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INCOME TAXES
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The domestic and foreign components of income before provision for income taxes were as follows (in thousands):
 For the years ended December 31,
 202120202019
Domestic$223,438 $168,117 $156,571 
Foreign46,277 6,433 (8,332)
Total$269,715 $174,550 $148,239 
The provision for income taxes consisted of the following (in thousands, except percentages):
 For the years ended December 31,
 202120202019
Current:   
Federal$42,480 $33,327 $20,482 
State18,126 14,575 14,564 
Foreign4,380 1,559 7,448 
64,986 49,461 42,494 
Deferred   
Federal2,275 (965)7,933 
State(4,777)(2,506)550 
Foreign3,984 (6,277)(478)
1,482 (9,748)8,005 
Provision for income taxes$66,468 $39,713 $50,499 
Effective tax rate
24.6%
22.8%
34.1%
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,
 202120202019
Tax expense at US statutory rate$56,640 $36,655 $31,130 
State income taxes, net of federal benefit12,101 9,837 10,597 
Foreign rate differential1,922 1,256 276 
Valuation allowance(9,139)(11,339)4,459 
Uncertain tax position interest and penalties263 (712)474 
Tax credits expired (used)2,530 2,039 (50)
Non-deductible compensation2,326 1,406 1,922 
Other(175)571 1,691 
Provision for income taxes$66,468 $39,713 $50,499 
The valuation allowance benefits recognized in 2021 and 2020 are predominately related to taxable earnings in certain Canadian entities that benefited from the wage subsidy received under CEWS. In addition, foreign tax credits that expired in 2021 and 2020 had full valuation allowances which were also written off, contributing to the valuation allowance benefits in the table above. The foreign tax credit expirations and associated valuation allowance write offs had no net impact to the provision for income taxes in either year.
During the year ended December 31, 2020, the Company recorded $1.3 million 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, 2021 and 2020 were as follows (in thousands):
20212020
Deferred tax assets:  
Provision for doubtful accounts$10,188 $10,305 
Closure, post-closure and remedial liabilities28,206 28,665 
Operating lease liabilities42,218 38,151 
Accrued expenses20,455 16,797 
Accrued compensation and benefits24,504 11,372 
Net operating loss carryforwards(1)
68,381 50,433 
Tax credit carryforwards(2)
12,368 14,471 
Interest rate swap liability5,215 10,089 
Stock-based compensation2,705 3,040 
Other5,635 5,553 
Total deferred tax assets219,875 188,876 
Deferred tax liabilities:  
Property, plant and equipment(273,883)(194,604)
Operating lease right-of-use assets(41,260)(38,018)
Permits and other intangible assets(138,241)(95,492)
Prepaid expenses(10,212)(9,660)
Total deferred tax liabilities(463,596)(337,774)
Total net deferred tax liability before valuation allowance(243,721)(148,898)
Less valuation allowance(69,806)(77,044)
Net deferred tax liabilities$(313,527)$(225,942)
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(1)As of December 31, 2021, the net operating loss carryforwards included (i) state net operating loss carryforwards of $280.6 million which will begin to expire in 2022, (ii) federal net operating loss carryforwards of $124.1 million which will begin to expire in 2024 and (iii) foreign net operating loss carryforwards of $116.0 million which will begin to expire in 2022. The increases in the state net operating loss carryforwards and federal net operating loss carryforwards are due to balances acquired in the HydroChemPSC acquisition.
(2)As of December 31, 2021, the foreign tax credit carryforwards of $11.0 million will expire between 2022 and 2024.
The Company has not accrued for any remaining undistributed foreign earnings. These amounts continue to be indefinitely reinvested in foreign operations and the amount of tax associated with the earnings is not expected to be material.
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, 2021 and 2020 were as follows (in thousands):
20212020
Allowance related to:  
Foreign tax credits11,047 14,127 
Federal net operating losses3,788 779 
State net operating loss carryforwards12,053 10,429 
Foreign net operating loss carryforwards26,697 29,839 
Deferred tax assets of a Canadian subsidiary10,701 11,468 
Realized and unrealized capital losses5,520 10,402 
Total valuation allowance$69,806 $77,044 
The changes to unrecognized tax benefits (excluding related penalties and interest) from January 1, 2019 through December 31, 2021, were as follows (in thousands):
202120202019
Unrecognized tax benefits, beginning of year$5,490 $6,414 $3,159 
(Reductions) additions to prior year tax positions— (833)3,354 
Expirations— (203)(209)
Foreign currency translation6 112 110 
Unrecognized tax benefits, end of year$5,496 $5,490 $6,414 
The unrecognized tax benefits at December 31, 2021 if and when recognized will affect the annual effective tax rate. However, the balance at December 31, 2021 included $3.2 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 $3.2 million would also recognized resulting in no net effect on the annual effective tax rate.
Due to expiring statute of limitation periods, the Company believes that total unrecognized tax benefits will decrease by approximately $0.3 million within the next 12 months.
At December 31, 2021, 2020 and 2019, the Company had accrued interest of $2.3 million, $2.1 million and $1.7 million, respectively, relative to unrecognized tax benefits. Interest expense and penalties relative to unrecognized tax benefits for the years ended December 31, 2021, 2020 and 2019 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 Internal Revenue Service for calendar years 2016 through 2020. The Company may be subject to examination by Canadian federal and provincial authorities for calendar years 2014 through 2020 and by state and local revenue authorities for calendar years 2015 through 2020. 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.