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Income Taxes | 9 Months Ended
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Sep. 30, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Company's effective tax rates for the three months ended September 30, 2023 and 2022 were 24.4% and 23.5%, respectively. The Company's effective tax rates for the nine months ended September 30, 2023 and 2022 were 24.2% and 23.2%, respectively. The Company's effective tax rates for the three and nine months ended September 30, 2023 and 2022 differed from the U.S. federal statutory rate of 21.0% principally due to subpart F income (i.e., global intangible low-taxed income, or "GILTI," earned by the Company's foreign subsidiaries), foreign income tax rate differentials, state and local taxes, changes in the Company's uncertain tax positions, the excess tax benefit related to stock-based compensation and certain other permanent items. The Company has been involved in a dispute with the Danish Tax Authority ("SKAT") regarding the royalty paid by a U.S. subsidiary of Tempur Sealy International to a Danish subsidiary (the "Danish Tax Matter") for tax years 2012 through current. The royalty is paid by the U.S. subsidiary for the right to utilize certain intangible assets owned by the Danish subsidiary in the U.S. production process. In November 2018, the Company entered into the Advanced Pricing Agreement program (the "APA Program") requesting SKAT and the U.S. Internal Revenue Service ("IRS") to directly negotiate a mutually acceptable agreement on the Danish Tax Matter. During December 2022, pursuant to the negotiations described above with respect to the APA Program, SKAT and the IRS preliminarily concluded on a mutually acceptable framework ("Preliminary Framework") to resolve the Danish Tax Matter for the 2012 to 2022 tax years. On October 12, 2023, the two tax authorities formally signed, pursuant to the APA Program, the bilateral APA case and mutual agreement procedure (the "Mutual Agreement") cases between the U.S. and the Kingdom of Denmark. The terms of the Mutual Agreement reflect in all material respects those terms contained in the Preliminary Framework. It is anticipated that implementation of the terms of the Mutual Agreement (as reflected in the calculation of taxable income in both Denmark and the U.S. for the years covered in such agreement) will be materially and substantially consistent with those previously recorded in the Company’s Consolidated Balance Sheets as of September 30, 2023 (pursuant to the Preliminary Framework which was preliminary as of that date) and will be completed in the next twelve months. The uncertain income tax liability for the Danish Tax Matter for the years 2012 through 2022 was approximately $37.2 million and $37.8 million at September 30, 2023 and December 31, 2022, respectively, and is reflected in the Company's Condensed Consolidated Balance Sheets in accrued expenses and other current liabilities. Conversely, the deferred tax asset for the U.S. correlative benefit associated with the accrual of the Danish Tax Matter for the 2012 to 2022 tax years was approximately $21.6 million for both periods ended September 30, 2023 and December 31, 2022. Starting January 1, 2023, the Company adopted the terms of the Preliminary Framework for the calculation of the royalty as described above. As such, there is no uncertain income tax liability or deferred tax asset associated with the adoption of the terms of the Mutual Agreement. As of September 30, 2023, the Company had made the following tax deposits related to assessments received by SKAT for the Danish Tax Matter for the years 2012 through 2016, which are reflected in the Company's Condensed Consolidated Balance Sheets in other current assets:
(in millions) | USD |  |
VAT deposits remaining with SKAT | $ | 1.4 |  |  |  |  |
Deposit payments | 56.4 |  |  |  |  |
Total | $ | 57.8 |  |  |  |  |

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