INCOME TAXES (Tables)
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12 Months Ended |
Dec. 31, 2022 |
INCOME TAXES [ABSTRACT] |
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Sources of Pre-Tax Accounting Income |
The sources of pre-tax operating income are as follows (in thousands): | | | | | | | | | | | | | Year Ended December 31, | | | | 2022 | | 2021 | | 2020 | | Domestic | | $ | 52,887 | | $ | 108,160 | | $ | 129,620 | | Foreign | | | 91,561 | | | 99,724 | | | 40,648 | | Total | | $ | 144,448 | | $ | 207,884 | | $ | 170,268 | |
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Components of Income Tax Expense (Benefit) |
The components of the Company’s Provision for (benefit from) income taxes are as follows (in thousands): | | | | | | | | | | | | | Year Ended December 31, | | | | 2022 | | 2021 | | 2020 | | Current provision for (benefit from) | | | | | | | | | | | Federal | | $ | 10,816 | | $ | 20,697 | | $ | 22,763 | | State | | | 5,245 | | | 8,006 | | | 9,871 | | Foreign | | | 22,055 | | | 20,161 | | | 13,496 | | Total current provision for (benefit from) | | | 38,116 | | | 48,864 | | | 46,130 | | Deferred provision for (benefit from) | | | | | | | | | | | Federal | | | (3,128) | | | (7,017) | | | (2,390) | | State | | | (192) | | | (402) | | | (254) | | Foreign | | | (7,681) | | | 8,250 | | | (2,549) | | Total deferred provision for (benefit from) | | | (11,001) | | | 831 | | | (5,193) | | Total provision for (benefit from) income taxes | | $ | 27,115 | | $ | 49,695 | | $ | 40,937 | |
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Effective Income Tax Rate Reconciliation Table |
The following reconciles the Company’s effective tax rate to the federal statutory rate (in thousands): | | | | | | | | | | | | | Year Ended December 31, | | | | 2022 | | 2021 | | 2020 | | Income tax per U.S. federal statutory rate (21%, 21%, 21%) | | $ | 30,334 | | $ | 43,655 | | $ | 35,756 | | State income taxes, net of federal deduction | | | 2,717 | | | 4,588 | | | 6,923 | | Change in valuation allowances | | | (3,278) | | | 12,567 | | | 3,903 | | Foreign income taxes at different rates than the U.S. | | | 1,202 | | | (1,416) | | | (783) | | Foreign withholding taxes | | | (2) | | | (93) | | | 106 | | Losses in international markets without tax benefits | | | — | | | — | | | (1,656) | | Nondeductible compensation under Section 162(m) | | | 841 | | | 1,494 | | | 656 | | Taxes related to equity compensation | | | (907) | | | (4,282) | | | (587) | | Liabilities for uncertain tax positions | | | (1,435) | | | (790) | | | 2,882 | | Permanent difference related to foreign exchange gains | | | 139 | | | 3,362 | | | (71) | | Impacts of foreign branch operations | | | 2,315 | | | (187) | | | (10) | | Non-taxable earnings of noncontrolling interest | | | (2,638) | | | (3,085) | | | (1,964) | | Foreign dividend less foreign tax credits | | | (1,616) | | | (1,142) | | | (1,723) | | Decrease (increase) to deferred tax asset - change in tax rate | | | — | | | — | | | (48) | | State and Federal income tax credits and NOL's | | | (4,604) | | | (4,531) | | | (3,918) | | Foreign earnings taxed currently in U.S. | | | 2,978 | | | 1,930 | | | 1,936 | | Taxes related to prior year filings | | | (432) | | | (1,192) | | | (1,718) | | Taxes related to acquisition accounting | | | — | | | — | | | 1,317 | | Other | | | 1,501 | | | (1,183) | | | (64) | | Income tax per effective tax rate | | $ | 27,115 | | $ | 49,695 | | $ | 40,937 | | | | | | | | | | | | | Effective tax rate percentage | | | 18.8% | | | 23.9% | | | 24.0% | |
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Schedule of Deferred Tax Assets and Liabilities |
The Company’s deferred income tax assets and liabilities are summarized as follows (in thousands): | | | | | | | | | | Year Ended December 31, | | | | 2022 | | 2021 | | Deferred tax assets, gross | | | | | | | | Accrued workers compensation, deferred compensation and employee benefits | | $ | 9,715 | | $ | 8,441 | | Allowance for credit losses, insurance and other accruals | | | 4,109 | | | 4,767 | | Amortization of deferred lease liabilities | | | 18,475 | | | 15,816 | | Net operating losses | | | 18,312 | | | 18,006 | | Equity compensation | | | 1,912 | | | 2,302 | | Customer acquisition and deferred revenue accruals | | | 18,749 | | | 20,069 | | Federal and state tax credits, net | | | 3,247 | | | 2,759 | | Unrealized losses on derivatives | | | — | | | 22 | | Impairment of equity investment | | | 1,047 | | | 4,064 | | Depreciation and amortization | | | 7,896 | | | — | | Partnership Investment | | | 102 | | | 106 | | Other | | | 3,931 | | | 5,052 | | Total deferred tax assets, gross | | | 87,495 | | | 81,404 | | Valuation allowances | | | (24,944) | | | (29,620) | | Total deferred tax assets, net | | | 62,551 | | | 51,784 | | Deferred tax liabilities | | | | | | | | Depreciation and amortization | | | — | | | (10,291) | | Unrealized gain on derivatives | | | (27) | | | — | | Contract acquisition costs | | | (19) | | | (1,831) | | Intangible assets | | | (28,848) | | | (21,202) | | Operating lease assets | | | (15,594) | | | (12,481) | | Other | | | (3,208) | | | (184) | | Total deferred tax liabilities | | | (47,696) | | | (45,989) | | Net deferred tax assets | | $ | 14,855 | | $ | 5,795 | |
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Valuation Allowance Rollforward |
Activity in the Company’s valuation allowance accounts consists of the following (in thousands): | | | | | | | | | | | | | Year Ended December 31, | | | | 2022 | | 2021 | | 2020 | | Beginning balance | | $ | 29,620 | | $ | 18,697 | | $ | 17,051 | | Additions of deferred income tax expense | | | 2,248 | | | 14,660 | | | 4,650 | | Reductions of deferred income tax expense | | | (6,924) | | | (3,737) | | | (3,004) | | Ending balance | | $ | 24,944 | | $ | 29,620 | | $ | 18,697 | |
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Expiration of Net Operating Loss Carryforwards |
As of December 31, 2022, after consideration of all tax loss carry back opportunities, the Company had tax affected tax loss carry forwards worldwide expiring as follows (in thousands): | | | | 2023 | | $ | 12 | 2024 | | | 9 | 2025 | | | 47 | 2026 | | | 50 | After 2026 | | | 7,624 | No expiration | | | 10,570 | Total | | $ | 18,312 |
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Reserve for Uncertain Tax Positions Rollforward |
The tabular reconciliation of the reserve for uncertain tax benefits on a gross basis without interest for the three years ended December 31, 2022 is presented below (in thousands): | | | | Balance as of December 31, 2019 | | $ | 4,784 | Additions for current year tax positions | | | 2,725 | Reductions in prior year tax positions | | | — | Balance as of December 31, 2020 | | | 7,509 | Additions for current year tax positions | | | 220 | Reductions in prior year tax positions | | | (826) | Balance as of December 31, 2021 | | | 6,903 | Additions for current year tax positions | | | 143 | Reductions in prior year tax positions | | | (479) | Balance as of December 31, 2022 | | $ | 6,567 |
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Jurisdictions Open to Income Tax Examination |
| | | Tax Jurisdiction | | Tax Year Ended | United States | | 2017 to Present | Australia | | 2018 - Present | India | | 2017 - Present | Canada | | 2018 - Present | Mexico | | 2017 - Present | Philippines | | 2018 - Present |
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