Income Taxes

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The effective tax rates were 16.4% and 26.2% for the three months ended September 30, 2020 and 2019, respectively, and 21.0% and 24.8% for the nine months ended September 30, 2020 and 2019, respectively. There were net discrete tax benefits of $727 and $5,443 for the three months ended September 30, 2020 and 2019, respectively, and $6,658 and $8,357 for the nine months ended September 30, 2020 and 2019, respectively.

The reduction in the annual effective rate for the nine months ended September 30, 2020 compared with the nine months ended September 30, 2019 was primarily attributable to a greater share of income earned in lower tax rate jurisdictions, the new regulations for the Global Intangible Low-Taxed Income (“GILTI”) provisions of US tax law, which allowed companies to elect out for high taxed foreign income, and the benefit provided by tax credits and discrete items applied to the tax on significantly lower income in 2020. The change to GILTI provisions occurred during the three months ended September 30, 2020. Additionally, the mix of income earned in lower tax jurisdictions also increased during the three months ended September 30, 2020. Together, these reduced the year to date effective tax rate as compared to previous calculations. Income tax expense for the three months ended September 30, 2020 reflects the impact of these adjustments on income earned in the first two quarters, which resulted in a lower tax rate for the quarter.

Discrete benefits for the three months ended September 30, 2020 included $1,896 related to the tax deductions for equity-based compensation that exceeded compensation expense recognized and $1,586 for provision to return adjustments which were offset by a detriment of $2,641 related to losses for which no tax benefit was recognized. Discrete benefits for the three months ended September 30, 2019 included $229 related to the tax deductions for equity-based compensation that exceeded compensation expense recognized and $5,326 for provision to return adjustments.

For the nine months ended September 30, 2020, discrete benefits include $6,590 related to the tax deductions for equity-based compensation that exceeded compensation expense recognized and $3,867 for provision to return adjustments and an investment credit requested on an amended return, which were partially offset by $3,282 related to the tax effect of losses in subsidiaries for which no tax benefit was recognized. For the nine months ended September 30, 2019, discrete benefits include $4,271 related to the tax deductions for equity-based compensation that exceeded compensation expense recognized and $5,293 for provision to return adjustments.

The Company accounts for its uncertain tax positions in accordance with the accounting standards for income taxes. The Company continues to classify interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. The following is a summary of the activity of the Company’s unrecognized tax benefits for nine months ended September 30, 2020 and 2019:

	2020		2019
Balance at January 1,	$	11,416	$	11,206
Additions for tax positions in current period	2,000		3,342
Foreign currency translation	(938)		(84)
Balance at September 30,	$	12,478	$	14,464

Substantially all of the liability for uncertain tax benefits related to various federal, state and foreign income tax matters would benefit the Company's effective tax rate, if recognized.