Income Taxes

12 Months Ended

Aug. 28, 2021

Income Taxes [Abstract]

Income Taxes

7. INCOME TAXES

The components of income before provision for income taxes were as follows:

	For the Fiscal Years Ended
	August 28,		August 29,		August 31,
	2021		2020		2019
Domestic	$	282,478	$	329,482	$	383,515
Foreign		5,901		4,768		(386)
Total	$	288,379	$	334,250	$	383,129

The provision for income taxes is comprised of the following:

	For the Fiscal Years Ended
	August 28,		August 29,		August 31,
	2021		2020		2019
Current:
Federal	$	60,988	$	58,501	$	66,248
State and local		15,237		14,564		16,239
Foreign		1,327		1,073		(87)
		77,552		74,138		82,400
Deferred:
Federal		(5,513)		7,392		10,622
State and local		(842)		1,091		1,310
Foreign		(755)		(129)		—
		(7,110)		8,354		11,932
Total	$	70,442	$	82,492	$	94,332

Significant components of deferred tax assets and liabilities are as follows:

	August 28,		August 29,
	2021		2020
Deferred tax liabilities:
Depreciation	$	(38,825)	$	(41,049)
Right-of-use assets		(10,998)		(14,260)
Goodwill		(105,203)		(96,303)
Intangible amortization		(2,667)		(1,478)
		(157,693)		(153,090)
Deferred tax assets:
Accounts receivable		4,154		4,109
Lease liability		10,767		14,231
Inventory		16,194		8,430
Self-insurance liability		1,859		—
Deferred compensation		328		753
Stock-based compensation		6,295		6,224
Foreign tax credit		2,204		2,159
Less: valuation allowance		(826)		(1,403)
Other accrued expenses/reserves		13,681		8,440
		54,656		42,943
Net Deferred Tax Liabilities	$	(103,037)	$	(110,147)

Reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:

	For the Fiscal Years Ended
	August 28,		August 29,		August 31,
	2021		2020		2019
U.S. federal statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	4.1		3.7		3.7
Other, net	(0.7)		—		(0.1)
Effective income tax rate	24.4	%	24.7	%	24.6	%

The aggregate changes in the balance of gross unrecognized tax benefits during fiscal years 2021 and 2020 were as follows:

	August 28,		August 29,
	2021		2020
Beginning Balance	$	12,562	$	13,297
Additions for tax positions relating to current year		624		1,682
Additions for tax positions relating to prior years		—		29
Reductions for tax positions relating to prior years		(378)		(25)
Settlements		(5,058)		(956)
Lapse of statute of limitations		(1,631)		(1,465)
Ending Balance	$	6,119	$	12,562

Included in the balance of unrecognized tax benefits at August 28, 2021 is $1,671 related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next 12 months. This amount represents a decrease in unrecognized tax benefits comprised primarily of items related to expiring statutes of limitations in state jurisdictions.

The Company recognizes interest expense and penalties in the provision for income taxes. The fiscal years 2021, 2020 and 2019 provisions include interest and penalties of $689, $23 and $27, respectively. The Company had accrued $277 and $585 for interest and penalties as of August 28, 2021 and August 29, 2020, respectively.

The Company has a foreign tax credit carryover of $2,204 of which a valuation allowance of $826 has been provided. This foreign tax credit carryover expires beginning fiscal year 2024.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which is intended to provide economic relief to those impacted by the COVID-19 pandemic. On March 11, 2021, President Biden signed into law the American Rescue Plan Act (the “ARPA”). The ARPA includes several provisions, such as measures that extend and expand the Employee Retention Credit (the “ERC”) provision, previously enacted under the CARES Act, through December 31, 2021. The Company is reviewing the ERC provision of the CARES Act and of the ARPA to determine eligibility and potential impact. 

The CARES Act provides for the deferral of the employer-paid portion of social security payroll taxes. The Company elected to defer the employer-paid portion of social security payroll taxes through December 31, 2020 of $18,887, of which $9,444 will be remitted by December 31, 2021 and $9,443 will be remitted by December 31, 2022.

The Company is routinely examined by federal and state tax authorities.  The Internal Revenue Service completed an examination of the Company’s U.S. income tax returns for fiscal years 2017, 2018 and 2019 which resulted in a settlement. The Company is subject to examination by the Internal Revenue Service from fiscal year 2020 to present. With limited exceptions, the Company is no longer subject to state income tax examinations prior to fiscal year 2018.