INCOME TAXES

12 Months Ended

Dec. 31, 2023

INCOME TAXES

INCOME TAXES

Note 10: Income Taxes

The following table lists the components of the provision for income taxes:

Years ended December 31,	2023		2022		2021
(in thousands)
Current provision (benefit):
Federal	$	45,146	$	47,744	$	4,946
State		6,502		3,164		(1,387)
Foreign		835		865		784
Deferred provision:
Federal		7,116		14,026		2,287
State		1,531		5,470		2,601
Total income tax provision	$	61,130	$	71,269	$	9,231

Reconciliation between the federal statutory rate and RPC’s effective tax rate is as follows:

Years ended December 31,	2023		2022		2021
Federal statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	2.1		1.9		2.9
Foreign taxes, net of federal benefit	0.3		0.3		5.1
Tax credits	(0.3)		(0.1)		(3.5)
Change in contingencies	0.1		—		8.6
Non-deductible expenses	0.8		0.7		(2.8)
Adjustments related to CARES Act	—		—		3.2
Change in estimated deferred rate	—		0.4		10.2
Adjustments related to vesting of restricted stock	(0.1)		0.2		7.1
Other	—		0.2		4.3
Effective tax rate	23.9	%	24.6	%	56.1	%

Significant components of the Company’s deferred tax assets and liabilities are as follows:

December 31,	2023		2022
(in thousands)
Deferred tax assets:
Self-insurance	$	4,303	$	3,051
Long-term retirement plan		5,101		5,237
State net operating loss carryforwards		1,520		1,960
Allowance for credit losses		1,634		1,757
Stock-based compensation		1,414		2,531
Inventory reserve		3,330		3,290
Lease liability		5,777		6,701
Capitalized research and development		3,066		1,041
Valuation allowance		(1,591)		(990)
All others, net		3,126		2,386
Gross deferred tax assets		27,680		26,964
Deferred tax liabilities:
Depreciation		(66,784)		(51,494)
Right of use asset		(5,461)		(6,397)
Goodwill amortization		(6,725)		(6,546)
Gross deferred tax liabilities		(78,970)		(64,437)
Net deferred tax liabilities	$	(51,290)	$	(37,473)

The Company's current intention is to permanently reinvest funds held in our foreign subsidiaries outside of the U.S., with the possible exception of repatriation of funds that have been previously subject to U.S. federal and state taxation or when it would be tax effective through the utilization of foreign tax credits or would otherwise create no additional U.S. tax cost.

Total net income tax payments (refunds) were $62.2 million in 2023, $35.8 million in 2022, and $(20.9) million in 2021. As of December 31, 2023, the Company has net operating loss carryforwards recorded related to state income taxes of $31.0 million (gross) that will expire between 2024 and 2042.

The Company’s policy is to record interest and penalties related to income tax matters as income tax expense. Accrued interest and penalties were immaterial as of December 31, 2023, and 2022.

During 2023, the Company recognized an increase in its liability for unrecognized tax benefits related primarily to current year positions and disclosed as part of other long-term liabilities on the consolidated balance sheet. This liability, if released, would affect our effective rate. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(in thousands)	2023		2022
Balance at January 1	$	1,917	$	1,737
Additions (reductions) based on tax positions related to the current year		337		197
Additions (reductions) for tax positions of prior years		(86)		(17)
Balance at December 31	$	2,168	$	1,917

It is reasonably possible that the amount of the unrecognized benefits with respect to the Company’s unrecognized tax positions will increase or decrease in the next 12 months. These changes may be the result of, among other things, expiration of the statute of limitation, or conclusions of examinations or reviews. However, quantification of an estimated range cannot be made at this time.

The Company and its subsidiaries are subject to U.S. federal and state income tax in multiple jurisdictions. In many cases, the uncertain tax positions are related to tax years that remain open and subject to examination by the relevant taxing authorities. In general, the Company’s 2020 through 2022 tax years remain open to examination. Additional years may be open to the extent attributes are being carried forward to an open year.