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Income Taxes
12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following table presents the Company's income tax expense:
202120202019
(In thousands)
Current expense:
Federal$140,258 $80,060 $50,703 
State42,319 19,153 16,616 
Foreign8,382 4,248 5,526 
190,959 103,461 72,845 
Deferred expense (benefit):
Federal48,874 29,640 28,618 
State(10,369)7,292 3,712 
Foreign1,423 9,283 (1,377)
39,928 46,215 30,953 
Income tax expense$230,887 $149,676 $103,798 
Rate Reconciliation — Expected tax expense is computed by applying the US federal corporate income tax rate of 21.0% to earnings before income taxes for 2021, 2020 and 2019. Actual tax expense differs from expected tax expense as follows:
202120202019
(In thousands)
Computed "expected" tax expense$204,673 $117,665 $86,935 
Increase (decrease) in income taxes resulting from:
State income taxes, net of federal income tax benefit23,063 22,423 17,803 
Other3,151 9,588 (940)
Income tax expense$230,887 $149,676 $103,798 
Deferred Income Taxes — The components of the net deferred tax asset (liability) included in "Deferred tax liabilities" in the consolidated balance sheets were:
December 31,
20212020
(In thousands)
Deferred tax assets:
Claims accrual$79,496 $81,426 
Allowance for doubtful accounts5,530 5,727 
Amortization of stock options8,192 7,712 
Accrued liabilities11,497 17,941 
Operating lease liabilities34,260 29,278 
Other20,562 10,687 
Total deferred tax assets159,537 152,771 
Valuation allowance— — 
Total deferred tax assets, net159,537 152,771 
Deferred tax liabilities:
Property and equipment, principally due to differences in depreciation(635,877)(586,349)
Prepaid taxes, licenses, and permits deducted for tax purposes(15,241)(12,629)
Intangible assets(338,191)(334,618)
Operating lease right-of-use assets(34,016)(28,259)
Other(11,089)(6,857)
Total deferred tax liabilities(1,034,414)(968,712)
Deferred income taxes$(874,877)$(815,941)
Valuation Allowance — The Company has not established a valuation allowance as it has been determined that, based upon available evidence, a valuation allowance is not required. Management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets. All other deferred tax assets are expected to be realized and utilized by continued profitability in future periods.
Cumulative Undistributed Foreign Earnings — As of December 31, 2021, foreign withholding taxes have not been provided on approximately $107.0 million of cumulative undistributed earnings of foreign subsidiaries. The earnings are considered to be permanently reinvested outside the US. As such, the Company is not required to provide withholding taxes on these earnings until they are repatriated in the form of dividends or otherwise. During the fourth quarter of 2020 our Mexico subsidiary distributed/repatriated $23.0 million to the US company. The taxes that resulted were insignificant.
Unrecognized Tax Benefits — The Company's unrecognized tax benefits as of December 31, 2021 would favorably impact the Company's effective tax rate if subsequently recognized.
See Note 2 for accounting policy related to the Company's income taxes.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2021, 2020, and 2019 is below:
202120202019
(In thousands)
Unrecognized tax benefits at beginning of year$2,950 $4,083 $7,423 
Increases for tax positions taken prior to beginning of year— — 38 
Decreases for tax positions taken prior to beginning of year(1,215)(1,133)(3,378)
Unrecognized tax benefits at end of year$1,735 $2,950 $4,083 
Increases for tax positions are related to the benefit received for federal deductions taken on the Company's subsidiary amended returns. Decreases for tax positions are related to federal deductions, which were reserved according to ASC 740-10. Management expects a decrease of $0.3 million in unrecognized tax benefits during the next twelve months.
Interest and Penalties — Accrued interest and penalties were approximately $0.1 million and $0.3 million as of December 31, 2021 and December 31, 2020, respectively.
Tax Examinations — Certain of the Company's subsidiaries are currently under examination by federal and various state jurisdictions for tax years ranging from 2014 to 2020. At the completion of these examinations, management does not expect any adjustments that would have a material impact on the Company's effective tax rate. Years subsequent to 2016 remain subject to examination.