Income Taxes

3 Months Ended

Apr. 03, 2021

Our income tax expense (benefit) and effective income tax rate were as follows (amounts in thousands, except percentages):


	13 Weeks Ended
	April 3, 2021			March 28, 2020
Income tax expense (benefit)	$	1,049		$	(1,801)
Effective income tax rate	5.3		%	(16.6)		%

The change from a net income tax benefit of $1.8 million for the 13 weeks ended March 28, 2020 to a net income tax expense of $1.0 million for the 13 weeks ended April 3, 2021 was primarily driven by higher pretax income during the 13 weeks ended April 3, 2021 as well as a reduction in excess tax benefits, related to the exercise of stock options and vesting of RSUs as compared to the same period in fiscal 2020.

The Company's tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete events arising in each respective quarter. During each interim period, the Company updates the estimated annual effective tax rate. Our effective income tax rate for the 13 weeks ended April 3, 2021 was lower than the U.S. statutory income tax rate of 21% primarily due to excess tax benefits related to the exercise of stock options and vesting of RSUs. The increase in our effective income tax rate for the 13 weeks ended April 3, 2021 compared to the corresponding period in fiscal 2020 was primarily due to the above mentioned higher pretax income and the reduction in discrete items related to the exercise of stock options and vesting of employee RSUs.

Our policy is to recognize interest and penalties associated with uncertain tax benefits as part of the income tax provision and include accrued interest and penalties with the related income tax liability on our condensed consolidated balance sheets. To date, we have not recognized any interest and penalties in our condensed consolidated statements of operations and comprehensive income, nor have we accrued for or made payments for interest and penalties. We had no unrecognized tax benefits as of April 3, 2021 and January 2, 2021, respectively, and do not anticipate any changes to our uncertain tax positions within the next 12 months.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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