Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for income taxes for the years ended December 31, 2020, 2019 and 2018, consisted of the following (in thousands):

	Year Ended December 31,
	2020		2019		2018
Current:
Federal	$	79,926	$	107,699	$	99,830
State	27,401		39,028		38,356
Foreign	20,018		33,227		35,007
Deferred:
Federal and state	(9,089)		(9,959)		(15,849)
Foreign	(2,650)		1,087		(30)
	$	115,606	$	171,082	$	157,314

Income before the provision for income taxes for the years ended December 31, 2020, 2019 and 2018, consisted of the following (in thousands):

	Year Ended December 31,
	2020		2019		2018
Domestic	$	378,876	$	545,695	$	485,489
Foreign	43,006		79,820		106,113
	$	421,882	$	625,515	$	591,602

The income taxes shown above varied from the statutory federal income tax rates for these periods as follows:

	Year Ended December 31,
	2020		2019		2018
Federal U.S. income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal tax benefit	4.9		4.9		4.7
Permanent book/tax differences	0.3		0.5		0.2
Compensation book/tax differences	1.3		0.6		0.4
Non-U.S. income taxed at different rates, net of foreign tax credits	1.7		2.1		2.0
Federal tax credits	(1.5)		(1.4)		(1.7)
Tax impact of uncertain tax positions	0.1		0.2		0.8
Tax effects of TCJA	—		—		0.4
Other, net	(0.4)		(0.5)		(1.2)
Effective tax rate	27.4	%	27.4	%	26.6	%

The deferred portion of the tax (benefit) provision consisted of the following (in thousands):

	Year Ended December 31,
	2020		2019		2018
Accrued expenses, deducted for tax when paid	$	(19,115)	$	(17,797)	$	(21,884)
Capitalized costs for books, deducted for tax	1,904		3,246		(4,832)
Depreciation	6,732		3,526		10,071
Other, net	(1,260)		2,153		766
	$	(11,739)	$	(8,872)	$	(15,879)

The components of the deferred income tax amounts at December 31, 2020 and 2019, were as follows (in thousands):

	December 31,
	2020		2019
Deferred Income Tax Assets
Employee deferred compensation and other benefit obligations	$	102,478	$	105,096
Deferred Payroll Taxes (CARES Act)	27,086		—
Credits and net operating loss carryforwards	30,651		25,130
Stock-based compensation	3,637		7,805
Allowance for credit losses	5,272		7,944
Workers’ compensation	3,774		3,929
Operating lease liabilities	59,249		51,932
Other	13,361		10,256
Total deferred income tax assets	245,508		212,092
Deferred Income Tax Liabilities
Amortization of intangible assets	(24,163)		(22,009)
Property and equipment basis differences	(25,555)		(16,981)
Right-of-use assets	(49,833)		(44,448)
Other	(8,922)		(7,278)
Total deferred income tax liabilities	(108,473)		(90,716)
Valuation allowance	(24,132)		(21,618)
Total deferred income tax assets, net	$	112,903	$	99,758

Credits and net operating loss carryforwards primarily include tax-effected net operating losses in foreign countries of $27.6 million that expire in 2021 and later; and California enterprise zone tax credits of $2.2 million that expire in 2023. Of the $2.2 million of California enterprise zone tax credits, the Company expects that it will utilize $0.7 million of these credits prior to expiration. Valuation allowances of $22.6 million have been maintained against net operating loss carryforwards and other deferred items in foreign countries. In addition, a valuation allowance of $1.5 million has been maintained against California enterprise zone tax credits.

As of December 31, 2020, the Company’s consolidated financial statements provide for any related U.S. tax liability on earnings of foreign subsidiaries that may be repatriated.

The following table reconciles the total amounts of gross unrecognized tax benefits from January 1, 2018 to December 31, 2020 (in thousands): 

	December 31,
	2020		2019		2018
Balance at beginning of period	$	9,354	$	8,418	$	2,886
Gross increases—tax positions in prior years	220		—		3,259
Gross decreases—tax positions in prior years	—		(760)		(8)
Gross increases—tax positions in current year	1,678		1,703		2,284
Settlements	—		(4)		—
Lapse of statute of limitations	(1,467)		(3)		(3)
Balance at end of period	$	9,785	$	9,354	$	8,418

The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $9.8 million, $9.3 million and $8.3 million or the years ended December 31, 2020, 2019 and 2018, respectively.

The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. The total amount of interest and penalties accrued as of December 31, 2020 was $0.5 million, including less than $0.1 million increase recorded in income tax expense during the year. The total amount of interest and penalties accrued as of December 31, 2019 was $0.5 million, including a $0.2 million increase recorded in income tax expense during the year. The total amount of interest and penalties accrued as of December 31, 2018, was $0.3 million.

The Company does not believe it is reasonably possible that the settlement of tax uncertainties will occur within the next twelve months.

The Company’s major income tax jurisdictions are the United States, Australia, Belgium, Canada, France, Germany and the United Kingdom. For U.S. federal income tax, the Company remains subject to examination for 2017 and subsequent years. For major U.S. states, with few exceptions, the Company remains subject to examination for 2016 and subsequent years. Generally, for foreign countries, the Company remains subject to examination for 2013 and subsequent years.