Income Taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

Our income tax provision represents federal, state, and international taxes on our income recognized for financial statement purposes and includes the effects of temporary differences between financial statement income and income recognized for tax return purposes. Deferred tax assets and liabilities are recorded for temporary differences between the financial reporting basis and the tax basis of assets and liabilities as adjusted for the expected benefits of utilizing net operating loss carryforwards. We record a valuation allowance to reduce our deferred tax assets to reflect the net deferred tax assets that we believe will be realized. In assessing the likelihood that we will be able to recover our deferred tax assets and the need for a valuation allowance, we consider all available evidence, both positive and negative, including historical levels of pre-tax book income, expiration of net operating losses, expectations and risks associated with estimates of future taxable income, and ongoing prudent and feasible tax planning strategies, as well as current tax laws. As of September 30, 2021, we continue to record a valuation allowance of $17.9 million against deferred tax assets primarily attributable to state net operating loss carryovers.

We recorded an income tax benefit of $13.9 million during the nine months ended September 30, 2021, consisting of a $16.8 million tax benefit from current operations, a $3.5 million U.S. state tax benefit, a $1.9 million tax reduction attributed to foreign tax, and a $1.8 million tax reduction attributed to the release of tax reserves, partially offset by a $6.3 million increase attributed to the base erosion anti-abuse tax (“BEAT”) in the U.S., $1.4 million increase attributed to non-deductible acquisition costs, and a $1.2 million increase attributed to foreign capital gains tax.

There were no unrecognized tax benefits as of September 30, 2021. The total amount of unrecognized tax benefits as of December 31, 2020 were $1.8 million, including $0.3 million of accrued interest. We make adjustments to these reserves when facts and circumstances change, such as the closing of tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and operating results. For the nine months ended September 30, 2021, we released $1.8 million of our reserve primarily attributable to the conclusion of foreign tax audits. It is reasonable to expect that the amount of unrecognized tax benefits could change in the next twelve months; however, we do not expect the change to have a significant impact on our results of operations or financial condition.

We file income tax returns in the U.S. federal jurisdiction, various states, and foreign jurisdictions. With a few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2016.