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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
For financial reporting purposes, income (loss) before income taxes includes the following components (in thousands):
Years Ended December 31,
202320222021
United States$(8,342)$(11,751)$69,817 
Foreign155,969 218,386 105,248 
Total$147,627 $206,635 $175,065 

The expense (benefit) for income taxes consists of the following (in thousands):
Years Ended December 31,
202320222021
Federal
Current$(3,490)$7,064 $3,994 
Deferred(6,306)(353)6,067 
Total(9,796)6,711 10,061 
State
Current(2,327)7,993 7,592 
Deferred797 (3,500)(1,498)
Total(1,530)4,493 6,094 
Foreign
Current36,020 47,798 31,955 
Deferred1,424 5,456 (836)
Total37,444 53,254 31,119 
Total$26,118 $64,458 $47,274 

Differences between the income tax expense computed at the statutory federal income tax rate and per the consolidated statements of operations are summarized as follows (in thousands):
Years Ended December 31,
202320222021
Tax expense at federal rate of 21%$31,002 $43,393 $36,764 
State income taxes, net of federal benefit1,744 2,351 4,816 
Change in valuation allowance1,588 71 1,228 
Foreign tax rate differential(7,658)(12,949)(5,376)
Unrecognized tax benefit increase (decrease)(5,726)2,039 858 
Tax effect of foreign operations10,350 15,336 16,151 
Tax benefit of research & development(5,104)(3,365)(4,123)
Performance-based compensation3,004 2,266 (1,887)
Tax effect of divestiture(2,900)14,522 — 
Other(182)794 (1,157)
Income tax provision$26,118 $64,458 $47,274 

The countries having the greatest impact on the tax rate adjustment line shown in the above table as “Foreign tax rate differential” for the three years reported are Ireland, Singapore, and the United Kingdom.
The deferred tax assets and liabilities result from differences in the timing of the recognition of certain income and expense items for tax and financial accounting purposes. The sources of these differences at each balance sheet date are as follows (in thousands):
December 31,
20232022
Deferred income tax assets:
Net operating loss carryforwards$15,409 $16,763 
Tax credits23,197 18,497 
Compensation15,478 15,272 
Deferred revenue9,873 10,168 
Operating lease8,297 10,202 
Capitalized research and development16,903 23,891 
Deferred interest
17,822 6,829 
Other951 2,704 
Gross deferred income tax assets107,930 104,326 
Less: valuation allowance(12,963)(11,384)
Net deferred income tax assets$94,967 $92,942 
Deferred income tax liabilities:
Depreciation and amortization$(31,741)$(33,692)
Operating lease right-of-use asset(7,303)(8,885)
Unbilled revenue(5,407)(9,566)
Withholding tax liability(32,752)(27,432)
Total deferred income tax liabilities(77,203)(79,575)
Net deferred income taxes$17,764 $13,367 
Deferred income taxes / liabilities included in the balance sheet are:
Deferred income tax asset – noncurrent$58,499 $53,738 
Deferred income tax liability – noncurrent(40,735)(40,371)
Net deferred income taxes$17,764 $13,367 

The deferred tax asset and liabilities disclosure above reflects a $6.8 million deferred interest reclass for the year ended December 31, 2022. Prior year reported $6.8 million related to deferred interest as Other within the deferred tax asset section. The amount is now reported separately within the deferred tax asset section.

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers projected future taxable income, carryback opportunities, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred tax assets are deductible, the Company believes it is more likely than not that it will realize the benefits of these deductible differences, net of the valuation allowances recorded.

At December 31, 2023, the Company had domestic federal tax net operating losses (“NOLs”) of $47.9 million, of which $2.9 million may be utilized over an indefinite life, with the remainder beginning to expire in 2024. The Company had deferred tax assets equal to $0.9 million related to domestic state tax NOLs which will begin to expire in 2024. The Company did not have any valuation allowance against the federal tax NOLs but had provided a $0.5 million valuation allowance against the deferred tax asset associated with the state NOLs. The Company had foreign tax NOLs of $16.7 million, of which $16.5 million may be utilized over an indefinite life, with the remainder expiring over the next five years. The Company did not have any valuation allowance against the deferred tax asset associated with the foreign NOLs.
The Company had U.S. foreign tax credit carryforwards at December 31, 2023, of $2.2 million, for which a $2.2 million valuation allowance had been provided. The U.S. foreign tax credits will begin to expire in 2028. The Company had foreign tax credit carryforwards in other foreign jurisdictions at December 31, 2023, of $3.3 million, of which $1.0 million may be utilized over an indefinite life, with the remainder expiring over the next seven years. The Company had provided a $1.0 million valuation allowance against the tax benefit associated with these foreign credits. The Company also had domestic federal general business tax credit carryforwards at December 31, 2023, of $27.4 million, which will expire in 2033 and state general business tax credit carryforwards of $0.6 million, which will begin to expire in 2024.

The Company did not provide deferred taxes on $41.5 million of unremitted earnings of its Indian subsidiaries that are considered permanently reinvested. The company did not estimate the deferred tax liability on these earnings as such estimation is not practicable to determine or is immaterial to the financial statements. As of December 31, 2023, deferred taxes for non-United States withholding and other taxes were provided on $23.4 million of unremitted earnings of non-United States subsidiaries that may be remitted to the United States. As of December 31, 2023 and 2022, the Company recorded a deferred tax liability of $0.6 million and $1.3 million, respectively, related to these non-United States earnings that may be remitted.

The unrecognized tax benefit at December 31, 2023 and 2022, was $20.9 million and $26.4 million, respectively, of which $10.5 million and $19.9 million, respectively, are included in other noncurrent liabilities in the consolidated balance sheets. Of the total unrecognized tax benefit amounts at December 31, 2023 and 2022, $20.1 million and $25.0 million, respectively, represent the net unrecognized tax benefits that, if recognized, would favorably impact the effective income tax rate in the respective years.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31 is as follows (in thousands):
202320222021
Balance of unrecognized tax benefits at beginning of year$26,408 $24,510 $24,310 
Increases for tax positions of prior years1,568 2,349 1,533 
Decreases for tax positions of prior years(6,560)(3,659)(65)
Increases for tax positions established for the current period3,941 9,320 2,272 
Decreases for settlements with taxing authorities(532)(63)(620)
Reductions resulting from lapse of applicable statute of limitation(4,005)(5,833)(2,876)
Adjustment resulting from foreign currency translation69 (216)(44)
Balance of unrecognized tax benefits at end of year$20,889 $26,408 $24,510 

On July 21, 2023, the Internal Revenue Service (“IRS”) issued Notice 2023-55 providing guidance to taxpayers in determining whether a foreign tax is eligible for a U.S. foreign tax credit for tax years 2022 and 2023 effectively delaying the application of an unfavorable foreign tax credit regulation until 2024. As a result of this guidance, the Company recorded a tax benefit of $6.0 million in the fiscal third quarter of 2023.

The Company files income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions, and many foreign jurisdictions. The United States, Ireland, and the United Kingdom are the main taxing jurisdictions in which the Company operates. The years open for audit vary depending on the tax jurisdiction. In the United States, the Company’s federal tax return for years following 2019 are open for audit. In the foreign jurisdictions, the tax returns open for audit generally vary by jurisdiction between 2006 and 2022.

The Company has been notified by the U.S. Internal Revenue Service that their 2021 federal tax return has been selected to be examined. The Company’s Indian income tax returns covering fiscal years ended March 31, 2005, 2014, 2016, 2018, and 2020 are under audit by the Indian tax authority. Other foreign subsidiaries could face challenges from various foreign tax authorities. It is not certain that the local authorities will accept the Company’s tax positions. The Company believes its tax positions comply with applicable tax law and intends to vigorously defend its positions. However, differing positions on certain issues could be upheld by tax authorities, which could adversely affect the Company’s financial condition and results of operations.
The Company believes it is reasonably possible that the total amount of unrecognized tax benefits will decrease within the next 12 months by approximately $2.2 million due to the settlement of various audits and the expiration of statutes of limitations. The Company accrues interest related to uncertain tax positions in interest expense or interest income and recognizes penalties related to uncertain tax positions in other income or other expense. As of December 31, 2023 and 2022, $0.5 million and $0.6 million, respectively, is accrued for the payment of interest and penalties related to income tax liabilities. The aggregate amount of interest and penalties expense (benefit) recorded in the statements of operations for the years ended December 31, 2023, 2022, and 2021, was $(0.1) million, $(0.5) million, and $(0.1) million, respectively.