Income Taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income TaxesWe recorded a benefit for income taxes of $2.9 million and $2.5 million for the three and nine months ended September 30, 2021. The effective tax rate was (16.1)% and (9.7)% for the three and nine months ended September 30, 2021. We recorded a benefit for income taxes of $1.9 million and $4.8 million for the three and nine months ended September 30, 2020. The effective tax rate was (39.0)% and (27.3)% for the three and nine months ended September 30, 2020.

The increase in the effective tax rate for the three months ended September 30, 2021 compared with the three months ended September 30, 2020 is primarily attributable to the net tax benefit of the loss carryback claim recognized in the three months ended September 30, 2020, as well as an increase in pre-tax book income for the three months ended September 30, 2021 partially offset by the release of reserves for uncertain tax positions for the three months ended September 30, 2021. Our effective tax rate for the three months ended September 30, 2021 differed from the federal statutory tax rate of 21% primarily due to an accrual true-up for actual research and development costs included on our recently filed tax return, non-deductible expenses, and the release of reserves for uncertain tax positions. Our effective tax rate for the three months ended September 30, 2020 differed from the federal statutory tax rate of 21% primarily due to the net tax benefit of the loss carryback claim and non-deductible expenses.

The increase in the effective tax rate for the nine months ended September 30, 2021 compared with the nine months ended September 30, 2020 is primarily attributable to the 2017 through 2019 research and development tax credits recognized in the nine months ended September 30, 2020, partially offset by a windfall from share-based compensation and the release of reserves for uncertain tax positions for the nine months ended September 30, 2021. Our effective tax rate for the nine months ended September 30, 2021 differed from the federal statutory tax rate of 21% primarily due to an accrual true-up for actual research and development costs included on our recently filed tax return, non-deductible expenses, a windfall from share-based compensation, and the release of reserves for uncertain tax positions. Our effective tax rate for the nine months ended September 30, 2020 differed from the federal statutory tax rate of 21% primarily due to research and development tax credits, the net tax benefit of the loss carryback claim, and non-deductible expenses.

For the year ended December 31, 2020, we completed a formal study to identify qualifying research and development expenses resulting in the recognition of federal tax benefits of $3.8 million, net of tax reserves, related to 2020 and $6.1 million, net of tax reserves, related to prior years. We recorded the tax benefit, before tax reserves, as a deferred tax asset. For the year ended December 31, 2021, we estimate a federal tax benefit of $4.6 million, net of tax reserves.

During the three months ended September 30, 2021, we released $3.5 million of unrecognized tax benefits and $1.2 million of interest expense due to lapse of statute of limitations for the applicable tax years. We do not anticipate further significant release of unrecognized tax benefits within the next twelve months.