Income Taxes

12 Months Ended

Sep. 03, 2022

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
	September 3,		August 28,		August 29,
	2022		2021		2020
Domestic	$	449,389	$	282,478	$	329,482
Foreign		1,743		5,901		4,768
Total	$	451,132	$	288,379	$	334,250

The provision for income taxes is comprised of the following:

	For the Fiscal Years Ended
	September 3,		August 28,		August 29,
	2022		2021		2020
Current:
Federal	$	77,761	$	60,988	$	58,501
State and local		19,524		15,237		14,564
Foreign		1,309		1,327		1,073
		98,594		77,552		74,138
Deferred:
Federal		11,591		(5,513)		7,392
State and local		1,281		(842)		1,091
Foreign		(816)		(755)		(129)
		12,056		(7,110)		8,354
Total	$	110,650	$	70,442	$	82,492

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

	September 3,		August 28,
	2022		2021
Deferred tax liabilities:
Depreciation	$	(41,990)	$	(38,825)
Right-of-use assets		(14,898)		(10,998)
Goodwill		(111,471)		(105,203)
Intangible amortization		(2,568)		(2,667)
		(170,927)		(157,693)
Deferred tax assets:
Accounts receivable		4,605		4,154
Lease liability		14,766		10,767
Inventory		13,476		16,194
Self-insurance liability		1,605		1,859
Deferred compensation		586		328
Stock-based compensation		5,881		6,295
Foreign tax credit		—		2,204
Less: valuation allowance		—		(826)
Other accrued expenses/reserves		14,915		13,681
		55,834		54,656
Net Deferred Tax Liabilities	$	(115,093)	$	(103,037)

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

	For the Fiscal Years Ended
	September 3,		August 28,		August 29,
	2022		2021		2020
U.S. federal income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	3.9		4.1		3.7
Other, net	(0.4)		(0.7)		—
Effective income tax rate	24.5	%	24.4	%	24.7	%

The aggregate changes in the balance of gross unrecognized tax benefits during fiscal years 2022 and 2021 were as follows:

	September 3,		August 28,
	2022		2021
Beginning Balance	$	6,119	$	12,562
Additions for tax positions relating to current year		1,130		624
Additions for tax positions relating to prior years		6,810		—
Reductions for tax positions relating to prior years		(626)		(378)
Settlements		—		(5,058)
Lapse of statute of limitations		(2,210)		(1,631)
Ending Balance	$	11,223	$	6,119

Included in the balance of unrecognized tax benefits at September 3, 2022 is $2,060 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 and foreign jurisdictions.

The Company recognizes interest expense and penalties in the provision for income taxes. The fiscal years 2022, 2021 and 2020 provisions include interest and penalties of $7, $689 and $23, respectively. The Company had accrued $2,490 and $277 for interest and penalties as of September 3, 2022 and August 28, 2021, respectively.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law, which is intended to provide economic relief to those impacted by the COVID-19 pandemic. On March 11, 2021, the American Rescue Plan Act (the “ARPA”) was signed into law. 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 has filed a refund claim in connection with the ERC and will account for the potential ERC refund, if any, upon approval and receipt.

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 this amount, half was remitted in December 2021 and half 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 2019. The Company is also subject to examinations in various foreign jurisdictions. The statute of limitations may vary by jurisdiction.