Income Taxes

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income TaxesOur income tax expense or benefit for interim periods is normally determined using an estimate of our annual effective tax rate, adjusted for discrete items. In the second quarter of 2022, we determined that we could not make a reliable estimate of the annual effective tax rate primarily due to the sensitivity of the estimated annual tax rate to changes in forecasted pre-tax earnings in relation to significant permanent differences. As a result, the effective tax rate for the six months ended June 30, 2022 was calculated based on 2022 year-to-date results. We recorded a tax benefit of $159 for the six months ended June 30, 2022 primarily reflecting the 2022 operating losses. The difference between the 2022 year-to-date effective tax rate of 12.8% and the current federal tax rate of 21% is primarily driven by increases to the valuation allowance in 2022, which reduced our recorded income tax benefit.

As of December 31, 2021, the Company had recorded valuation allowances of $2,423 primarily for certain federal deferred tax assets, as well as for certain federal and state net operating loss and tax credit carryforwards. To measure the valuation allowance, the Company estimated in what year each of its deferred tax assets and liabilities would reverse using systematic and logical methods to estimate the reversal patterns. Based on these methods, deferred tax liabilities are assumed to reverse and generate taxable income over the next 5 to 10 years while deferred tax assets related to pension and other postretirement benefit obligations are assumed to reverse and generate tax deductions over the next 15 to 20 years. The valuation allowance primarily results from not having sufficient income from deferred tax liability reversals in the appropriate future periods to support the realization of deferred tax assets.

Federal income tax audits have been settled for all years prior to 2018. The Internal Revenue Service (IRS) began the 2018-2019 federal tax audit in the first quarter of 2021 and added tax year 2020 to the audit in the fourth quarter of 2021. We are also subject to examination in major state and international jurisdictions for the 2008-2020 tax years. We believe appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all open years.