The Company is taxed as a corporation for income tax purposes and is subject to federal, state, and local taxes with respect to its allocable share of any net taxable income from RSG LLC. RSG LLC is a limited liability company taxed as a partnership for income tax purposes, and its taxable income or loss is passed through to its members, including the Company. RSG LLC is subject to income taxes on its taxable income in certain foreign countries, in certain state and local jurisdictions that impose income taxes on partnerships, and on the taxable income of its U.S. corporate subsidiaries. For the periods presented prior to the Organizational Transactions and IPO, the reported income taxes represent those of RSG LLC.

The effective tax rates are significantly different from the 21% U.S. federal statutory tax rate primarily because the Company was taxed as an LLC pre-IPO and is not liable for income taxes on the portion of earnings that is attributable to the non-controlling interest in the post-IPO period.

Uncertain Tax Positions

The Company does not believe it has any significant uncertain tax positions and therefore has no unrecognized tax benefits as of December 31, 2021, that if recognized, would affect the annual effective tax rate. The Company will file its first tax returns for the tax year ended December 31, 2021 in 2022, which is the first tax year subject to examination by taxing authorities for U.S. federal and state income tax purposes. The 2018 through 2020 tax years are considered open for purposes of federal examination under the statutes of limitations for RSG LLC, which continues to file an annual U.S. Return of Partnership Income, and our C-Corporation subsidiaries. There are no on-going U.S. federal, state, or foreign tax audits or examinations as of the date of issuance of this Form 10-K.

Deferred Taxes

As a result of the Organizational Transactions and the IPO, the Company acquired an interest in RSG LLC and has recognized a deferred tax asset for the difference between the financial reporting and tax basis of its investment in RSG LLC and for start-up costs incurred.

As of December 31, 2021, the Company concluded that, based on the weight of all available positive and negative evidence, the Deferred tax assets with respect to the Company’s basis difference in its investment in RSG LLC, start-up costs, tax credits and U.S. net operating losses are more likely than not to be realized. As such, no valuation allowance has been recognized against those deferred tax assets. The Company has recorded a full valuation allowance against U.K. net operating losses in the amount of $0.3 million. The valuation allowance will be maintained until there is sufficient evidence to support the reversal of all or some portion of this allowance.

Tax Receivable Agreement (TRA)

In connection with the Organizational Transactions and IPO, the Company entered into a TRA with certain pre-IPO LLC Unitholders. The TRA provides for the payment by the Company to certain pre-IPO LLC Unitholders of 85% of the net cash savings, if any, in U.S. federal, state and local income taxes that the Company realizes (or is deemed to realize in certain circumstances) as a result of (i) certain increases in the tax basis of the assets of RSG LLC resulting from purchases or exchanges of LLC Units (“Exchange Tax Attributes”), (ii) certain tax attributes of RSG LLC that existed prior to the IPO or to which the Company succeed as a result of certain aspects of the Organizational Transactions (“Pre-IPO M&A Tax Attributes”), (iii) certain favorable "remedial" partnership tax allocations to which the Company becomes entitles (if any), and (iv) certain other tax benefits related to the Company entering into the TRA, including certain tax benefits attributable to payments that the Company is makes under the TRA (“TRA Payment Tax Attributes”). The Company recognizes a liability on the consolidated balance sheet based on the undiscounted estimated future payments under the TRA. The amounts payable under the TRA will vary depending upon a number of factors, including the amount, character, and timing of the taxable income of the Company in the future.

Based on current projections, the Company anticipates having sufficient taxable income to be able to realize the benefits and has recorded Tax receivable agreement liabilities of $272.1 million related to these benefits on the Consolidated Balance Sheets as of December 31, 2021 in a non-cash transaction. The following summarizes activity related to the Tax receivable agreement liabilities:

During the year ended December 31, 2021, the TRA liabilities increased $272.6 million as a result the Organizational Transactions and the IPO which resulted in an increase to Additional paid-in capital on the Consolidated Statements of Mezzanine Equity and Stockholders’/Members’ Equity. During the year ended December 31, 2021, the Company remeasured the TRA liabilities due to changes in state tax rates resulting in a $0.5 million benefit as the Company decreased its estimated cash tax savings rate from 25.17% to 25.12%. The change was recognized in Other non-operating income (loss) on the Consolidated Statements of Income.

Members' Tax Distributions

The Company declared Members' Tax Distributions of $34.9 million, inclusive of $11.2 million in the post-IPO period, $63.4 million, and $33.1 million as of December 31, 2021, 2020, and 2019, respectively. Members' Tax Distributions for quarterly estimates are generally paid throughout the year they relate to, and a final payment is made in the first half of the subsequent year.