Income Taxes

6 Months Ended

Mar. 04, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

During the twenty-six-week period ended March 4, 2023, there were no material changes in unrecognized tax benefits.

The U.S. government enacted the CARES Act to provide certain relief as a result of the COVID-19 pandemic. The CARES Act provides tax relief, along with other stimulus measures, including the ERC, which allows for employers to claim a refundable tax credit against the employer share of Social Security tax equal to 50% of qualified wages paid to qualified employees between March 13, 2020 and December 31, 2020 and 70% of qualified wages paid to employees after December 31, 2020 through September 30, 2021. The ERC was designed to encourage businesses to keep employees on the payroll during the COVID-19 pandemic. During the thirteen-week period ended March 4, 2023, the Company received $6,096 related to ERC claims previously submitted. As there is no authoritative guidance under accounting principles generally accepted in the United States of America on accounting for government assistance to for-profit business entities, we account for the ERC by analogy to International Accounting Standard 20, Accounting for Government Grants and Disclosure of Government Assistance. Management determined the probability threshold has not been met for $5,127 of the funds received, and, as such, were recorded in Accrued expenses and other current liabilities in the unaudited Condensed Consolidated Balance Sheet as of March 4, 2023.

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 the remaining half was remitted in December 2022.

The Company’s effective tax rate was 25.0% for the twenty-six-week period ended March 4, 2023, as compared to 24.3% for the twenty-six-week period ended February 26, 2022. The increase in the effective tax rate was primarily due to an increase in unfavorable permanent tax items as well as a lower tax benefit from stock-based compensation.