Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

As of December 31, 2022, we had approximately $1.2 billion in net operating loss carryforwards (“NOL carryforwards”); however, we currently have a valuation allowance against this and substantially all of our other deferred tax assets. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. For the year ended December 31, 2022, we recorded an income tax expense of $0.7 million primarily driven by an increase in state taxable income. For the year ended December 31, 2021, we recorded an income tax expense of $1.0 million primarily driven by foreign withholding taxes. For the year ended December 31, 2020, we recorded an income tax benefit of $20.7 million primarily driven by an increase in our net operating loss carryforwards and the change in our indefinitely-lived goodwill due to the impairments. Management continues to conclude that we did not meet the “more likely than not” requirement in order to recognize deferred tax assets on the remaining amounts and a valuation allowance has been recorded for substantially all of our net deferred tax assets at December 31, 2022 and 2021.

In connection with our emergence from bankruptcy on August 31, 2012, we experienced an ownership change as defined under Section 382 of the Code. Section 382 generally places a limit on the amount of NOL carryforwards and other tax attributes arising before an ownership change that may be used to offset taxable income after an ownership change. We believe that we have qualified for an exception to the general limitation rules under Code Section 382(l)(5) which provides for substantially less restrictive limitations on our NOL carryforwards. Our amended and restated certificate of incorporation places restrictions upon the ability of certain equity interest holders to transfer their ownership interest in us. These restrictions are designed to provide us with the maximum assurance that another ownership change does not occur that could adversely impact our NOL carryforwards.

We believe that any adjustment to our uncertain tax positions would not have a material impact on our financial statements given the Company’s deferred tax and corresponding valuation allowance position as of December 31, 2022.

Our net taxable income must be apportioned to various states based upon the income tax laws of the states in which we derive our revenue. Our NOL carryforwards will not always be available to offset taxable income apportioned to the various states. The states from which our refining, logistics, and retail revenues are derived are not the same states in which our NOLs were incurred; therefore, we expect to incur state tax liabilities in connection with our refining, logistics, and retail operations.

We will continue to assess the realizability of our deferred tax assets based on consideration of actual operating results. If sufficient positive evidence of improving actual operating results becomes available, the amount of the deferred tax asset considered more likely than not to be recognized would be increased with a corresponding reduction in income tax expense in the period recorded.

Income tax expense (benefit) consisted of the following (in thousands):

	Year Ended December 31,
	2022		2021		2020
Current:
U.S.—Federal	$	—	$	—	$	—
U.S.—State	362		26		51
Foreign	73		1,255		125
Deferred:
U.S.—Federal	236		(223)		(20,509)
U.S.—State	39		(37)		(387)
Total	$	710	$	1,021	$	(20,720)

Income tax expense was different from the amounts computed by applying U.S. Federal income tax rate to pretax income as a result of the following:

	Year Ended December 31,
	2022		2021		2020
Federal statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	0.1	%	—	%	0.1	%
Foreign taxes	—	%	(1.6)	%	—	%
Change in valuation allowance related to current activity	(21.3)	%	(20.1)	%	(14.0)	%
Permanent items	0.4	%	(0.6)	%	(2.3)	%
Actual income tax rate	0.2	%	(1.3)	%	4.8	%

Deferred tax assets (liabilities) are comprised of the following (in thousands):

	December 31,
	2022		2021
Deferred tax assets:
Net operating loss	$	308,457	$	424,112
Intangible assets	830		1,912
Environmental credit obligations	71,424		40,097
Other	4,099		16,137
Total deferred tax assets	384,810		482,258
Valuation allowance	(330,456)		(421,387)
Net deferred tax assets	54,354		60,871
Deferred tax liabilities:
Inventory	5,891		9,820
Property and equipment	54,124		56,436
Total deferred tax liabilities	60,015		66,256
Total deferred tax liability, net	$	(5,661)	$	(5,385)

We have NOL carryforwards as of December 31, 2022 of $1.2 billion for federal income tax purposes. If not utilized, approximately $1.0 billion of our NOL carryforwards will expire during 2029 through 2037. Approximately $0.2 billion of our NOL carryforwards do not expire.