Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note K—Income Taxes

The provision for income taxes for the years ended December 31, 2023, 2022 and 2021, consisted of the following (in thousands):

	Year Ended December 31,
	2023		2022		2021
Current:
Federal	$	108,825	$	137,483	$	137,862
State	38,365		47,032		47,226
Foreign	34,885		40,204		41,464
Deferred:
Federal and state	(16,266)		13,542		(22,515)
Foreign	(372)		775		1,117
	$	165,437	$	239,036	$	205,154

Income before the provision for income taxes for the years ended December 31, 2023, 2022 and 2021, consisted of the following (in thousands):

	Year Ended December 31,
	2023		2022		2021
Domestic	$	485,291	$	780,624	$	676,445
Foreign	91,292		116,331		127,335
	$	576,583	$	896,955	$	803,780

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

	Year Ended December 31,
	2023		2022		2021
Federal U.S. income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal tax benefit	4.7		4.7		4.5
Permanent book/tax differences	0.4		0.3		(0.4)
Compensation book/tax differences	1.3		0.7		0.7
Non-U.S. income taxed at different rates, net of foreign tax credits	2.5		1.7		1.9
Federal tax credits	(0.8)		(1.0)		(1.6)
Tax impact of uncertain tax positions	(0.1)		0.1		0.3
Other, net	(0.3)		(0.9)		(0.9)
Effective tax rate	28.7	%	26.6	%	25.5	%

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

	Year Ended December 31,
	2023		2022		2021
Accrued expenses, deducted for tax when paid	$	(23,456)	$	41,953	$	(32,741)
Internal-use software and capitalized costs	(11,054)		(7,930)		462
Depreciation	(330)		4,608		(2,286)
Unrealized gains (losses) from investments held in employee deferred compensation trusts	19,139		(26,009)		8,167
Other, net	(937)		1,695		5,000
	$	(16,638)	$	14,317	$	(21,398)

The components of the deferred income tax amounts at December 31, 2023 and 2022, were as follows (in thousands):

	December 31,
	2023		2022
Deferred income tax assets
Employee deferred compensation and other benefit obligations	$	162,803	$	137,501
Deferred revenues, foreign royalties and management fees	375		3,528
Credits and net operating loss carryforwards	28,137		24,782
Stock-based compensation	6,318		5,262
Allowance for credit losses	6,825		6,765
Workers’ compensation	3,052		3,207
Operating lease liabilities	48,358		46,145
Other	17,698		17,542
Total deferred income tax assets	273,566		244,732
Deferred income tax liabilities
Amortization of intangible assets	(20,162)		(20,465)
Property and equipment basis differences	(8,612)		(19,756)
Unrealized gains from investments held in employee deferred compensation trusts	(27,131)		(7,992)
Right-of-use assets	(38,837)		(37,618)
Other	(13,258)		(12,104)
Total deferred income tax liabilities	(108,000)		(97,935)
Valuation allowance	(25,772)		(23,571)
Total deferred income tax assets, net	$	139,794	$	123,226

Credits and net operating loss carryforwards include tax-effected net operating losses in foreign countries of $26.5 million that expire in 2024 and later, and foreign tax credits of $1.6 million that expire in 2029 and later. Valuation allowances of $24.1 million have been maintained against net operating loss carryforwards and other deferred items in foreign countries. In addition, a valuation allowance of $1.6 million has been maintained against the foreign tax credits.

As of December 31, 2023, the Company’s consolidated financial statements provide for any related U.S. tax liability on earnings of international subsidiaries that may be repatriated.

The following table reconciles the total amounts of gross unrecognized tax benefits from January 1, 2021, through December 31, 2023 (in thousands): 

	2023		2022		2021
Balance at beginning of period	$	12,260	$	11,264	$	9,785
Gross increases—tax positions in prior years	27		1,528		3
Gross decreases—tax positions in prior years	0		(7)		0
Gross increases—tax positions in current year	769		1,533		3,370
Lapse of statute of limitations	(1,923)		(2,058)		(1,894)
Balance at end of period	$	11,133	$	12,260	$	11,264

The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $11.1 million, $12.3 million and $11.3 million for 2023, 2022 and 2021, 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, 2023, is $1.0 million, including a $0.4 million increase recorded in income tax expense during the year. The total amount of interest and penalties accrued as of December 31, 2022, was $0.6 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, 2021, was $0.4 million, including a $0.1 million decrease recorded in income tax expense during the year.

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, Brazil, Canada, Germany and the United Kingdom. For U.S. federal income tax, the Company remains subject to examination for 2020 and subsequent years. For major U.S. states, with few exceptions, the Company remains subject to examination for 2019 and subsequent years. Generally, for foreign countries, the Company remains subject to examination for 2016 and subsequent years.