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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES We have been organized and have operated as a REIT effective beginning with our taxable year that ended on December 31, 2014. As a REIT, we are generally permitted to deduct from our federal taxable income the dividends we pay to our stockholders. The income represented by such dividends is not subject to federal taxation at the entity level but is taxed, if at all, at the stockholder level. The income of our domestic TRSs, which hold our domestic operations that may not be REIT-compliant as currently operated and structured, is subject, as applicable, to federal and state corporate income tax. In addition, we and our subsidiaries continue to be subject to foreign income taxes in other jurisdictions in which we have business operations or a taxable presence, regardless of whether assets are held or operations are conducted through subsidiaries disregarded for federal income tax purposes or TRSs. We will also be subject to a separate corporate income tax on any gains recognized on the sale or disposition of any asset previously owned by a C corporation during a five-year period after the date we first owned the asset as a REIT asset that are attributable to "built-in gains" with respect to that asset on that date. We will also be subject to a built-in gains tax on our depreciation recapture recognized into income as a result of accounting method changes in connection with our acquisition activities. If we fail to remain qualified for taxation as a REIT, we will be subject to federal income tax at regular corporate income tax rates. Even if we remain qualified for taxation as a REIT, we may be subject to some federal, state, local and foreign taxes on our income and property in addition to taxes owed with respect to our TRS operations. In particular, while state income tax regimes often parallel the federal income tax regime for REITs, many states do not completely follow federal rules and some do not follow them at all. The significant components of our deferred tax assets and deferred tax liabilities as of December 31, 2024 and 2023 are presented below:
| DECEMBER 31,
| 2024 |  | 2023
Deferred Tax Assets: |  |  |
Accrued liabilities and other adjustments | $ | 156,349 |  |  | $ | 100,476 |
Net operating loss carryforwards | 168,773 |  |  | 158,363 |
Valuation allowance | (132,714) |  |  | (103,897) |
| 192,408 |  |  | 154,942 |
Deferred Tax Liabilities: |  |  |
Other assets, principally due to differences in amortization | (185,301) |  |  | (220,218) |
Property, plant and equipment, principally due to differences in depreciation | (63,192) |  |  | (90,156) |
Other | (122,844) |  |  | (65,909) |
| (371,337) |  |  | (376,283) |
Net deferred tax (liability) asset | $ | (178,929) |  |  | $ | (221,341) |
The deferred tax assets and deferred tax liabilities as of December 31, 2024 and 2023 are presented below:
| DECEMBER 31,
| 2024 |  | 2023
Noncurrent deferred tax assets (Included in Other, a component of Other assets, net) | $ | 26,412 |  |  | $ | 14,069 |
Noncurrent deferred tax liabilities | (205,341) |  |  | (235,410) |
At December 31, 2024, we have federal net operating loss carryforwards of $95,543 and disallowed interest expense carryforwards of $152,156, both of which can be carried forward indefinitely, and of which $89,178 and $68,745, respectively, are expected to be realized to reduce future federal taxable income. We have assets for foreign net operating losses of $146,616 and foreign disallowed interest expense carryforwards of $17,746, with various expiration dates (and in some cases no expiration date), subject to valuation allowances of approximately 72.0% and 46.5%, respectively. If actual results differ unfavorably from certain of our estimates used, we may not be able to realize all or part of our net deferred income tax assets and additional valuation allowances may be required. Although we believe our estimates are reasonable, no assurance can be given that our estimates reflected in the tax provisions and accruals will equal our actual results. These differences could have a material impact on our income tax provision and operating results in the period in which such determination is made. A rollforward of the valuation allowance is as follows:
YEAR ENDED DECEMBER 31, | BALANCE AT BEGINNING OF THE YEAR |  | CHARGED (CREDITED) TO EXPENSE |  | OTHER INCREASES/(DECREASES)(1)(2) |  | BALANCE AT END OF THE YEAR
2024 | $ | 103,897 |  |  | $ | 37,018 |  |  | $ | (8,201) |  |  | $ | 132,714 |
2023 | 47,514 |  |  | 4,855 |  |  | 51,528 |  |  | 103,897 |
2022 | 51,744 |  |  | (1,333) |  |  | (2,897) |  |  | 47,514 |
(1)Other decreases and increases in valuation allowances are primarily related to changes in foreign currency exchange rates and prior year acquisitions. (2)Prior to 2023, certain of our non-United States tax loss carryforwards were determined to have a remote possibility of realization and therefore were not reported in the table above. In connection with the implementation of the Organization for Economic Co-operation and Development (the "OECD") global minimum tax initiative known as Pillar Two, any existing deferred taxes not disclosed in our 2023 financial statements will not be available in the future to reduce tax otherwise due under Pillar Two. Accordingly, beginning in 2023, we are disclosing in the above table the tax effects of these non-United States tax loss carryforwards offset with a full valuation allowance. The components of net income (loss) before provision (benefit) for income taxes for the years ended December 31, 2024, 2023 and 2022 are as follows:
| YEAR ENDED DECEMBER 31,
| 2024 |  | 2023 |  | 2022
United States | $ | 56,617 |  |  | $ | 76,012 |  |  | $ | 449,241 |
Canada | 153,450 |  |  | 111,331 |  |  | 103,826 |
Other Foreign | 34,471 |  |  | 39,863 |  |  | 78,571 |
Net income (loss) before provision (benefit) for income taxes | $ | 244,538 |  |  | $ | 227,206 |  |  | $ | 631,638 |
The provision (benefit) for income taxes for the years ended December 31, 2024, 2023 and 2022 consist of the following components:
| YEAR ENDED DECEMBER 31,
| 2024 |  | 2023 |  | 2022
Federal—current | $ | 5,205 |  |  | $ | 1,255 |  |  | $ | 24,331 |
Federal—deferred | (2,394) |  |  | (18,488) |  |  | (30,581) |
State—current | 914 |  |  | 1,544 |  |  | 8,553 |
State—deferred | (3,731) |  |  | (4,630) |  |  | (3,728) |
Foreign—current | 96,168 |  |  | 72,408 |  |  | 92,525 |
Foreign—deferred | (35,290) |  |  | (12,146) |  |  | (21,611) |
Provision (Benefit) for Income Taxes | $ | 60,872 |  |  | $ | 39,943 |  |  | $ | 69,489 |
A reconciliation of total income tax expense and the amount computed by applying the current federal statutory tax rate of 21.0% to net income (loss) before provision (benefit) for income taxes for the years ended December 31, 2024, 2023 and 2022, respectively, is as follows:
| YEAR ENDED DECEMBER 31,
| 2024 |  | 2023 |  | 2022
Computed "expected" tax provision | $ | 51,353 |  |  | $ | 47,713 |  |  | $ | 132,644 |
Changes in income taxes resulting from: |  |  |  |  |
Tax adjustment relating to REIT | (33,926) |  |  | (39,299) |  |  | (82,620) |
State taxes, net of federal tax benefit | (2,919) |  |  | (3,147) |  |  | 4,043 |
Increase (decrease) in valuation allowance | 37,018 |  |  | 4,855 |  |  | (1,333) |
Withholding taxes | 11,359 |  |  | 11,658 |  |  | 10,600 |
(Reversal) reserve accrual and audit settlements, net of federal tax benefit | (2,052) |  |  | (4,946) |  |  | 40 |
Change in valuation of acquisition contingencies | 643 |  |  | 3,242 |  |  | (19,656) |
Foreign tax rate differential | 13,322 |  |  | 6,876 |  |  | 22,227 |
Adjustments relating to foreign taxes | (10,346) |  |  | 14,405 |  |  | 2,820 |
Excess tax benefits on equity compensation | (5,047) |  |  | (1,905) |  |  | (955) |
Other, net | 1,467 |  |  | 491 |  |  | 1,679 |
Provision (Benefit) for Income Taxes | $ | 60,872 |  |  | $ | 39,943 |  |  | $ | 69,489 |
Our effective tax rates for the years ended December 31, 2024, 2023 and 2022 were 24.9%, 17.6% and 11.0%, respectively. Our effective tax rate is subject to variability in the future due to, among other items: (i) changes in the mix of income between our QRSs and our TRSs, as well as among the jurisdictions in which we operate, (ii) tax law changes, (iii) volatility in foreign exchange gains and losses, (iv) the timing of the establishment and reversal of tax reserves, (v) our ability to utilize net operating losses and interest expenses that we generate and (vi) the taxability or deductibility of significant transactions. The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate were:
YEAR ENDED DECEMBER 31,
2024 | 2023 | 2022
The lack of tax benefits recognized for the ordinary losses and disallowed interest expenses of certain entities of $37,018 and differences in the tax rates to which our foreign earnings are subject of $13,322, partially offset by the benefits derived from the dividends paid deduction of $33,926. In addition, we recorded gains and losses in Other expense (income), net during the period, for which there was no tax impact. | The benefits derived from the dividends paid deduction of $39,299 and the differences in the tax rates to which our foreign earnings are subject of $6,876. In addition, there were gains and losses recorded in Other expense (income), net for which there was no tax impact. | The benefits derived from the dividends paid deduction of $82,620 and the differences in the tax rates to which our foreign earnings are subject of $22,227. In addition, there were gains and losses recorded in Other expense (income), net and Gain (loss) on disposal/write-down of property, plant and equipment, net during the period for which there were insignificant tax impacts.
As a REIT, we are entitled to a deduction for dividends paid, resulting in a substantial reduction of federal income tax expense. As a REIT, substantially all of our income tax expense will be incurred based on the earnings generated by our foreign subsidiaries and our domestic TRSs. We provide for foreign withholding taxes on the undistributed earnings of our foreign TRSs because it is not our intention to reinvest the undistributed earnings of our foreign TRSs indefinitely outside the United States. As a REIT, future repatriation of incremental undistributed earnings of our foreign subsidiaries will not be subject to federal or state income tax. The OECD has issued proposals that change long-standing tax principles, including a global minimum tax rate of 15% ("Pillar Two"). While the United States has not enacted legislation to effectuate Pillar Two, Iron Mountain operates in many foreign jurisdictions that have enacted legislation to implement Pillar Two. Pillar Two is applicable for Iron Mountain beginning in 2024. Since we do not have material operations in jurisdictions with tax rates lower than the Pillar Two minimum, we are not expecting a material impact on our effective tax rate, corporate tax liabilities or cash tax liabilities. We continue to monitor United States and global legislative actions as well as administrative guidance related to Pillar Two for potential impacts. The evaluation of an uncertain tax position is a two-step process. The first step is a recognition process whereby we determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step is a measurement process whereby a tax position that meets the more likely than not recognition threshold is calculated to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. We have elected to recognize interest and penalties associated with uncertain tax positions as a component of the provision (benefit) for income taxes in the accompanying Consolidated Statements of Operations. We recorded decreases of $375 and $2,557 and an increase of $90 for gross interest and penalties for the years ended December 31, 2024, 2023 and 2022, respectively. We had $3,558 and $4,183 accrued for the payment of interest and penalties as of December 31, 2024 and 2023, respectively. A summary of tax years that remain subject to examination by major tax jurisdictions is as follows:
TAX YEARS | TAX JURISDICTION
See Below | United States—Federal and State
2021 to present | United Kingdom
2016 to present | Canada
The normal statute of limitations for United States federal tax purposes is three years from the date the tax return is filed; however, the statute of limitations may remain open for periods longer than three years in instances where a federal tax examination is in progress. The 2024, 2023 and 2022 tax years and net operating loss carryforwards utilized in these years remain subject to examination for United States federal tax purposes. The normal statute of limitations for state purposes is between three to five years. However, certain of our state statute of limitations remain open for periods longer than this when audits are in progress. We are subject to income taxes in the United States and numerous foreign jurisdictions. We are subject to examination by various tax authorities in jurisdictions in which we have business operations or a taxable presence. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. As of December 31, 2024, we had $25,876 of reserves related to uncertain tax positions, of which $19,740 and $6,136 is included in other long-term liabilities and deferred income taxes, respectively, in the accompanying Consolidated Balance Sheet. As of December 31, 2023, we had $23,570 of reserves related to uncertain tax positions, of which $20,488 and $3,082 is included in other long-term liabilities and deferred income taxes, respectively, in the accompanying Consolidated Balance Sheet. Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in changes to our estimates. A rollforward of unrecognized tax benefits is as follows:
Gross tax contingencies—January 1, 2022 | $ | 27,772 |
Gross additions based on tax positions related to the current year | 2,271 |
Gross additions for tax positions of prior years | 723 |
Gross reductions for tax positions of prior years | (1,866) |
Acquired unrecognized tax benefits | 1,354 |
Lapses of statutes | (2,501) |
Gross tax contingencies—December 31, 2022 | 27,753 |
Gross additions based on tax positions related to the current year | 3,511 |
Gross additions for tax positions of prior years | 634 |
Gross reductions for tax positions of prior years | (5,454) |
Lapses of statutes | (2,874) |
Gross tax contingencies—December 31, 2023 | 23,570 |
Gross additions based on tax positions related to the current year | 3,091 |
Gross reductions for tax positions of prior years | (1,698) |
Acquired unrecognized tax benefits | 5,717 |
Lapses of statutes | (4,804) |
Gross tax contingencies—December 31, 2024 | $ | 25,876 |
The reversal of the reserves of $25,876 as of December 31, 2024 will be recorded as a reduction of our income tax provision, if sustained. We believe that it is reasonably possible that an amount up to $2,941 of our unrecognized tax positions may be recognized by the end of 2025 as a result of a lapse of statute of limitations or upon closing and settling significant audits in various worldwide jurisdictions.

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