Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 12 — Income Taxes

The following table summarizes the provision for income taxes:

	Year Ended December 31,
	2022		2021		2020
	(amounts in thousands)
Current:
Federal	$	3,022	$	9,120	$	28,833
State	2,381		3,766		7,564
	$	5,403	$	12,886	$	36,397
Deferred:
Federal	$	4,305	$	2,118	$	(4,903)
State	744		956		(990)
	$	5,049	$	3,074	$	(5,893)
Tax provision	$	10,452	$	15,960	$	30,504

Deferred income taxes are recorded using the asset and liability method. Deferred tax assets and liabilities are determined based on differences between the financial reporting and income tax basis of assets and liabilities.

Significant components of the Company’s federal and state deferred tax asset and liability balances were as follows:

	Year Ended December 31,
	2022		2021
	(in thousands)
Deferred tax assets:
Allowance for doubtful accounts	$	18,139	$	16,124
Deferred compensation	8,686		9,587
Deferred payroll taxes under the CARES Act	—		6,220
Accrued insurance claims	5,609		6,252
Non-deductible reserves	256		521
Leases	227		247
Other	2,488		1,854
	$	35,405	$	40,805
Deferred tax liabilities:
Expensing of housekeeping supplies	$	(2,510)	$	(3,085)
Amortization of goodwill and intangibles	(2,389)		(2,118)
Depreciation of property and equipment	(1,769)		(1,915)
Other	(399)		(2,152)
	$	(7,067)	$	(9,270)
Net deferred tax assets	$	28,338	$	31,535

Realization of the Company’s deferred tax assets is dependent upon future earnings in specific tax jurisdictions, the timing and amount of which are uncertain. Management assesses the Company’s income tax positions and records tax benefits for all years subject to examination based upon an evaluation of the facts, circumstances, and information available at the reporting dates, which include historical operating results and expectations of future earnings. As such, management believes it is more likely than not that the deferred tax assets recorded will be realized to reduce future income taxes and therefore no valuation allowances are necessary.

The table below provides a reconciliation between the tax expense computed by applying the statutory federal income tax rate to income before income taxes and the provision for income taxes:

	Year Ended December 31,
	2022		2021		2020
	(in thousands)
Income tax expense computed at statutory rate	$	9,467	$	12,983	$	27,129
Increases (decreases) resulting from:
State income taxes, net of federal tax benefit	2,625		3,931		4,985
Federal jobs credits	(2,571)		(3,177)		(3,089)
Tax exempt interest	(308)		(324)		(323)
Share-based compensation	1,250		1,072		1,323
Fines and penalties1	4		1,294		20
Other, net	(15)		181		459
Income tax expense	$	10,452	$	15,960	$	30,504

1.For the year ended December 31, 2020, the Company presented less than $0.1 million of fines and penalties within the Other, net caption. Such amounts have been reclassified to the Fines and penalties caption for comparative purposes.

The Company performs an evaluation each period of its tax positions taken and expected to be taken in tax returns. The evaluation is performed on positions relating to tax years that remain subject to examination by major tax jurisdictions, the earliest of which is the tax year ended December 31, 2017. Based on the evaluation, the Company concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. Therefore, the table reporting on the change in the liability for unrecognized tax benefits during the years ended December 31, 2022 and 2021 is omitted as there is no activity to report in such account for the years ended December 31, 2022 or 2021.