Income Taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The effective tax rates were 26.4% and 16.4% for the three months ended September 30, 2021 and 2020, respectively, and 24.6% and 21.0% for the nine months ended September 30, 2021, and 2020, respectively. There were net discrete tax benefits of $1,424 and $727 for the three months ended September 30, 2021 and 2020, respectively, and $5,849 and $6,658 for the nine months ended September 30, 2021 and 2020, respectively, which were primarily related to the tax deductions for equity-based compensation that exceeded compensation expense recognized for books and to provision to return adjustments for the prior year.

The primary reasons for the increase in the tax rate from the prior year is due in part to the higher level of income in 2021 which means the benefits from equity based compensation and tax credits provided a lower percentage benefit and in part to the impact to the third quarter 2020 tax rate from new regulations for the Global Intangible Low-Taxed Income (“GILTI”) provisions of US tax law issued in July 2020, which allowed companies to elect out of GILTI for high taxed foreign income. This change substantially reduced the tax rate in that quarter as it reduced the annual effective rate applied to year to date income; the impact of that reduced rate applied to income earned in the first two quarters of 2020 reduced the tax expense in the third quarter of 2020.

The Company accounts for its uncertain tax positions in accordance with the accounting standards for income taxes. The Company classifies 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, 2021 and 2020:

	Nine Months Ended September 30,
	2021		2020
Balance at January 1,	$	14,706	$	11,416
Additions for tax positions in current period	4,000		2,000
Foreign currency translation	92		(938)
Balance at September 30,	$	18,798	$	12,478

The liability for uncertain tax benefits is included in deferred income taxes and other long-term liabilities at September 30, 2021 and December 31, 2020. 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.