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Income Taxes
 9 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

11.

Income Taxes

On August 9, President Biden signed the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act into law, which includes an advanced manufacturing investment tax credit, among other provisions. On August 16, President Biden signed the Inflation Reduction Act (the IRA) into law, which includes implementation of a new alternative minimum tax, an excise tax on stock buybacks, and tax incentives for energy and climate initiatives, among other provisions. Based on the Company’s review, these new laws do not result in a material change to the Company’s income tax provision for 2022.

The Company’s effective tax rate was 24.0% and 25.5% for the three months ended September 30, 2022 and 2021, respectively. The change in the effective tax rate was due primarily to a decrease in withholding tax, a change in jurisdictional mix of earnings and a nonrecurring write down of a foreign tax receivable included in 2021, partially offset by a release of a valuation allowance included in 2021.  The Company’s effective tax rate for the nine months ended September 30, 2022 and 2021 was 23.5% and 25.8%, respectively. The change in effective tax rate was due primarily to a decrease in withholding tax, a change in jurisdictional mix of earnings, a settlement of an uncertain tax position and a nonrecurring write down of a foreign tax receivable included in 2021, partially offset by a release of a valuation allowance included in 2021. The difference between the effective tax rate and the statutory U.S. Federal income tax rate of 21.0% for the three and nine months ended September 30, 2022 primarily relates to state income taxes, partially offset by benefits related to untaxed income attributable to noncontrolling interests, earnings in lower tax jurisdictions, and federal research tax credits.  

As of September 30, 2022, the Company’s deferred tax assets were subject to a valuation allowance of $28.5 million primarily related to foreign net operating loss carryforwards, foreign tax credit carryforwards, and capital losses that

the Company has determined are not more-likely-than-not to be realized. The factors used to assess the likelihood of realization include:  the past performance of the entities, forecasts of future taxable income, future reversals of existing taxable temporary differences, and available tax planning strategies that could be implemented to realize the deferred tax assets. The ability or failure to achieve the forecasted taxable income in these entities could affect the ultimate realization of deferred tax assets. 

As of September 30, 2022 and December 31, 2021, the liability for income taxes associated with unrecognized tax benefits was $22.7 million and $21.2 million, respectively.  It is reasonably possible that the Company may realize a decrease in our unrecognized tax benefits of approximately $4.0 million during the next 12 months as a result of concluding various tax audits and closing tax years.

Although the Company believes its reserves for its tax positions are reasonable, the final outcome of tax audits could be materially different, both favorably and unfavorably.  It is reasonably possible that certain audits may conclude in the next 12 months and that the unrecognized tax benefits the Company has recorded in relation to these tax years may change compared to the liabilities recorded for these periods. However, it is not currently possible to estimate the amount, if any, of such change.