INCOME TAXES

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Tax Rate for the Nine and Three Months Ended September 30, 2021

The Company has historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. The Company used a discrete effective tax rate method to calculate taxes for the fiscal three- and nine-month periods ended September 30, 2021. The Company determined that since small changes in estimated "ordinary" income would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate for the fiscal three- and nine-month periods ended September 30, 2021.

The Company recognized an income tax benefit at an effective income tax rate of 20.7% for the nine months ended September 30, 2021. The Company recognized an income tax expense at an effective income tax rate of 173.5% for the three months ended September 30, 2021. The effective income tax rate was determined using a discrete effective tax rate method to calculate taxes for the period. The effective income tax rate for the period was impacted by permanent items, state tax expense and discrete income tax expense related to net operating loss carrybacks.

On March 27, 2020, the United States enacted the CARES Act. The CARES Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effects of the COVID-19 pandemic. The CARES Act includes significant business tax provisions that, among other things, includes the removal of certain limitations on utilization of net operating losses, increases the loss carry back period for certain losses to five years, and increases the ability to deduct interest expense, as well as amending certain provisions of the previously enacted Tax Cuts and Jobs Act. The Company continues to evaluate the impact the CARES Act will have on the Company’s tax obligations.

Tax Rate for the Nine and Three Months Ended September 30, 2020

The Company recognized an income tax benefit at an effective income tax rate of 20.4% and 20.0% for the nine months and three months ended September 30, 2020, respectively, which was determined using a forecasted rate based upon projected taxable income for the full year.

Net Deferred Tax Assets and Liabilities

The income tax accounting process to determine the deferred tax liabilities involves estimating all temporary differences between the tax and financial reporting bases of the Company’s assets and liabilities, based on enacted tax laws and statutory tax rates applicable to the period in which the differences are expected to affect taxable income. The Company estimated the current exposure by assessing the temporary differences and computing the provision for income taxes by applying the estimated effective tax rate to income.