Income Taxes

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

4.  INCOME TAXES

The total amount of unrecognized benefit that would affect the effective tax rate, if recognized, was less than $1 million as of March 31, 2022. A total of less than $1 million of interest and penalties is included in the amount of the liability for uncertain tax positions at March 31, 2022. It is the Company’s policy to recognize interest and penalties related to unrecognized benefits in its condensed consolidated statements of loss as income tax expense.

It is possible the amount of unrecognized tax benefit could change in the next 12 months as a result of a lapse of the statute of limitations and settlements with taxing authorities; however, the Company does not anticipate the change will have a material impact on the Company’s condensed consolidated results of operations or financial position.

The Company’s federal income tax return for the 2018 tax year remains under examination by the Internal Revenue Service. The Company believes the result of this examination will not be material to its consolidated results of operations or consolidated financial position. The Company has extended the federal statute of limitations through June 30, 2022 for Community Health Systems, Inc. for the tax periods ended December 31, 2014 and 2015. In addition, the Company has extended the federal statute of limitations through December 31, 2023 for the tax period ended December 31, 2018.

The Company’s effective tax rates were 43.4% and 202.9% for the three months ended March 31, 2022 and 2021, respectively. Valuation allowances recognized on IRC Section 163(j) interest carryforwards created as a result of the financing transaction completed during the three months ended March 31, 2022 were lower than valuation allowances recognized related to the financing transactions completed during the three months ended March 31, 2021, resulting in a period-over-period decrease in the effective tax rate.

Cash paid for income taxes, net of refunds received, resulted in a net payment of approximately $2 million and less than $1 million during the three months ended March 31, 2022 and 2021, respectively.