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INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The following is a summary of the Company's income tax expense:
Year Ended December 31,
(In Thousands)202320222021
Current Income Tax Expense:
Federal$77,412 $46,579 $50,240 
State12,420 12,155 18,678 
89,832 58,734 68,918 
Deferred Income Tax (Benefit) Expense:
Federal(32,612)(10,696)16,852 
State163 1,497 (1,123)
(32,449)(9,199)15,729 
Income Tax Expense$57,383 $49,535 $84,647 
Significant components of the Company's deferred income tax liabilities and assets are as follows:
December 31,
(In Thousands)20232022
Deferred Income Tax Liabilities:
Property and Equipment$103 $232 
Goodwill and Other Intangibles657 949 
Investment in Partnership131,002 161,499 
Operating Lease Right-of-Use Assets173 271 
Total Deferred Income Tax Liabilities131,935 162,951 
Deferred Income Tax Assets:
Accrued Liabilities9,769 10,420 
Advance Payments38 33 
Operating Lease Liabilities191 382 
Other, Net25,795 23,598 
Total Deferred Income Tax Assets35,793 34,433 
Less: Valuation Allowance(5,715)(5,788)
Net Deferred Income Tax Liabilities$101,857 $134,306 
The Company's effective tax rate differs from the statutory United States Federal income tax rate as follows:
Year Ended December 31,
202320222021
Statutory Rate21.0 %21.0 %21.0 %
Increases (Decreases) in United States Federal Taxes
Resulting From:
State Income Taxes, Net of Federal Income Tax Benefit4.9 5.0 3.8 
Non-deductible Goodwill Impairment— 1.4 — 
Other Permanent Differences0.3 0.6 — 
Deferred Tax Adjustments1.1 0.7 — 
Valuation Allowance— 2.2 — 
Current Uncertain Tax Position Expense1.9 2.2 0.7 
Shortfall in Stock-based Compensation0.4 1.0 — 
Other, Net(0.4)(0.7)0.3 
Effective Tax Rate29.2 %33.4 %25.8 %
At December 31, 2023, the Company had $1.9 million of tax-effected state net operating loss carryforwards and $3.5 million of state tax credit carryforwards, which will both begin to expire in 2024 and 2025, respectively.
The Company files a federal consolidated income tax return in the United States, and the separate legal entities file in various states. With few exceptions, the Company is no longer subject to federal, state and local tax examinations by tax authorities for years before 2020.
Uncertain Tax Positions
The following table summarizes the activity related to the Company's uncertain tax positions:
Year Ended December 31,
(In Thousands)202320222021
Balance at January 1,$46,407 $46,750 $2,748 
Additions Based on Tax Positions Related to the Current Year81 850 44,816 
Additions for Tax Positions of Prior Years— — 21 
Prior Year Reductions— — (1)
Statute Expirations(288)(607)(692)
Settlements— (586)(142)
Balance at December 31,$46,200 $46,407 $46,750 
As of December 31, 2023 and 2022, uncertain tax positions (inclusive of accrued interest) were $55.0 million and $51.1 million, respectively, and are included within accounts payable and accrued expenses in the consolidated balance sheets. The increase is primarily driven by the Company's tax treatment of its settlement with the Federal Trade Commission ("FTC").
In December 2019, Progressive Leasing reached an agreement in principle with the staff of the FTC with respect to a tentative settlement to resolve the FTC inquiry received by the Company in July 2018, under which Progressive Leasing agreed to pay $175.0 million. At the time of the agreement, the Company treated the tentative settlement as a non-deductible regulatory charge for tax purposes and recognized tax expense.
The $175.0 million settlement was finalized and paid to the FTC in 2020. Prior to filing the Company's 2020 income tax return, it was determined there is a reasonable basis for deducting the settlement amount on the return. However, the tax position does not meet the more-likely-than-not recognition standard and no tax benefit has been recognized in the current period. As a result, the Company has reclassified $44.7 million from taxes payable, previously recognized in December 2019, to an uncertain tax position as of September 30, 2021. Additionally, the Company has recognized the accrued interest related to the uncertain tax position as a component of income tax expense in accordance with the Company's accounting policy. As of December 31, 2023 and 2022, the amount of accrued interest related to the FTC settlement was $8.6 million and $4.5 million, respectively. The Company believes, due to the statute of limitations expiration, it is reasonably possible the uncertain tax position related to the FTC settlement, including the accrued interest, could be released within the next 12 months.
As of December 31, 2023 and 2022, the amount of uncertain tax benefits that, if recognized, would affect the effective tax rate is $51.2 million and $48.1 million, respectively, including interest and penalties.
During the years ended December 31, 2023, 2022 and 2021 the Company recognized a net expense of $4.1 million, $3.0 million, and $1.5 million respectively, related to penalties and interest. The Company had $8.8 million and $4.7 million of accrued interest and penalties at December 31, 2023 and 2022, respectively. The Company recognizes potential interest and penalties related to uncertain tax benefits as a component of income tax expense.