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Income Taxes | 12 Months Ended
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Dec. 31, 2022
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,
| 2022 |  | 2021 |  | 2020
United States | $ | (11,751) |  |  | $ | 69,817 |  |  | $ | 19,405 |
Foreign | 218,386 |  |  | 105,248 |  |  | 79,221 |
Total | $ | 206,635 |  |  | $ | 175,065 |  |  | $ | 98,626 |
The expense (benefit) for income taxes consists of the following (in thousands):
| Years Ended December 31,
| 2022 |  | 2021 |  | 2020
Federal |  |  |  |  |
Current | $ | 7,064 |  |  | $ | 3,994 |  |  | $ | (2,683) |
Deferred | (353) |  |  | 6,067 |  |  | (3,477) |
Total | 6,711 |  |  | 10,061 |  |  | (6,160) |
State |  |  |  |  |
Current | 7,993 |  |  | 7,592 |  |  | 2,514 |
Deferred | (3,500) |  |  | (1,498) |  |  | (1,758) |
Total | 4,493 |  |  | 6,094 |  |  | 756 |
Foreign |  |  |  |  |
Current | 47,798 |  |  | 31,955 |  |  | 22,786 |
Deferred | 5,456 |  |  | (836) |  |  | 8,584 |
Total | 53,254 |  |  | 31,119 |  |  | 31,370 |
Total | $ | 64,458 |  |  | $ | 47,274 |  |  | $ | 25,966 |
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,
| 2022 |  | 2021 |  | 2020
Tax expense at federal rate of 21% | $ | 43,393 |  |  | $ | 36,764 |  |  | $ | 20,711 |
State income taxes, net of federal benefit | 2,351 |  |  | 4,816 |  |  | 321 |
Change in valuation allowance | 71 |  |  | 1,228 |  |  | 2,459 |
Foreign tax rate differential | (12,949) |  |  | (5,376) |  |  | (1,809) |
Unrecognized tax benefit increase (decrease) | 2,039 |  |  | 858 |  |  | (4,405) |
Tax effect of foreign operations | 15,336 |  |  | 16,151 |  |  | 11,373 |
Tax benefit of research & development | (3,365) |  |  | (4,123) |  |  | (2,173) |
Performance-based compensation | 2,266 |  |  | (1,887) |  |  | (2,624) |
Tax effect of divestiture | 14,522 |  |  | — |  |  | — |
Other | 794 |  |  | (1,157) |  |  | 2,113 |
Income tax provision | $ | 64,458 |  |  | $ | 47,274 |  |  | $ | 25,966 |
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,
| 2022 |  | 2021
Deferred income tax assets: |  |  |
Net operating loss carryforwards | $ | 16,763 |  |  | $ | 18,826 |
Tax credits | 18,497 |  |  | 37,672 |
Compensation | 15,272 |  |  | 17,133 |
Deferred revenue | 10,168 |  |  | 16,333 |
Operating lease | 10,202 |  |  | 10,236 |
Capitalized research and development | 23,891 |  |  | — |
Other | 9,533 |  |  | 9,988 |
Gross deferred income tax assets | 104,326 |  |  | 110,188 |
Less: valuation allowance | (11,384) |  |  | (11,324) |
Net deferred income tax assets | $ | 92,942 |  |  | $ | 98,864 |
Deferred income tax liabilities: |  |  |
Depreciation and amortization | $ | (33,692) |  |  | $ | (41,465) |
Operating lease right-of-use asset | (8,885) |  |  | (8,791) |
Unbilled revenue | (9,566) |  |  | (15,596) |
Withholding tax liability | (27,432) |  |  | (18,356) |
Total deferred income tax liabilities | (79,575) |  |  | (84,208) |
Net deferred income taxes | $ | 13,367 |  |  | $ | 14,656 |
Deferred income taxes / liabilities included in the balance sheet are: |  |  |
Deferred income tax asset – noncurrent | $ | 53,738 |  |  | $ | 50,778 |
Deferred income tax liability – noncurrent | (40,371) |  |  | (36,122) |
Net deferred income taxes | $ | 13,367 |  |  | $ | 14,656 |
The deferred tax asset and liabilities disclosure above reflects a $18.4 million withholding tax liability reclass for the year ended December 31, 2021. Prior year reported $18.4 million related to withholding tax liability as Tax credits within the deferred tax asset section. This amount is now reported separately within the deferred tax liability 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, 2022, the Company had domestic federal tax net operating losses (“NOLs”) of $53.2 million, of which $2.9 million may be utilized over an indefinite life, with the remainder beginning to expire in 2023. The Company had deferred tax assets equal to $0.7 million related to domestic state tax NOLs which will begin to expire in 2023. The Company does not have any valuation allowance against the federal tax NOLs but has provided a $0.6 million valuation allowance against the deferred tax asset associated with the state NOLs. The Company had foreign tax NOLs of $17.3 million, of which $17.0 million may be utilized over an indefinite life, with the remainder expiring over the next seven years. The Company has provided a $0.1 million valuation allowance against the deferred tax asset associated with the foreign NOLs. The Company had U.S. foreign tax credit carryforwards at December 31, 2022, of $2.1 million, for which a $2.1 million valuation allowance has been provided. The U.S. foreign tax credits will begin to expire in 2027. The Company had foreign tax credit carryforwards in other foreign jurisdictions at December 31, 2022, of $2.3 million, of which $1.2 million may be utilized over an indefinite life, with the remainder expiring over the next seven years. The Company has provided a $1.2 million valuation allowance against the tax benefit associated with these foreign credits. The Company also has domestic federal and state general business tax credit carryforwards at December 31, 2022, of $20.5 million and $0.7 million, respectively, which will begin to expire in 2023. The Company has not provided deferred taxes on $37.8 million of unremitted earnings of its Indian subsidiaries that are considered permanently reinvested. The company has not estimated 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, 2022, deferred taxes for non-United States withholding and other taxes were provided on $26.1 million of unremitted earnings of non-United States subsidiaries that may be remitted to the United States. As of December 31, 2022 and 2021, we have recorded a deferred tax liability of $1.3 million and $1.5 million, respectively, related to these non-United States earnings that may be remitted. The unrecognized tax benefit at December 31, 2022 and 2021, was $26.4 million and $24.5 million, respectively, of which $19.9 million and $16.9 million, respectively, are included in other noncurrent liabilities in the consolidated balance sheets. Of the total unrecognized tax benefit amounts at December 31, 2022 and 2021, $25.0 million and $23.5 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):
| 2022 |  | 2021 |  | 2020
Balance of unrecognized tax benefits at beginning of year | $ | 24,510 |  |  | $ | 24,310 |  |  | $ | 29,000 |
Increases for tax positions of prior years | 2,349 |  |  | 1,533 |  |  | 4,219 |
Decreases for tax positions of prior years | (3,659) |  |  | (65) |  |  | — |
Increases for tax positions established for the current period | 9,320 |  |  | 2,272 |  |  | 3,912 |
Decreases for settlements with taxing authorities | (63) |  |  | (620) |  |  | (285) |
Reductions resulting from lapse of applicable statute of limitation | (5,833) |  |  | (2,876) |  |  | (12,630) |
Adjustment resulting from foreign currency translation | (216) |  |  | (44) |  |  | 94 |
Balance of unrecognized tax benefits at end of year | $ | 26,408 |  |  | $ | 24,510 |  |  | $ | 24,310 |
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 2018 are open for audit. In the foreign jurisdictions, the tax returns open for audit generally vary by jurisdiction between 2005 and 2021. The Company’s Indian income tax returns covering fiscal years ended March 31, 2005, 2014, 2016 through 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 $4.6 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, 2022 and 2021, $0.6 million and $1.1 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, 2022, 2021, and 2020, was $(0.5) million, $(0.1) million, and $0.1 million, respectively.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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