Income Taxes

12 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

15) Income Taxes

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. The CARES Act allows employers to defer the payment of the employer's portion of Social Security taxes for period beginning March 27, 2020 and ending December 31, 2020 to years 2021 and 2022. The company has elected to defer the payment of its portion of Social Security taxes through September 30, 2021 of $5.2 million and recorded a related deferred tax asset of $1.5 million at September 30, 2021.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted into law.  The Tax Reform Act allows for the full depreciation, in the year acquired, for certain fixed assets purchased between September 28, 2017 and December 31, 2022 (also known as 100% bonus depreciation).

Income tax expense is comprised of the following for the indicated periods (in thousands):

	Years Ended September 30,
	2021		2020			2019
Current:
Federal	$	16,077	$	17,083		$	7,921
State		6,237		7,086			4,722
Deferred
Federal		8,263		(2,643	)		(3,168	)
State		3,098		(901	)		(1,958	)
	$	33,675	$	20,625		$	7,517

The provision for income taxes differs from income taxes computed at the Federal statutory rate as a result of the following (in thousands):

	Years Ended September 30,
	2021			2020			2019
Income from continuing operations before taxes	$	121,412		$	76,543		$	25,154
Provision for income taxes:
Tax at Federal statutory rate	$	25,496		$	16,074		$	5,282
State taxes net of federal benefit		7,927			5,224			1,626
Permanent differences		196			89			345
Change in valuation allowance		86			(113	)		23
Other		(30	)		(649	)		241
	$	33,675		$	20,625		$	7,517

The components of the net deferred taxes for the years ended September 30, 2021 and September 30, 2020 using current tax rates are as follows (in thousands):

	September 30,
	2021			2020
Deferred tax assets:
Operating lease liabilities	$	29,115		$	29,997
Net operating loss carryforwards		5,590			5,620
Vacation accrual		2,923			2,931
Pension accrual		3,603			3,807
Allowance for bad debts		1,291			1,653
Insurance accrual		2,020			2,283
Inventory capitalization		631			641
Fair value of derivative instruments		—			3,556
Other, net		1,504			1,208
Total deferred tax assets		46,677			51,696
Valuation allowance		(3,976	)		(3,890	)
Net deferred tax assets	$	42,701		$	47,806
Deferred tax liabilities:
Operating lease right-of-use assets	$	27,774		$	28,492
Property and equipment		14,374			14,305
Intangibles		19,591			19,091
Fair value of derivative instruments		6,864			—
Other, net		3,112			3,145
Total deferred tax liabilities	$	71,715		$	65,033
Net deferred taxes	$	(29,014	)	$	(17,227	)

In order to fully realize the net deferred tax assets, the Company’s corporate subsidiaries will need to generate future taxable income. A valuation allowance is recognized if, based on the weight of available evidence including historical tax losses, it is more likely than not that some or all of deferred tax assets will not be realized. The net change in the total valuation allowance for the fiscal year ended September 30, 2021 was $0.1 million. The net change in the total valuation allowance for the fiscal year ended September 30, 2020 was $(0.1) million. Based upon a review of a number of factors and all available evidence, including recent historical operating performance, the expectation of sustainable earnings, and the confidence that sufficient positive taxable income will continue in all tax jurisdictions for the foreseeable future, management concludes for the year ended September 30, 2021, it is more likely than not that the Company will realize the full benefit of its deferred tax assets, net of existing valuation allowance related to State net operating loss carryforwards at September 30, 2021.

As of January 1, 2021, the Company had State tax effected net operating loss carry forwards (“NOLs”) of approximately $1.8 million after consideration of valuation allowances.  The State NOLs, which will expire between 2023 and 2037, are generally available to offset any future taxable income in certain states

At September 30, 2021, we did not have unrecognized income tax benefits.

We file U.S. Federal income tax returns and various state and local returns. A number of years may elapse before an uncertain tax position is audited and finally resolved. For our Federal income tax returns we have four tax years subject to examination. In our major state tax jurisdictions of New York, Connecticut, and Pennsylvania we have four years that are subject to examination. In the state tax jurisdiction of New Jersey we have five tax years that are subject to examination. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, based on our assessment of many factors including past experience and interpretation of tax law, we believe that our provision for income taxes reflect the most probable outcome. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events.