INCOME TAXES

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

We recorded an income tax provision of $1.8 million and $2.1 million for the three and six months ended June 30, 2022 compared to a provision of $0.9 million and $0.5 million for the three and six months ended June 30, 2021. The effective tax rate, inclusive of discrete items, was a provision of 9.0% for the three months ended June 30, 2022, compared to a provision of 5.1% for the three months ended June 30, 2021. For the six months ended June 30, 2022, our effective tax rate, inclusive of discrete items, was a provision of 4.1%, compared to a provision of 1.0% for the six months ended June 30, 2021. Our effective tax rate differed from the statutory tax rate due to an increase in the valuation allowance in certain foreign jurisdictions. The effective tax rate in the prior year was also impacted by the tax benefits recognized related to the CARES Act.

The lack of going concern basis applicable for our second quarter financial statements generally requires a valuation allowance for all deferred tax assets that are not realizable through the reversal of existing timing differences or taxable income in carryback years. While several subsidiaries have historically been profitable and for which future income was a material factor in assessing the realizability of their deferred tax assets, the substantial doubt about the Company’s ability to continue as a going concern basis casts doubt on our ability to generate future income. As a result, the Company included a charge of $0.8 million in income tax expense for the valuation allowance required to offset the remaining net deferred tax assets. The $0.8 million charge is primarily attributable to our Germany and Canada subsidiaries. Refer to Note 1 - Summary of Significant Accounting Policies and Practices for additional liquidity and going concern discussion.