Income Taxes

3 Months Ended

Mar. 31, 2020

Effective Tax Rates

Our quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the period presented.

Our effective tax rates are as follows:



	Three Months Ended March 31,
	2020	2019
Effective Tax Rate	21.8%	21.0%

Our tax rate for the three months ended March 31, 2020 is higher than the prior year’s comparable periods primarily due to lower share-based compensation benefits, partially offset by a higher statutory U.S. deduction related to our non-U.S. subsidiaries’ income.

Our tax rate for the three months ended March 31, 2020 is higher than the statutory U.S. federal tax rate of 21% primarily due to earnings in jurisdictions with statutory tax rates higher than the U.S. and U.S. state taxes, partially offset by excess share-based compensation benefits and the statutory U.S. deduction related to our non-U.S. subsidiaries’ income.

Unrecognized Tax Benefits

During the three months ended March 31, 2020, our gross unrecognized tax benefits, excluding interest and penalties, decreased by $1.3 million, primarily as a result of reductions resulting from the expiration of statutes of limitations and tax positions taken in prior periods, partially offset by increases in tax positions taken in the current year. During the three months ended March 31, 2020, the total amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate decreased by $1.1 million. The difference between these amounts relates to (1) offsetting tax effects from other tax jurisdictions, and (2) interest expense, net of deferred taxes.

During the three months ended March 31, 2020, we recognized $0.3 million of interest and penalty expense related to unrecognized tax benefits in our Condensed Consolidated Statement of Operations. At March 31, 2020 and December 31, 2019, the total amount of accrued interest and penalty expense related to unrecognized tax benefits recorded in our Condensed Consolidated Balance Sheets was $8.3 million and $8.0 million, respectively.

During the next twelve months, it is reasonably possible that our unrecognized tax benefits may decrease by $10.3 million due to expiration of statutes of limitations and settlements with tax authorities. However, if the ultimate resolution of income tax examinations results in amounts that differ from this estimate, we will record additional income tax expense or benefit in the period in which such matters are effectively settled.