Income Taxes

12 Months Ended

Dec. 31, 2019

Deferred tax assets and liabilities as of December 31 are as follows:


	2020		2019
Deferred income tax assets:	(in thousands)
Allowance for doubtful accounts	$	258	$	262
Accrued expenses	6,353		3,892
Stock-based compensation	126		178
Insurance accruals	14,283		15,054
State net operating loss carryforward	—		2,618
Federal net operating loss carryover and credits	—		8,793
Indirect tax benefits of unrecognized tax benefits	1,037		1,052
Other	221		3
Total gross deferred tax assets	22,278		31,852
Less valuation allowance	—		—
Net deferred tax assets	22,278		31,852
Deferred income tax liabilities:
Property and equipment	(98,355)		(101,843)
Goodwill and amortizable intangibles	(18,959)		(15,939)
Prepaid expenses	(804)		(1,762)
	(118,118)		(119,544)
Net deferred tax liability	$	(95,840)	$	(87,692)

The deferred tax amounts above have been classified in the accompanying consolidated balance sheets at December 31, 2020 and 2019 as follows:


	2020		2019
	(in thousands)
Noncurrent assets, net	$	8,164	$	6,006
Long-term liabilities, net	(104,004)		(93,698)
	$	(95,840)	$	(87,692)

We have not recorded a valuation allowance against any deferred tax assets at December 31, 2020 and 2019. In management’s opinion, it is more likely than not that we will be able to utilize these deferred tax assets in future periods as a result of our history of profitability, taxable income, and reversal of deferred tax liabilities.

Income tax expense consists of the following:


	2020		2019		2018
	(in thousands)
Current income taxes:
Federal	$	10,835	$	14,122	$	11,985
State	4,472		5,698		4,498
	15,307		19,820		16,483
Deferred income taxes:
Federal	736		5,595		5,537
State	7,412		(1,204)		(2,780)
	8,148		4,391		2,757
Total	$	23,455	$	24,211	$	19,240

The income tax provision differs from the amount determined by applying the U.S. federal tax rate as follows:


	2020		2019		2018
	(in thousands)
Federal tax at statutory rate (21%, 21%, 21% respectively)	$	19,795	$	20,406	$	19,302
State taxes, net of federal benefit	5,678		3,561		2,200
Permanent differences to return	446		540		408
Return to provision adjustment	(2,615)		(392)		(1,327)
Uncertain income tax penalties and interest, net	(73)		289		(1,067)
Other	224		(193)		(276)
	$	23,455	$	24,211	$	19,240

At December 31, 2020 and December 31, 2019, we had a total of $4.9 million and $5.0 million in gross unrecognized tax benefits, respectively, included in long-term income taxes payable in the consolidated balance sheets. Of this amount, $3.9 million and $4.0 million represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate as of December 31, 2020 and December 31, 2019, respectively. Unrecognized tax benefits were a net decrease of $0.1 million and a net increase of $0.4 million during the years ended December 31, 2020 and 2019, respectively, due mainly to the expiration of certain statutes of limitation net of additions and settlements with respective states. This had the effect of decreasing the effective state tax rate in 2020 and increasing the effective state rate during 2019. The total net amount of accrued interest and penalties for such unrecognized tax benefits was $0.9 million and $0.9 million at December 31, 2020 and December 31, 2019, respectively, and is included in income taxes payable in the consolidated balance sheets. Net interest and penalties included in income tax expense for the years ended December 31, 2020, 2019 and 2018 was approximately $0.1 million, zero, and a benefit of $1.4 million, respectively. Income tax expense is increased each period for the accrual of interest on outstanding positions and penalties when the uncertain tax position is initially recorded. Income tax expense is reduced in periods by the amount of accrued interest and penalties associated with reversed uncertain tax positions due to lapse of applicable statute of limitations, when applicable or when a position is settled. Income tax expense was reduced during the years ended December 31, 2020, 2019 and 2018 due to reversals of interest and penalties due to lapse of applicable statute of limitations and settlements, net of additions for interest and penalty accruals during the same period. These unrecognized tax benefits relate to risks associated with state income tax filing positions for our corporate subsidiaries.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


	2020		2019
	(in thousands)
Balance at January 1,	$	5,010	$	4,585
Additions based on tax positions related to current year	767		1,138
Additions for tax positions of prior years	—		124
Reductions for tax positions of prior years	(216)		—
Reductions due to lapse of applicable statute of limitations	(428)		(701)
Settlements	(196)		(136)
Balance at December 31,	$	4,937	$	5,010

A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months. These changes could result from the expiration of the statute of limitations, examinations or other unforeseen circumstances. We do not have any outstanding litigation related to tax matters. At this time, management’s best estimate of the reasonably possible change in the amount of gross unrecognized tax benefits is approximately no change to an increase of $1.0 million during the next twelve months, due to the combination of expiration of certain statute of limitations and estimated additions. The federal statute of limitations remains open for the years 2017 and forward. Tax years 2010 and forward are subject to audit by state tax authorities depending on the tax code and administrative practice of each state.