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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
 
The provision for income taxes from operations consisted of the following: 
 Years Ended December 31,
(in thousands)
202220212020
Current
Federal$90,703 $65,861 $42,337 
State25,347 19,515 12,571 
Foreign12,544 7,641 4,478 
Deferred0
Federal(5,806)802 2,330 
State(801)(169)598 
Foreign(7,917)(1,548)250 
$114,070 $92,102 $62,564 
 

Income and loss from operations before income taxes for the years ended December 31, 2022, 2021, and 2020, respectively, consisted of the following:
 Years Ended December 31,
 (in thousands) 
202220212020
Domestic$437,506 $336,085 $238,320 
Foreign10,559 22,464 11,244 
$448,065 $358,549 $249,564 

As of December 31, 2022, the Company had $36.1 million of net operating loss carryforwards in various foreign taxing jurisdictions. Most of the tax losses can be carried forward indefinitely.

As of December 31, 2022, and 2021, the Company has valuation allowances of $11.2 million and $12.0 million, respectively. The valuation allowance decreased by $0.8 million and increased by $0.7 million for the years ended December 31, 2022, and December 31, 2021, respectively. The decrease in the 2022 valuation allowances was primarily a result of exchange rate fluctuation. The increase in the 2021 valuation allowances was primarily the result of an impairment on a foreign equity investment.

As of December 31, 2022, the Company asserts that its accumulated undistributed earnings generated by our foreign subsidiaries are permanently reinvested and as such, has not recognized a US deferred tax liability on its investment in foreign subsidiaries. The Company will continue to assess its permanent reinvestment assertion on a quarterly basis.
Reconciliations between the statutory federal income tax rates and the Company’s effective income tax rates as a percentage of income before income taxes for its operations were as follows:
 Years Ended December 31,
 (in thousands) 
202220212020
Federal tax rate21.0 %21.0 %21.0 %
State taxes, net of federal benefit4.4 %4.3 %4.2 %
Change in valuation allowance— %— %0.1 %
True-up of prior year tax returns to tax provision— %(0.1)%(0.4)%
Difference between U.S. statutory and foreign local tax rates0.2 %0.4 %0.4 %
Change in uncertain tax position— %— %— %
Other(0.1)%0.1 %(0.2)%
Effective income tax rate25.5 %25.7 %25.1 %

The tax effects of the significant temporary differences that constitute the deferred tax assets and liabilities as of December 31, 2022, and 2021, respectively, were as follows:
 As of December 31,
 (in thousands)
20222021
Deferred asset taxes
State tax$1,857 $1,490 
Health claims2,877 1,351 
Inventories7,902 7,497 
Sales incentive and advertising allowances2,191 1,777 
Lease obligations14,827 11,562 
Stock-based compensation2,251 2,612 
Foreign tax credit carryforwards4,961 4,983 
Non-United States tax loss carry forward6,557 7,824 
Acquisition expense2,409 609 
Capitalized research & development expenditures6,671 — 
Other2,533 1,889 
Total deferred tax assets$55,036 $41,594 
  Less valuation allowances(11,180)(11,992)
  Total deferred asset taxes$43,856 $29,602 
Deferred tax liabilities
Depreciation$(28,271)$(14,999)
Goodwill and other intangibles amortization(102,998)(16,682)
Right of use assets(14,635)(11,453)
Hedging OCI(10,284)— 
Total deferred tax liabilities(156,188)(43,134)
Total Deferred tax asset/(liability)$(112,332)$(13,532)
A reconciliation of the beginning and ending amounts of unrecognized tax benefits in 2022, 2021 and 2020, respectively, were as follows, including foreign translation amounts:
Reconciliation of Unrecognized Tax Benefits202220212020
Balance as of January 1$944 $1,168 $1,706 
Additions based on tax positions related to prior years6,528 9 78 
Reductions based on tax positions related to prior years(38)(47)(7)
Additions for tax positions of the current year73 3 48 
Lapse of statute of limitations(275)(189)(657)
Balance as of December 31$7,232 $944 $1,168 

During 2022, the Company’s uncertain tax positions increased by $6.5 million, primarily due to positions for open years of which were assumed in the Company’s acquisition of ETANCO.
 
Tax positions of $0.2, $0.3, and $0.3 million are included in the balance of unrecognized tax benefits as of December 31, 2022, 2021, and 2020, respectively, which if recognized, would reduce the effective tax rate.

The Company accrues interest and penalties related to unrecognized tax benefits in income tax expense in accordance with the Company’s historical accounting policy. During the years ended December 31, 2022, 2021 and 2020, accrued interest increased by $673 thousand, and decreased by $39 thousand and $108 thousand, respectively. The Company had accrued $0.9 million, $0.2 million and $0.3 million as of December 31, 2022, 2021 and 2020, respectively for the potential payment of interest and penalties before income tax benefits. The Company does not expect any material changes in unrecognized tax benefits within the next 12 months.
 
As of December 31, 2022, the Company remained subject to federal income tax examinations in the U.S. for the tax years 2019 through 2022. In addition, tax years 2017 through 2022 remain open to examination in states, local and foreign jurisdictions.

On August 16, 2022, President Biden signed into law the Inflation Reduction Act “IRA”. The provisions include the new Corporate Alternative Minimum Tax "CAMT", an excise tax on stock buybacks, and significant tax incentives for energy and climate initiatives, all effective for tax year 2023. The Company is not subject to the provisions of CAMT but will evaluate the impact, if any, of the other provisions under the IRA when they become effective in tax year 2023.