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INCOME TAXES

12 Months Ended

Dec. 31, 2020

The domestic and foreign components of income before provision for income taxes were as follows (in thousands):


	For the years ended December 31,
	2020		2019		2018
Domestic	$	168,117	$	156,571	$	115,070
Foreign	6,433		(8,332)		(20,588)
Total	$	174,550	$	148,239	$	94,482

The provision for income taxes consisted of the following (in thousands, except percentages):


	For the years ended December 31,
	2020		2019		2018
Current:
Federal	$	33,327	$	20,482	$	(7,677)
State	14,575		14,564		12,653
Foreign	1,559		7,448		4,781
	49,461		42,494		9,757
Deferred
Federal	(965)		7,933		19,899
State	(2,506)		550		(1,205)
Foreign	(6,277)		(478)		395
	(9,748)		8,005		19,089
Provision for income taxes	$	39,713	$	50,499	$	28,846

Effective tax rate	22.8%		34.1%		30.5%

The Company's effective income tax rate varied from the amount computed using the statutory federal income tax rate of 21% as follows (in thousands):


	For the years ended December 31,
	2020		2019		2018
Tax expense at US statutory rate	$	36,655	$	31,130	$	19,841
State income taxes, net of federal benefit	9,837		10,597		8,711
Foreign rate differential	1,256		276		(1,124)
Valuation allowance	(11,339)		4,459		10,466


Uncertain tax position interest and penalties	(712)		474		(1,806)
Tax credits	2,039		(50)		(9,799)
Non-deductible compensation	1,406		1,922		1,813
Other	571		1,691		1,032
Adjustment for Tax Cuts and Jobs Act	—		—		(288)
Provision for income taxes	$	39,713	$	50,499	$	28,846

The valuation allowance benefit of $11.3 million recognized in 2020 is predominately related to taxable earnings in certain Canadian entities that benefited from the wage subsidy received under the CEWS. In addition, the foreign tax credit that expired in 2020 had a full valuation allowance which was also written off, contributing to the valuation allowance benefit in the table above. The foreign tax credit expiration and valuation allowance write off had no net impact to the provision for income taxes.

During 2018, the Company completed an analysis of certain federal manufacturing and research and development credit benefits for tax years 2014 through 2017. Upon the filing of its 2017 tax return in October 2018, the Company recognized $3.3 million of tax benefits and recognized an additional $7.1 million upon the amendments of its 2014 through 2016 tax returns for a net benefit recorded as a component of the 2018 tax provision of $9.8 million (shown as Tax credits in the table above). The Company collected the refund during 2020.

During the years ended December 31, 2020 and December 31, 2018, the Company recorded $1.3 million and $5.0 million, respective, of tax benefits related to tax deductible foreign currency losses to accumulated other comprehensive loss and as such these benefits are not included within the provision for income taxes. See Note 15, "Accumulated Other Comprehensive Loss," for additional information related to these transactions.

The components of the total net deferred tax assets and liabilities as of December 31, 2020 and 2019 were as follows (in thousands):


	2020		2019
Deferred tax assets:

Provision for doubtful accounts	$	10,305	$	8,949
Closure, post-closure and remedial liabilities	28,665		26,960
Operating lease liabilities	38,151		40,879
Accrued expenses	16,797		17,602
Accrued compensation and benefits	11,372		7,155
Net operating loss carryforwards(1)	50,433		50,824
Tax credit carryforwards(2)	14,471		16,909
Interest rate swap liability	10,089		6,252
Stock-based compensation	3,040		2,435
Other	5,553		8,342
Total deferred tax assets	188,876		186,307
Deferred tax liabilities:
Property, plant and equipment	(194,604)		(184,594)
Operating lease right-of-use assets	(38,018)		(40,985)
Permits and other intangible assets	(95,492)		(98,654)
Prepaid expenses	(9,660)		(9,694)
Total deferred tax liabilities	(337,774)		(333,927)
Total net deferred tax liability before valuation allowance	(148,898)		(147,620)
Less valuation allowance	(77,044)		(83,643)
Net deferred tax liabilities	$	(225,942)	$	(231,263)

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(1)As of December 31, 2020, the net operating loss carryforwards included (i) state net operating loss carryovers of $193.2 million which will begin to expire in 2021, (ii) federal net operating loss carryforwards of $16.8 million which will begin to expire in 2025 and (iii) foreign net operating loss carryforwards of $151.5 million which will begin to expire in 2021.

(2)As of December 31, 2020, the foreign tax credit carryforwards of $14.1 million will expire between 2021 and 2024.

The Company has not accrued for any remaining undistributed foreign earnings. These amounts continue to be indefinitely reinvested in foreign operations.

A valuation allowance is required to be established when, based on an evaluation of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The components of the total valuation allowance as of December 31, 2020 and 2019 were as follows (in thousands):


	2020		2019
Allowance related to:
Foreign tax credits	14,127		16,565
Acquired federal net operating losses	779		779
State net operating loss carryforwards	10,429		10,663
Foreign net operating loss carryforwards	29,839		34,149
Deferred tax assets of a Canadian subsidiary	11,468		14,922
Realized and unrealized capital losses	10,402		6,565
Total valuation allowance	$	77,044	$	83,643

The changes to unrecognized tax benefits (excluding related penalties and interest) from January 1, 2018 through December 31, 2020, were as follows (in thousands):


	2020		2019		2018
Unrecognized tax benefits, beginning of year	$	6,414	$	3,159	$	5,121

(Reductions) additions to prior year tax positions	(833)		3,354		(625)

Expirations	(203)		(209)		(1,115)

Foreign currency translation	112		110		(222)
Unrecognized tax benefits, end of year	$	5,490	$	6,414	$	3,159

The unrecognized tax benefits at December 31, 2020 if and when recognized will affect the annual effective tax rate. However, the balance at December 31, 2020 included $3.1 million of unrecognized tax benefits for Canadian Revenue Agency transfer pricing adjustments. Should these be recognized, the Company would request relief from double taxation. Therefore, an offsetting benefit of $3.1 million would also recognized resulting in no net effect on the annual effective tax rate.

The Company does not currently believe that the total unrecognized tax benefits will change within the next 12 months.

At December 31, 2020, 2019 and 2018, the Company had accrued interest of $2.1 million, $1.7 million and $0.8 million, respectively, relative to unrecognized tax benefits. Interest expense and penalties relative to unrecognized tax benefits for the years ended December 31, 2020, 2019 and 2018 were immaterial.

The Company files U.S. federal income tax returns as well as income tax returns in various states and foreign jurisdictions. The Company may be subject to examination by the IRS for calendar years 2015 through 2019. The Company may be subject to examination by Canadian federal and provincial authorities for calendar years 2013 through 2019 and by state and local revenue authorities for calendar years 2014 through 2019. The Company has ongoing U.S. state and local jurisdictional audits, as well as Canadian federal and provincial audits, all of which the Company believes will not result in material liabilities.

- 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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