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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
For financial reporting purposes, income from continuing operations before income taxes includes the following components (in thousands):
202120202019
United States$92,847 $103,306 $92,710 
Foreign (Canada)193 182 179 
Total$93,040 $103,488 $92,889 
Income tax expense (benefit) included in the accompanying Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019 was as follows (in thousands): 
 202120202019
Continuing operations:
Current:
Federal$12,369 $21,926 $12,776 
Foreign52 78 48 
State and local3,397 5,584 4,110 
Total15,818 27,588 16,934 
Deferred:
Federal5,029 (1,968)3,685 
State and local1,282 (479)1,221 
Total6,311 (2,447)4,906 
Total income tax expense from continuing operations22,129 25,141 21,840 
Discontinued operations:
Operations of discontinued operations:
Current(5)(11)(107)
Deferred— — (1)
Total income tax expense from discontinued
   operations		(5)(11)(108)
Total income tax expense$22,124 $25,130 $21,732 
The provision for income taxes attributable to income from continuing operations differed from the amount obtained by applying the federal statutory income tax rate to income from continuing operations before income taxes, as follows (in thousands, except percentages):
 202120202019
Tax at U.S. federal statutory rates$19,538 $21,733 $19,507 
State taxes (net of federal benefit)4,498 5,354 4,774 
Business meals and entertainment — non-deductible190 458 987 
Change in valuation allowance435 176 932 
Reserves for uncertain tax positions(104)(1,290)(263)
Share-based compensation(4,187)(2,394)(4,773)
Non-deductible expenses1,408 787 713 
Other, net351 317 (37)
Provision for income taxes from continuing operations$22,129 $25,141 $21,840 
Effective income tax rate23.8 %24.3 %23.5 %
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020, were as follows (in thousands):
 20212020
Deferred tax assets:
Net operating loss carryforwards$1,202 $1,249 
Allowance for doubtful accounts3,613 3,288 
Employee benefits and compensation33,549 30,151 
Lease costs5,726 6,291 
State tax credit carryforwards189 1,291 
Deferral of employer FICA taxes1,961 3,983 
Other deferred tax assets589 424 
Total gross deferred tax assets46,829 46,677 
Less: valuation allowance(2,046)(2,663)
Total deferred tax assets, net44,783 44,014 
Deferred tax liabilities:
Client list intangible assets250 524 
Goodwill and other intangibles57,740 49,680 
Property and equipment1,488 2,071 
Other deferred tax liabilities745 491 
Total gross deferred tax liabilities60,223 52,766 
Deferred income taxes, net$(15,440)$(8,752)
We have established valuation allowances for deferred tax assets related to certain employee benefits and compensation, state net operating loss (“NOL”) carryforwards and state income tax credit carryforwards at December 31, 2021 and December 31, 2020. The net decrease in the valuation allowance of $0.6 million for the year ended December 31, 2021 primarily related to changes in the valuation allowance for NOLs and state tax credit carryforwards.
In assessing the realization of deferred tax assets, management considers all available positive and negative evidence, including projected future taxable income, scheduled reversal of deferred tax liabilities, historical financial operations and tax planning strategies. Based upon review of these items, management believes it is more-likely-than-not that the Company will realize the benefits of these deferred tax assets, net of the existing valuation allowances.
We file income tax returns in the United States, Canada, and most state jurisdictions. CBIZ's federal income tax returns for years ending prior to January 1, 2018 are no longer subject to examination. With limited exceptions, our state and local income tax returns and non-U.S. income tax returns are no longer subject to tax authority examinations for years ending prior to January 1, 2017 and January 1, 2016, respectively.
The availability of NOLs and state tax credits are reported as deferred tax assets, net of applicable valuation allowances, in the accompanying Consolidated Balance Sheets. At December 31, 2021, we had state net operating loss carryforwards of $36.4 million and a state tax credit carryforward of $0.2 million. The state net operating loss carryforwards expire on various dates between 2022 and 2041 and the state tax credit carryforward expires on various dates between 2022 and 2029.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
 202120202019
Balance at January 1$1,536 $2,536 $2,819 
Additions for tax positions of the current year161 150 145 
Additions for positions of prior years400 — — 
Settlements of prior year positions(374)— (282)
Lapse of statutes of limitation(129)(1,150)(146)
Balance at December 31$1,594 $1,536 $2,536 
Included in the balance of unrecognized tax benefits at December 31, 2021 are $1.0 million of unrecognized tax benefits that, if recognized, would affect the effective tax rate. We believe it is reasonably possible that certain of these unrecognized tax benefits could change in the next twelve months. We expect reductions in the liability for unrecognized tax benefits of approximately $0.1 million within the next twelve months due to expiration of statutes of limitation. Given the number of years that are currently subject to examination, we are unable to estimate the range of potential adjustments to the remaining balance of unrecognized tax benefits at this time.
We recognize interest expense, and penalties related to unrecognized tax benefits as a component of income tax expense. During 2021, we recorded a decrease of $0.2 million in accrued interest, and, as of December 31, 2021, we had recognized a liability for interest expense and penalties of $0.2 million and $0.2 million, respectively, relating to unrecognized tax benefits. During 2020, we recorded an immaterial decrease in accrued interest, and, as of December 31, 2020, we had recognized a liability for interest expense and penalties of $0.4 million and $0.2 million, respectively, relating to unrecognized tax benefits.