Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes [Abstract]

Income Taxes

Note 8.         Taxes

The components of income (loss) before income taxes were as follows:

	Year Ended December 31,
	2021		2020		2019
United States	$	52,780	$	55,874	$	13,830
Foreign		10		(2,234)		(878)
Total Income before Income Taxes	$	52,790	$	53,640	$	12,952

The expense (benefit) for income taxes consisted of the following:

	Year Ended December 31,
	2021		2020		2019
Current
Federal	$	9,444	$	1,868	$	2,550
State		1,290		2,315		1,015
Foreign		82		67		90
Total Current		10,816		4,250		3,655
Deferred
Federal		961		(9,671)		(203)
State		(685)		(2,366)		(163)
Total Deferred		276		(12,037)		(366)
Income Tax Expense (Benefit)	$	11,092	$	(7,787)	$	3,289

A reconciliation to the statutory tax rate is as follows:

	Year Ended December 31,
	2021				2020				2019
Income Tax Expense at Federal Statutory Rate	$	11,088	21.0	%	$	11,264	21.0	%	$	2,720	21.0	%
Increases (Decreases):
State Income Taxes, Net of Federal Income Tax Benefit		2,086	4.0	%		1,949	3.6	%		425	3.3	%
Change in Valuation Allowance and Loss Carryforwards		(2,698)	(5.1)	%		(21,363)	(39.8)	%		668	5.2	%
Foreign Operations		365	0.7	%		2,431	4.5	%		90	0.7	%
Uncertain Tax Positions		242	0.4	%		—	—	%		174	1.3	%
Non-Deductible Fines and Penalties		—	—	%		2	—	%		6	—	%
CARES Act Rate Differential		—	—	%		(1,751)	(3.3)	%		—	—	%
Other		9	—	%		(319)	(0.5)	%		(794)	(6.1)	%
Income Tax Expense (Benefit)	$	11,092	21.0%	%	$	(7,787)	(14.5)	%	$	3,289	25.4	%

The tax effects of temporary differences that result in significant portions of the deferred tax accounts based on enacted statutory rates in both 2021 and 2020, are as follows:

	December 31,
	2021		2020
Deferred Tax Liabilities:
Operating Lease Right-of-Use Assets	$	(31,374)	$	(28,579)
Depreciation and Amortization and Other		(14,324)		(14,532)
Total Gross Deferred Tax Liabilities		(45,698)		(43,111)
Deferred Tax Assets:
Operating Lease Liabilities		34,021		31,365
Stock-Based Compensation Expense		2,381		2,155
Legal Settlement Reserves		8,850		7,998
Other Accruals and Reserves		2,809		4,718
Employee Benefits		2,117		3,616
Inventory Reserves		927		1,241
Inventory Capitalization		4,088		2,790
Foreign Net Operating Loss Carryforwards		2,405		2,674
Net Operating Loss Carryforwards		1,186		250
Capital Loss Carryforwards and Other		655		3,538
Total Gross Deferred Tax Assets		59,439		60,345
Less: Valuation Allowance		(2,405)		(5,623)
Total Deferred Tax Assets		57,034		54,722
Net Deferred Tax Asset	$	11,336	$	11,611

The Company continues to monitor developments by federal and state rulemaking authorities regarding tax law changes and recognizes the impact of these law changes in the period in which they are enacted.

At the beginning of 2020, the Company had a full valuation allowance of $27 million recorded against its net deferred assets as the Company was in a consolidated cumulative three-year loss position, and the Company was not relying upon projections of future taxable income in assessing their recoverability.  The Company assesses the available evidence on a quarterly basis to assess if, based on the weight of all available evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.  The Company was no longer in a consolidated cumulative three-year loss position at December 31, 2020.  Based on the Company’s evaluation at a jurisdictional level as of December 31, 2020, the Company released valuation allowances of $20 million in the fourth quarter of 2020 in jurisdictions where the Company believes sufficient future taxable income, including consideration of future performance, market or economic conditions, will be generated to use existing deferred tax assets.  This release of the valuation allowance resulted in noncash income tax benefit of $20 million in 2020. At December 31, 2021 the Company’s remaining valuation allowance was $2.4 million relating to foreign operations. The amount of the deferred tax assets considered realizable could be adjusted in future periods if evidence warrants such a change. During 2021, the Company recognized additional state net operating losses expected to be utilized, which are reflected in the ending deferred tax assets and resulted in a reduction of tax expense of approximately $2.4 million.

As of December 31, 2021 and 2020, the Company had no remaining U.S. federal net operating loss carryforward. The Company had foreign operating loss carryforwards of $13 million and $14 million at December 31, 2021 and 2020, respectively, which have begun to expire and have a full valuation allowance. As of December 31, 2021 and 2020, respectively, the Company had state loss carryforwards of $18 million and $29 million, which begin to expire in 2025.

The Company paid income taxes (net of refunds) of $11 million, $10 million and $0.2 million in 2021, 2020 and 2019, respectively.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company amended its 2018 tax return with respect to CARES Act items and carried the 2018 NOL back to 2013 resulting in a net tax benefit of $1.8 million in 2020. 

As of December 31, 2021 and 2020, respectively, the Company had $0.4 million and $0.2 million of gross unrecognized tax benefits related to Uncertain Tax Positions ($0.4 million and $0.2 million net of federal tax benefit). It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain of the uncertain tax positions will increase or decrease during the next 12 months; however, the Company does not expect the change in uncertain tax positions to have a significant effect on its results of operations, financial position or cash flows.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, excluding interest and penalties, is as follows:

	Year Ended December 31,
	2021		2020
Balance at beginning of year	$	225	$	225
Increase for tax positions related to current year		375		—
Decrease for tax positions related to prior years		(133)		—
Settlements		(92)		—
Balance at end of year	$	375	$	225

The Company files income tax returns with the U.S. federal government and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities.   As of December 31, 2021, the Internal Revenue Service has completed audits of the Company’s income tax returns through 2016.

In February 2022 the Company received sales tax and use tax assessments from the Commonwealth of Virginia covering part of 2014 through 2017. The Company believes there are some factual errors, is disputing this assessment, and will defend itself vigorously in this matter. Given the uncertainty of the final resolution, the Company cannot reasonably estimate the loss or range of loss, if any, that may result from this action and therefore no specific accrual has been made related to this. Any losses could, potentially, have a material adverse effect, individually or collectively, on the Company’s results of operations, financial condition and liquidity.