Income Taxes

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

5.  INCOME TAXES

The total amount of unrecognized benefit that would affect the effective tax rate, if recognized, was less than $1 million as of June 30, 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 June 30, 2022. It is the Company’s policy to recognize interest and penalties related to unrecognized benefits in its condensed consolidated statements of (loss) income 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 December 31, 2023 for the tax period ended December 31, 2018.

The Company’s provision for income taxes was $200 million and $54 million for the three months ended June 30, 2022 and 2021, respectively, and $223 million and $123 million for the six months ended June 30, 2022 and 2021, respectively. The Company’s effective tax rates were (204.1)% and 59.3% for the three months ended June 30, 2022 and 2021, respectively, and (495.6)% and 98.4% for the six months ended June 30, 2022 and 2021, respectively. The increase in the provision for income taxes for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021 was primarily due to an increase in non-deductible interest as a result of a decline in projected adjusted taxable income for 2022 compared to 2021, compounded by an adverse change in the IRC Section 163(j) limit for deductible interest expense beginning in 2022. The difference in the Company’s effective tax rate for the three and six months ended June 30, 2022 compared to the three and six months June 30, 2021 is due to an increase in the provision for income taxes and the Company reporting loss before income taxes in the current year periods compared to income before income taxes in the prior year periods.

Cash paid for income taxes, net of refunds received, resulted in a net payment of approximately $4 million and $1 million during the three months ended June 30, 2022 and 2021, respectively, and $6 million and $1 million during the six months ended June 30, 2022 and 2021, respectively.