XML 35 R23.htm IDEA: XBRL DOCUMENT v3.21.2
Income Taxes
 9 Months Ended
Sep. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
During the nine months ended September 30, 2021, gross unrecognized tax benefits decreased by $4.8 million to $32.1 million. The decrease is primarily related to recording non-U.S. reserves and foreign exchange. If recognized, approximately $27.4 million of the $32.1 million in unrecognized tax benefits would affect our effective tax rate and net earnings in future periods.
We recognize interest and penalties related to unrecognized tax benefits as a component of our income tax provision. We had accrued interest and penalties totaling $9.2 million and $9.0 million as of September 30, 2021 and December 31, 2020, respectively, that were included in other noncurrent liabilities in the Condensed Consolidated Balance Sheets.
Accounting for uncertain tax positions is determined by prescribing the minimum probability threshold that a tax position is more likely than not to be sustained based on the technical merits of the position. Mosaic is continually under audit by various tax authorities in the normal course of business. Such tax authorities may raise issues contrary to positions taken by the Company. If such positions are ultimately not sustained by the Company, this could result in material assessments to the Company. The costs related to defending, if needed, such positions on appeal or in court may be material. The Company is currently in negotiations with non-U.S. tax authorities where settlements could result in different tax outcomes than what is currently accounted for. The Company believes that any issues raised have been properly accounted for in its current financial statements.
For the three months ended September 30, 2021, tax expense specific to the period was a cost of approximately $20.0 million. This consisted primarily of net tax cost related to the true up of estimates related to our U.S. tax return provision, a benefit for withholding taxes related to undistributed earnings, and other miscellaneous benefits. In addition to items specific to the period, our income tax rate is impacted by the mix of earnings across the jurisdictions in which we operate, by a benefit associated with depletion, a benefit associated with non-U.S. incentives, changes in valuation allowances and by the impact of certain entities being taxed in both their foreign jurisdiction and the U.S., including foreign tax credits for various taxes incurred.
Generally, for interim periods, income tax is equal to the total of (1) year-to-date pretax income multiplied by our forecasted effective tax rate plus (2) tax expense items specific to the period. In situations where we expect to report losses for which we do not expect to receive tax benefits, we are required to apply separate forecasted effective tax rates to those jurisdictions rather than including them in the consolidated effective tax rate. For the three months ended September 30, 2021, income tax expense was not impacted by this set of rules.
For the nine months ended September 30, 2021, tax expense specific to the period was a benefit of approximately $25.2 million. This relates to various items, including benefits for the following items: $42.7 million related to the pretax Esterhazy mine closure costs and $2.8 million recorded related to prior year non-U.S. reserves. These tax benefits are partially offset by net tax costs of $20.3 million million primarily related to true up of estimates related to our U.S. tax return provision, a benefit for withholding taxes related to undistributed earnings, and other miscellaneous benefits. In addition to items specific to the period, our income tax rate is impacted by the mix of earnings across the jurisdictions in which we operate, by a benefit associated with depletion, and by the impact of certain entities being taxed in both foreign jurisdictions and the U.S., including foreign tax credits for various taxes incurred.