Annual report pursuant to Section 13 and 15(d)

Provision for Income Taxes

v3.21.2
Provision for Income Taxes
 12 Months Ended
Sep. 30, 2021
Income Tax Disclosure [Abstract]  
Provision for Income Taxes Provision for Income Taxes
The Company files a consolidated United States federal income tax return and income tax returns in various states. Management evaluated the Company’s tax positions based on appropriate provisions of applicable enacted tax laws and regulations and believes that they are supportable based on their specific technical merits and the facts and circumstances of the transactions.
The provision for income taxes for the fiscal years ended September 30, 2021, 2020 and 2019 consisted of the following (in thousands):
For the Fiscal Year Ended 
September 30,
2021 2020 2019
Current
U.S. Federal $ 3,609  $ 8,960  $ 9,780 
State 995  490  1,132 
Total current 4,604  9,450  10,912 
Deferred
U.S. Federal 3,029  2,222  2,203 
State 716  1,088  794 
Total deferred 3,745  3,310  2,997 
Provision for income taxes $ 8,349  $ 12,760  $ 13,909 
Differences exist between income and expenses reported on the consolidated financial statements and those deducted for U.S. federal and state income tax reporting. The Company’s deferred tax assets and liabilities consisted of the following temporary difference tax effects at September 30, 2021, 2020 and 2019 (in thousands):
September 30,
2021 2020
Deferred tax assets
Allowance for bad debt $ 413  $ 527 
Amortization of finite-lived intangible assets 586  405 
State net operating loss 488  664 
Employee benefits 736  37 
Accrued insurance claims 1,610  1,583 
Other 335  556 
Total deferred tax assets 4,168  3,772 
Deferred tax liabilities
Amortization of goodwill (6,541) (5,048)
Property, plant and equipment (14,530) (12,341)
Other (459) — 
Total deferred tax liabilities, (21,530) (17,389)
Net deferred tax liabilities $ (17,362) $ (13,617)
The Consolidated Balance Sheets at September 30, 2021 and 2020 include gross deferred tax assets of $4.2 million and $3.8 million, respectively. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryforward periods), projected taxable income, and tax-planning strategies in making this assessment. Based on the weight of all evidence known and available as of the balance sheet date, management believes that these tax benefits are more likely than not to be realized in the future. To the extent that management does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established.
Income taxes payable have been reduced by fuel tax credits of $0.3 million for each of the fiscal years ended September 30, 2021 and 2020. The remaining amount of goodwill expected to be deductible for tax purposes was $68.5 million and $22.6 million at September 30, 2021 and 2020, respectively.
The following is a reconciliation of net deferred tax assets (liabilities) to amounts reflected on the Company’s Consolidated Balance Sheets at September 30, 2021 and 2020 (in thousands):
September 30,
2021 2020
Asset: Deferred income taxes, net $ —  $ 386 
Liability: Deferred income taxes, net (17,362) (14,003)
Net deferred tax assets (liabilities) $ (17,362) $ (13,617)
At September 30, 2021 and 2020, the Company had state net operating loss carryforwards of $15.2 million and $15.3 million, respectively. The state net operating loss credit carryforwards expire in varying amounts between the fiscal years ended September 30, 2032 and 2036.
The U.S. statutory federal income tax rate applicable to the Company was 21% during the fiscal years ended September 30, 2021, 2020 and 2019. The following table reconciles income taxes based on the U.S. federal statutory tax rate to the Company’s income before provision for income taxes for the fiscal years ended September 30, 2021, 2020 and 2019 (in thousands):
For the Fiscal Year Ended 
September 30,
2021 2020 2019
Provision for income tax at federal statutory rate $ 5,990  $ 11,142  $ 11,976 
State income taxes 1,351  1,272  1,521 
Permanent differences 961  330  319 
Other 47  16  93 
Provision for income taxes $ 8,349  $ 12,760  $ 13,909 
Uncertain Tax Positions
ASC Topic 740, Income Taxes (“ASC 740”), prescribes a recognition threshold and measurement model for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return and provides guidance on derecognition classification, interest and penalties, accounting in interim periods, disclosure and transition.
The Company is subject to tax audits in various jurisdictions in the United States. Tax audits, by their nature, are often complex. In the normal course of business, the Company is subject to challenges from the Internal Revenue Service (“IRS”) and other tax authorities regarding amounts of taxes due. These challenges may alter the timing or amount of taxable income or deductions, or the allocation of income among tax jurisdictions. As part of the calculation of the provision for income taxes on earnings, management determines whether the benefits of the Company’s tax positions are at least more likely than not to be sustained upon audit based on the technical merits of the tax position. For tax positions that are more likely than not to be sustained upon audit, management accrues the largest amount of the benefit that is more likely than not to be sustained. Such accruals require management to make estimates and judgments with respect to the ultimate outcome of a tax audit. Actual results could vary materially from these estimates. The Company performed an analysis of its tax positions and determined that no uncertain tax positions existed at September 30, 2021 or 2020. Accordingly, there was no liability for uncertain tax positions at September 30, 2021 or 2020. Based on the provisions of ASC 740, the Company had no material unrecognized tax benefits at September 30, 2021 or 2020. Due to the utilization of net operating loss carryforwards, the Company’s federal income tax returns for fiscal years ended September 30, 2015 through September 30, 2021 are subject to examination. Various state income tax returns for fiscal years ended September 30, 2012 through September 30, 2021 are also subject to examination.