Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

v3.21.2
Income Taxes
6 Months Ended
Jun. 30, 2021
Income Taxes  
Income Taxes

16.

Income Taxes

The Company’s effective tax rate was 5.5% and (14.4%) for the three months ended June 30, 2021 and 2020, respectively. The Company’s effective tax rate was 4.7% and (15.4%) for the six months ended June 30, 2021 and 2020, respectively.  The effective tax rate for the three and six months ended June 30, 2021 was lower than the Company’s historical annual effective tax rate due to a discrete tax benefit of $2,739 related to favorable income tax audit results in states in which the Company files. The following items caused the effective tax rate for the three and six months ended June 30, 2020 to be significantly different from the Company’s historical annual effective tax rate:

The Company recorded impairment of nondeductible goodwill related to the Municipal reporting unit. This decreased the rate by 8.4% and 7.5% for the three and six months ended June 30, 2020, respectively.
After an evaluation of recent profitability, future projections of profitability, and future deferred tax liabilities, the Company concluded that an additional valuation allowance of approximately $1,477 was necessary for certain state deferred tax assets. This decreased the rate by 0.3% and 0.2% for the three and six months ended June 30, 2020, respectively.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  The largest item affecting deferred taxes is the difference between book and tax amortization of goodwill and other intangibles amortization.