Income Taxes

3 Months Ended

Mar. 31, 2021

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,
	2021	2020
Effective Tax Rate	20.9%	21.8%

Our tax rate for the three months ended March 31, 2021 is lower than the prior year’s comparable period primarily due to higher tax credit utilization, partially offset by a lower statutory U.S. deduction related to our non-U.S. subsidiaries’ income.

Our tax rate for the three months ended March 31, 2021 is approximately equal to the statutory U.S. federal tax rate of 21%.

Unrecognized Tax Benefits

During the three months ended March 31, 2021, our gross unrecognized tax benefits, excluding interest and penalties, decreased by $0.1 million, primarily as a result of decreases due to settlements and expiration of statutes of limitations in the current year, partially offset by increases in tax positions taken in the current and prior periods. During the three months ended March 31, 2021, the total amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate decreased by $0.1 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, 2021, we recognized $0.1 million of interest and penalty expense related to unrecognized tax benefits in our Condensed Consolidated Statement of Operations. As of March 31, 2021 and December 31, 2020, the total amount of accrued interest and penalty expense related to unrecognized tax benefits recorded in our Condensed Consolidated Balance Sheets was $7.6 million and $7.5 million, respectively.

During the next twelve months, it is reasonably possible that our unrecognized tax benefits may decrease by $9.4 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.