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INCOME TAXES
 12 Months Ended
Jun. 30, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES
Income before income taxes consists of the following:
Fiscal Years Ended
June 30, 2021June 24, 2020June 26, 2019
Domestic$146.7 $5.0 $168.1 
Foreign(1.5)(0.1)3.7 
Income before income taxes$145.2 $4.9 $171.8 
The Provision (benefit) for income taxes and effective tax rate consists of the following:
Fiscal Years Ended
June 30, 2021June 24, 2020June 26, 2019
Current income tax (benefit) expenses:
Federal$11.6 $(32.9)$63.3 
State14.4 4.8 28.8 
Foreign— 0.0 0.6 
Total current income tax (benefit) expenses26.0 (28.1)92.7 
Deferred income tax (benefit) expenses:
Federal(9.4)8.8 (58.5)
State(3.0)(0.2)(18.0)
Foreign— 0.0 0.7 
Total deferred income tax (benefit) expenses(12.4)8.6 (75.8)
Provision (benefit) for income taxes$13.6 $(19.5)$16.9 
Effective tax rate 9.4 %(398.0)%9.8 %
A reconciliation between the reported Provision (benefit) for income taxes and the amount computed by applying the statutory Federal income tax rate to Income before income taxes is as follows:
Fiscal Years Ended
June 30, 2021June 24, 2020June 26, 2019
Income tax expense at statutory rate$30.5 $1.0 $36.1 
FICA and other tax credits(24.7)(24.8)(28.2)
State income taxes, net of Federal benefit7.8 3.6 8.5 
Stock based compensation tax shortfall (windfall)(2.3)0.5 0.5 
Other2.3 0.2 — 
Provision (benefit) for income taxes$13.6 $(19.5)$16.9 
Our federal statutory tax rate for fiscal 2021, fiscal 2020 and fiscal 2019 was 21.0%.
Deferred Tax and Allowances
The income tax effects of temporary differences that give rise to significant portions of deferred income tax assets and liabilities are as follows:
June 30, 2021June 24, 2020
Deferred income tax assets:
Lease liabilities$305.1 $313.7 
Gift cards17.0 13.7 
Insurance reserves11.5 12.2 
Stock-based compensation10.9 11.0 
Federal credit carryover6.8 7.3 
Net operating losses4.1 3.2 
State credit carryover2.5 2.8 
Restructure charges and impairments1.5 1.4 
Payroll tax deferral13.6 3.2 
Other, net10.6 7.1 
Less: Valuation allowance(6.1)(5.6)
Total deferred income tax assets377.5 370.0 
Deferred income tax liabilities:
Lease assets275.7 275.5 
Goodwill and other amortization22.6 21.6 
Depreciation and capitalized interest on property and equipment11.8 19.8 
Prepaid expenses16.0 14.4 
Other, net0.5 0.5 
Total deferred income tax liabilities326.6 331.8 
Deferred income taxes, net$50.9 $38.2 
As of June 30, 2021, we have deferred tax assets of $4.4 million reflecting the benefit of state loss carryforwards, before federal benefit and valuation allowance, which expire at various dates between fiscal 2026 and fiscal 2041. We have deferred tax assets of $6.8 million of federal and $3.2 million of state tax credits, before federal benefit and valuation allowance, which expire at various dates between fiscal 2024 and fiscal 2035. The recognized deferred tax asset for the state loss carryforwards is $1.6 million and the federal tax credits is $6.8 million. The federal credit carryover is limited by Section 382 of the Internal Revenue Code.
The valuation allowance increased by $0.5 million in fiscal 2021 to recognize certain state net operating loss benefits and state tax credits management believes are not more-likely-than-not to be realized. In assessing whether
a deferred tax asset will be realized, we consider the likelihood of the realization, and the reversal of existing taxable temporary differences, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income, as of June 30, 2021, we believe it is more-likely-than-not that we will realize the benefits of the deferred tax assets, net of the existing valuation allowances.
CARES Act Impact
In the fourth quarter of fiscal 2020, the United States government passed a $2.0 trillion Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) designed primarily to help keep businesses running during and after the pandemic. The CARES Act included provisions for certain deductions and tax credits, filing deadline extensions, filing payment deadlines and making available certain grant money to assist in this pandemic. As of June 30, 2021, this legislation has allowed us to:
•Reduce our payroll tax liability by utilizing employee retention credits to assist with employee payroll costs during the pandemic of $7.9 million in fiscal 2020.
•Amend our 2018 and 2019 U.S. Income Tax Returns in order to claim additional depreciation deductions related to qualified improvement property of $4.6 million. We also were able to include a benefit in our fiscal 2020 U.S. Income Tax Return related to the additional depreciation on qualified improvement property of approximately $2.0 million
•Defer the employer portion of certain payroll taxes, totaling $54.5 million which will be repaid in two equal installments on December 31, 2021, and December 31, 2022
Unrecognized Tax Benefits
A reconciliation of unrecognized tax benefits are as follows:
June 30, 2021June 24, 2020
Balance at beginning of year$3.0 $3.5 
Additions based on tax positions related to the current year0.3 0.3 
Additions based on tax positions related to prior years1.4 — 
Settlements with tax authorities— 0.0 
Expiration of statute of limitations(0.4)(0.8)
Balance at end of year$4.3 $3.0 
The total amount of unrecognized tax benefits, excluding interest and penalties, that would affect income tax expenses if resolved in our favor was $3.4 million and $2.4 million as of June 30, 2021 and June 24, 2020, respectively. We do not expect any material changes to our liability for uncertain tax positions in the next 12 months.
We recognize accrued interest and penalties related to unrecognized tax benefits in Provision (benefit) for income taxes in the Consolidated Statements of Comprehensive Income. As of June 30, 2021, we had $0.4 million ($0.3 million net of a $0.1 million Federal deferred tax benefit) of interest and penalties accrued, compared to $0.3 million ($0.2 million net of a $0.1 million Federal deferred tax benefit) at June 24, 2020.
Our income tax returns are subject to examination by taxing authorities in the jurisdictions in which we operate. The periods subject to examination for our federal return are fiscal 2021 to fiscal 2022, and fiscal 2018 to fiscal 2020 for our Canadian returns. State income tax returns are generally subject to examination for a period of three to five years from date return is filed. We have various state income tax returns in the process of examination or settlements. Our federal returns for fiscal 2021 and 2022 are currently under examination through the Internal Revenue Service: Compliance Assurance Process (CAP) program. There are no unrecorded liabilities associated with these examinations.