590		0.3
	$	52,872	15.8	%	$	37,492	13.3	%	$	20,004	9.9	%

As of December 31, 2023, the Company’s accounting position is that unremitted foreign earnings are indefinitely reinvested. Therefore, the Company has not recorded deferred foreign withholding taxes on the unremitted foreign earnings and it is not practicable to determine the amount of the additional taxes that would result if these earnings were repatriated. The undistributed earnings of foreign subsidiaries was approximately $59.2 million for the year ended December 31, 2023.

Components of the Company’s net deferred tax asset (liability) included in the consolidated balance sheets consisted of the following at December 31 (in thousands):

	2023		2022
Deferred tax assets:
Accrued liabilities	$	27,101	$	24,483
Depreciation and amortization	1,258		1,269
Foreign operating loss carryforward	35		30
Advanced billings	98,438		67,789
Other	2,474		1,005
Valuation allowance	(1,826)		(430)
Total deferred tax assets	127,480		94,146
Deferred tax liabilities:
Depreciation and amortization	(52,443)		(44,731)
Prepaid expenses	(1,581)		(1,263)
Other	(1,425)		(1,139)
Total deferred tax liabilities	(55,449)		(47,133)
Net deferred tax asset (liability)	$	72,031	$	47,013

The Company has foreign operating loss carryforwards for which a deferred tax asset of less than $0.1 million has been established as of December 31, 2023. The Company does not have a valuation allowance against this deferred tax asset as of December 31, 2023 based upon its assessment that it is more likely than not that this amount will be realized. The ultimate realization of this tax benefit is dependent upon the generation of sufficient operating income in the respective tax jurisdictions. The foreign net operating loss carryforwards will expire in 2027 and 2028 if not utilized.

Annual activity related to the Company’s valuation allowance is as follows (in thousands):

	Year Ended December 31,
	2023		2022		2021
Beginning Balance	$	430	$	850	$	578
Additions charged to expense	1,582		15		305
Reductions from utilization, reassessments and expirations	(186)		(493)		(33)
Remeasurement due to effect of tax reform	—		58		—
Ending Balance	$	1,826	$	430	$	850

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows (in thousands):

	Year Ended December 31,
	2023		2022		2021
Beginning Balance	$	15,947	$	13,784	$	10,691
Increases in tax positions for prior years	—		171		1,253
Decreases in tax positions for prior years	(97)		(490)		(223)
Increases in tax positions for current year	5,382		4,871		3,098
Lapse in statute of limitations	(852)		(2,389)		(1,035)
Ending Balance	$	20,380	$	15,947	$	13,784

Interest and penalties associated with uncertain tax positions are recognized as components of Income tax provision in the consolidated statements of operations. There was no material change to tax-related interest and penalties during the years

ended December 31, 2023, 2022 and 2021. As of December 31, 2023 and 2022, respectively, the Company has a liability for interest and penalties of $5.2 million and $3.8 million that is associated with related tax liabilities of $16.2 million and $12.7 million for uncertain tax positions.

The Company operates in various foreign, state and local jurisdictions. The number of tax years for which the statute of limitations remains open for foreign, state and local jurisdictions varies by jurisdiction and is approximately four years (2019 through 2023). For federal tax purposes, the Company’s open tax years are 2020 through 2023.