Income Taxes

9 Months Ended

Sep. 30, 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 September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019
Effective Tax Rate	25.0%	22.5%	23.1%	22.3%

Our tax rates for the three and nine months ended September 30, 2020 are higher than the prior year’s comparable periods primarily due to a larger accrual of income and withholding tax due upon the ultimate repatriation of taxes to the U.S., partially offset by lower income taxes attributable to non-U.S. jurisdictions.

Our tax rate for the three months ended September 30, 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 certain expenses that are statutorily non-deductible for income tax purposes, partially offset by the U.S. federal research credit.

Our tax rate for the nine months ended September 30, 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 certain expenses that are statutorily non-deductible for income tax purposes, partially offset by excess share-based compensation benefits and the U.S. federal research credit.

Unrecognized Tax Benefits

During the three months ended September 30, 2020, our gross unrecognized tax benefits, excluding interest and penalties, increased by $0.2 million primarily as a result of tax positions taken in both the current and prior periods, partially offset by reductions resulting from the expiration of statutes of limitations and settlements with taxing authorities. During the nine months ended September 30, 2020, our gross unrecognized tax benefits, excluding interest and penalties, decreased by $2.5 million primarily as a result of reductions resulting from the expiration of statutes of limitations, settlements with taxing authorities and tax positions taken during a prior period, partially offset by increases in tax positions taken during the current period.

During the three months ended September 30, 2020, the total amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate increased by $0.5 million. During the nine months ended September 30, 2020, the total amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate decreased by $2.1 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 and nine months ended September 30, 2020, we recognized $0.2 million and $0.5 million, respectively, of interest and penalty expense related to unrecognized tax benefits in our Condensed Consolidated Statement of Operations. At September 30, 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 $8.5 million and $8.0 million, respectively.

During the next twelve months, it is reasonably possible that our unrecognized tax benefits may decrease by $14.3 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.