Income Taxes

9 Months Ended

Sep. 30, 2020

Income Taxes

Income Taxes

12. Income Taxes

Income tax expense attributable to income from operations differed from the amount computed by applying the statutory federal income tax rate of 21% as of September 30, 2020 and 2019 to pre-tax income as a result of the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Tax at the federal statutory rate	$	2,140	$	1,854	$	6,986	$	5,278
State income taxes (net of federal benefit)		359		311		1,172		885
Change in state tax rate		—		1,187		—		1,187
Tax credits		(85)		—		(336)		—
Other		27		(349)		30		(252)
Total income tax expense	$	2,441	$	3,003	$	7,852	$	7,098

On September 12, 2019, the Florida Department of Revenue announced that the corporate income tax rate for tax years 2019, 2020, and 2021 is reduced from 5.5% to 4.458%. As a result, the Company has recorded $1.2 million of income tax expense during both the three and nine months ending September 30, 2019 to adjust its deferred tax balances due to the impact on the Company’s existing Florida net operating loss carried forward in addition to other temporary differences.

As of September 30, 2020 and December 31, 2019 the Company had an income tax receivable of $2.3 million and $2.8 million, respectively, included in other assets on the condensed consolidated balance sheets. As of December 31, 2019 the income tax receivable included a federal alternative minimum tax (“AMT”) credit receivable of $2.2 million, which was converted to a tax deposit and partially utilized on the federal income tax return filed for the tax year end December 31, 2019.

Significant judgment is required in evaluating the Company's uncertain tax positions and determining its provision for income taxes. The Company regularly assesses the likelihood of adverse outcomes resulting from potential examinations to determine the adequacy of its provision for income taxes and applies a “more-likely-than-not” in determining the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company has not identified any material unrecognized tax benefits as of either September 30, 2020 or December 31, 2019.

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 net operating loss (“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 CARES Act also contains modifications on the limitation of business interest for tax years beginning in 2019 and 2020. The modifications to Section 163(j) increase the allowable business interest deduction from 30% of adjusted taxable income to 50% of adjusted taxable income. Based upon current facts and circumstances, the Company does not expect that these provisions would result in a material cash benefit or impact to the effective tax rate.