Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company's effective tax rate was 29.4% and 25.2% for the three and nine months ended September 30, 2022, respectively. The Company's effective tax rate was 28.1% and 25.3% for the three and nine months ended September 30, 2021, respectively. The effective tax rates for the three and nine months ended September 30, 2022 and 2021 were higher than the U.S. statutory rate of 21.0% primarily due to state taxes, Section 162(m) compensation limitations and foreign operations, partially offset by tax benefits for share based compensation deductions and research credits.

The Company’s 2016-2019 U.S. income tax returns are currently under examination by the Internal Revenue Service (the “IRS”). The IRS has sought to disallow research credits of $5.7 million on the Company’s 2011-2015 U.S. income tax returns. The Company has exhausted all administrative appeals and formal mediation and has currently engaged in pre-trial motions to resolve this dispute. The Company believes the research credits taken are appropriate and intends to vigorously defend its position. An amount of adjustment, if any, and the timing of such adjustment are not reasonably possible to estimate at this time. The total amount of research credits taken or expected to be taken on the Company’s income tax returns for 2011 through September 30, 2022 is $30.6 million.