Income Taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 17. Income Taxes

The effective tax rate was 21.4% for the three months ended September 30, 2021 and a negative 2.7% for the three months ended September 30, 2020. The effective tax rate was a negative 0.2% for the nine months ended September 30, 2021 and a negative 6.8% for the nine months ended September 30, 2020.

During the three and nine months ended September 30, 2021, we did not use the annualized effective tax rate (“AETR”) to compute the income tax benefit or expense. Instead, the income tax benefit or expense was computed using the actual year-to-date tax rate as the AETR became highly sensitive due to the amount of aggregate projected tax benefit on the projected losses in Canada, the United Arab Emirates, the Netherlands, and immaterial European operations were marginally positive. As the full year projected tax benefit is expected to be marginally positive in these operations, the actual effective tax rate was a better estimate of the current quarter and year to date tax benefit than the amount computed using the AETR.

The 21.4% effective tax rate for the three months ended September 30, 2021 was the result of the taxes on the pre-tax income earned in Canada during the third quarter while excluding the taxes associated with the pre-tax income earned in the United States and the United Kingdom during the quarter. The Company did not recognize any tax benefit or expense on the pre-tax year to date losses and quarter-to-date income earned in the United States and United Kingdom as a full valuation allowance has been continued to be recorded on the net deferred tax assets in the United States and United Kingdom.

The negative effective tax rates for the three and nine months ended September 30, 2020 were due to the recording of a valuation allowance of $25.5 million in the second quarter of 2020 against our remaining United States, United Kingdom, and other European net deferred tax assets as of September 30, 2020, as well as no tax benefits on non-deductible goodwill impairments and losses recognized in those jurisdictions. We recorded the valuation allowance based upon the level of historical losses and the uncertainty and timing of future income.

We received net cash refunds of $3.6 million during the three months ended September 30, 2021 and $3.2 million during the nine months ended September 30, 2021. We received tax refunds in excess of payments of $6.8 million during the three months ended September 30, 2020 and $14.7 million during the nine months ended September 30, 2020.