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Income Taxes
3 Months Ended
Mar. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company's effective tax rate for the three months ended March 31, 2021 was 22.2%. For the three months ended March 31, 2020, the Company recorded tax expense on a pre-tax loss resulting in a negative tax rate of 75.7%. The difference between the effective tax rate and the 21% federal statutory rate in 2020 was primarily due to a change in valuation allowance over consolidated pre-tax loss for the period, recognized in the period under the discrete method. The Company utilized the discrete method for recording income taxes during 2020 due to uncertainty in estimating annual pre-tax earnings, primarily due to the COVID-19 pandemic. The Company re-evaluated the methodology in calculating income taxes and returned to using the estimated annual effective tax rate method during the three months ended March 31, 2021.
Each interim period is considered an integral part of the annual period and tax expense or benefit is measured using an estimated annual effective income tax rate. The estimated annual effective tax rate for the full year is applied to the respective interim period, taking into account year-to-date amounts and projected amounts for the year. Since the Company operates in foreign countries with varying tax rates, the Company's quarterly effective tax rate is dependent on the level of income or loss from international operations in the reporting period.
The Company's subsidiary in Costa Rica is operating under a 100% tax holiday through December 31, 2026. The impact of the tax holiday in Costa Rica for the three months ended March 31, 2021 and 2020, was immaterial.
The Company is subject to income taxes in the U.S. and foreign jurisdictions. Significant judgement is required in evaluating uncertain tax positions and determining our provision for income taxes. There has been no material change to the Company’s total gross unrecognized tax benefits from December 31, 2020.