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Income Taxes
 9 Months Ended
Sep. 30, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company recorded a provision for (benefit from) income taxes of $1.2 million and $(1.3) million for the three months ended September 30, 2020 and 2019, respectively, and $2.5 million and $3.4 million for the nine months ended September 30, 2020 and 2019, respectively. The provision for income taxes for the three and nine months ended September 30, 2020 was driven by a combination of the valuation allowance recorded on U.S. deferred tax assets, foreign withholding taxes, the projected annual effective tax rate for the foreign jurisdictions for 2020, partial California deferred tax asset valuation allowance release, and indefinite-lived intangible tax amortization expense. The provision for (benefit from) income taxes for the three and nine months ended September 30, 2019 was driven by a combination of the valuation allowance recorded on U.S. deferred tax assets, foreign withholding taxes, the projected annual effective tax rate for the foreign jurisdictions for 2019 and a one-time benefit from the release of valuation allowance related to the Northwest Logic acquisition purchase accounting.
During the three months ended September 30, 2020 and 2019, the Company paid withholding taxes of $5.2 million and $4.3 million, respectively. During the nine months ended September 30, 2020 and 2019, the Company paid withholding taxes of $14.8 million and $13.0 million, respectively.
The Company periodically evaluates the realizability of its net deferred tax assets based on all available evidence, both positive and negative. During the third quarter of 2018, the Company assessed the changes in its underlying facts and circumstances and evaluated the realizability of its existing deferred tax assets based on all available evidence, both positive and negative, and the weight accorded to each, and concluded a full valuation allowance associated with U.S. federal and California deferred tax assets was appropriate. The Company continues to maintain a full valuation allowance against its U.S. federal deferred tax assets. As a result of the enactment of California A.B. 85 and the temporary suspension of California net operating loss utilization for tax years 2020 through 2022, the Company released $0.7 million of the valuation allowance on its deferred tax asset for California research and development tax credits during the second quarter of 2020. During the three months ended September 30, 2020, the Company re-established $0.1 million of the valuation allowance, resulting in a net release of $0.6 million of the valuation allowance on its deferred tax asset for California research and development tax credits during the nine months ended September 30, 2020. The Company continues to maintain a full valuation allowance on the remainder of its California deferred tax assets as it does not expect to be able to fully utilize them.

The Company has U.S. federal deferred tax assets related to research and development credits, foreign tax credits and other tax attributes that can be used to offset U.S. federal taxable income in future periods. These credit carryforwards will expire if they are not used within certain time periods. It is possible that some or all of these attributes could ultimately expire unused.
The Company maintains liabilities for uncertain tax positions within its long-term income taxes payable accounts and as a reduction to existing deferred tax assets to the extent tax attributes are available to offset such liabilities. These liabilities
involve judgment and estimation and are monitored by management based on the best information available including changes in tax regulations, the outcome of relevant court cases and other information.
As of September 30, 2020, the Company had approximately $130.8 million of unrecognized tax benefits, including $23.6 million recorded as a reduction of long-term deferred tax assets, $104.1 million recorded as a reduction of other assets associated with refundable withholding taxes previously withheld from licensees in South Korea (Korea), and $3.1 million recorded in long-term income taxes payable. If recognized, $3.1 million would be recorded as an income tax benefit. As a result of recent court rulings in Korea, the Company has determined that they may be entitled to refund claims for foreign taxes previously withheld from licensees in Korea. The Company recognizes that there are numerous risks and uncertainties associated with the ultimate collection of this refund, and has therefore maintained an offsetting reserve for the entire amount of refundable withholding taxes previously withheld in Korea. As of December 31, 2019, the Company had $115.7 million of unrecognized tax benefits, including $22.8 million recorded as a reduction of long-term deferred tax assets, $91 million recorded as a reduction of other assets associated with refundable withholding taxes previously withheld from licensees in South Korea, and $1.8 million recorded in long-term income taxes payable.
Although it is possible that some of the unrecognized tax benefits could be settled within the next 12 months, the Company cannot reasonably estimate the outcome at this time.
The Company recognizes interest and penalties related to uncertain tax positions as a component of the income tax provision. At September 30, 2020 and December 31, 2019, an immaterial amount of interest and penalties is included in long-term income taxes payable.
Rambus files income tax returns for the U.S., California, India, the U.K., the Netherlands and various other state and foreign jurisdictions. The U.S. federal returns are subject to examination from 2016 and forward. The California returns are subject to examination from 2010 and forward. In addition, any research and development credit carryforward or net operating loss carryforward generated in prior years and utilized in these or future years may also be subject to examination. The India returns are subject to examination from fiscal year ending March 2012 and forward. The Company is currently under examination by California for the 2010 and 2011 tax years. The Company’s India subsidiary is under examination by the Indian tax administration for tax years beginning with 2011, except for 2014, which was assessed in the Company’s favor. These examinations may result in proposed adjustments to the income taxes as filed during these periods. Management regularly assesses the likelihood of outcomes resulting from income tax examinations to determine the adequacy of their provision for income taxes and believes their provision for unrecognized tax benefits is adequate.
Additionally, the Company’s future effective tax rates could be adversely affected by earnings being higher than anticipated in countries where the Company has higher statutory rates or lower than anticipated in countries where it has lower statutory rates, by changes in valuation of its deferred tax assets and liabilities or by changes in tax laws or interpretations of those laws.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted and signed into law. The CARES Act includes a number of federal income tax law changes, including, but not limited to (1) permitting net operating loss carrybacks to offset 100% of taxable income for taxable years beginning before 2021, (2) accelerating alternative minimum tax credit refunds, (3) temporarily increasing the allowable business interest deduction from 30% to 50% of adjusted taxable income, and (4) providing a technical correction for depreciation related to qualified improvement property. The Company has preliminarily evaluated the impact of the CARES Act and does not expect it will have a material impact on the Company’s condensed consolidated financial statements.