Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.22.0.1
Income Taxes
12 Months Ended
Dec. 31, 2021
Income Taxes  
Income Taxes

7. Income Taxes

Deferred tax attributes resulting from differences between the tax basis of assets and liabilities and the reported amounts in the Consolidated Balance Sheets are as follows:

December 31,

December 31,

    

2021

    

2020

 

Deferred tax assets:

Accruals and reserves

$

501

$

483

Deferred rent credit

163

175

Depreciation and amortization

24

7

Total deferred tax assets

688

665

Deferred tax liabilities:

Accruals and reserves

(67)

(9)

Depreciation and amortization

(2,212)

 

(2,010)

Total deferred tax liabilities

(2,279)

(2,019)

Net deferred tax (liabilities) asset

$

(1,591)

$

(1,354)

The provision for income taxes is as follows:

Year ended December 31,

 

    

2021

    

2020

 

Current:

Federal

$

1,692

$

1,339

State

 

572

 

263

Foreign

 

674

 

314

 

2,938

 

1,916

Deferred:

Federal

 

(45)

 

(134)

State

(12)

(28)

Foreign

 

285

 

(8)

 

228

 

(170)

$

3,166

$

1,746

Effective Tax Rate

 

25.6

%  

 

28.1

%

The reasons for the difference between total tax expense and the amount computed by applying the U.S. statutory federal income tax rate to income before income taxes are as follows:

Year ended December 31,

 

    

2021

    

2020

 

Statutory rate applied to pretax income

$

2,596

$

1,309

State income taxes, net of federal income tax benefit

 

442

 

182

Adjustment for foreign rate change

353

Other permanent items

19

19

Acquisition related costs

319

Dividends

(17)

(19)

Foreign income taxes over U.S. statutory rate

 

(18)

 

(1)

GILTI, net of foreign tax credits

(38)

Stock compensation

(135)

(59)

Other items

 

(36)

 

(4)

Income tax expense

$

3,166

$

1,746

The Company has analyzed filing positions in all the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company has identified its federal consolidated tax return, its state tax return in New Jersey, its Canadian tax return and its tax return in the United Kingdom as major tax jurisdictions. As of December 31, 2021, the Company’s 2018 through 2020 Federal tax returns remain open for

examination. The Company’s New Jersey and Canadian tax returns are open for examination for the years 2017 through 2020. The Company’s tax return in the United Kingdom is open for examination for the years 2019 and 2020. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including experience and interpretations of tax law applied to the facts of each matter.

For financial reporting purposes, income before income taxes includes the following components:

Year ended December 31,

 

    

2021

    

2020

 

United States

$

9,355

$

4,767

Foreign

 

3,009

 

1,453

$

12,364

$

6,220

The Company has approximately $7.4 million of undistributed earnings in Canada and $2.2 million of undistributed earnings in the United Kingdom, which it continues to reinvest indefinitely, and therefore no withholding taxes related to its repatriation has been recorded.

The following table summarizes the activity related to the Company’s unrecognized tax benefits as of December 31, 2021 and 2020:

2021

    

2020

Balance as of January 1

$

-

$

49

Additions related to prior period tax positions

 

-

-

Reductions related to settlements with tax authorities

 

-

(49)

Balance as of December 31

$

-

$

-

During the years ended December 31, 2021 and 2020, the Company incurred interest and penalties of zero and less than $0.1 million, respectively, related to these uncertain tax benefits.