INCOME TAXES

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Tax Rate for the Nine and Three Months Ended September 30, 2022

The Company recognized an income tax benefit at an effective income tax rate of 22.0% and 21.7% for the nine and three months ended September 30, 2022, respectively. The effective income tax rate was determined using a forecasted tax rate based upon projected taxable income for the year. The effective income tax rate for the period was impacted by permanent items, state tax expense, discrete income tax expense items related to stock based compensation, a valuation allowance for certain state net operating losses, adjustments related to amended federal income tax returns for 2018 and 2019, and interest and penalties associated with uncertain tax positions.

On March 27, 2020, the United States enacted the CARES Act. The CARES Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effects of the COVID-19 pandemic. The CARES Act includes significant business tax provisions that, among other things, includes the removal of certain limitations on utilization of net operating losses, increases the loss carry back period for certain losses to five years, and increases the ability to deduct interest expense, as well as amending certain provisions of the previously enacted Tax Cuts and Jobs Act. The Company was able to carryback its 2020 federal income tax loss to prior tax years and file a refund claim with the IRS for $15.2 million, which it received in the first quarter of 2022. During the third quarter of 2022, the Company filed amended federal income tax returns for 2018 and 2019, in which it requested a refund of $5.5 million for 2018.

Tax Rate for the Nine and Three Months Ended September 30, 2021

The Company recognized an income tax benefit at an effective income tax rate of 20.7% and 173.5% for the nine and three months ended September 30, 2021, respectively, which was determined using a forecasted rate based upon projected taxable income for the full year.

Net Deferred Tax Assets and Liabilities

The income tax accounting process to determine the deferred tax liabilities involves estimating all temporary differences between the tax and financial reporting bases of the Company’s assets and liabilities, based on enacted tax laws and statutory tax rates applicable to the period in which the differences are expected to affect taxable income. The Company estimated the current exposure by assessing the temporary differences and computing the provision for income taxes by applying the estimated effective tax rate to income.