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Income Taxes | 6 Months Ended
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Jun. 30, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Coronavirus Aid, Relief and Economic Security Act In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law in March 2020. The CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (“2017 Tax Act”). Corporate taxpayers may carryback net operating losses (NOLs) originating between 2018 and 2020 for up to five years, which was not previously allowed under the 2017 Tax Act. The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 or 2020. Taxpayers may generally deduct interest up to the sum of 50% of adjusted taxable income plus business interest income (30% limit under the 2017 Tax Act) for 2019 and 2020. The CARES Act allows taxpayers with alternative minimum tax credits to claim a refund in 2020 for the entire amount of the credits instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act. In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any material adjustments to our income tax provision for the three or six months ended June 30, 2020 or to our net deferred tax assets. Effective Income Tax Rate and Income Tax Provision For interim tax reporting, we estimate one annual effective tax rate for tax jurisdictions not subject to a valuation allowance and apply that rate to the year-to-date ordinary income/(loss). Tax effects of significant unusual or infrequently occurring items are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they occur. Our effective income tax rate was 30.8% and 26.5%, respectively, for the three and six months ended June 30, 2020. In comparison to the U.S. statutory rate of 21.0%, the Company's effective income tax rate was negatively impacted by foreign earnings taxed at a higher rate, the effect of the global intangible low-taxed income “GILTI” and other foreign income inclusions in the U.S. tax base, state income taxes and non-deductible expenses and positively impacted by the research and development credit. For the six months ended June 30, 2020, the rate is positively impacted by adjustments associated with the effective settlement of specific uncertain tax positions with the IRS. Our effective income tax rate was 32.5% and 32.2%, respectively, for the three and six months ended June 30, 2019. In comparison to the U.S. statutory rate of 21.0%, the Company's effective income tax rate was negatively impacted by foreign earnings taxed at a higher rate, the effect of GILTI and other foreign income inclusions in the U.S. tax base, state income taxes and non-deductible expenses, and was positively impacted by the release of a valuation allowance related profitability improvements in South America and a research and development credit. There was a negligible change in our valuation allowances for the three and six months ended June 30, 2020 and an $8.1 million decrease for the three and six months ended June 30, 2019. We reported a net increase in unrecognized tax positions in the three months ended June 30, 2020 of $4.4 million primarily related to interest accrual on existing positions and a net decrease in the six months ended June 30, 2020 of $5.6 million, primarily related to certain settlements with respect to the ongoing U.S. IRS audit for the 2011- 2014 tax years. We are not currently able to reasonably estimate the amount by which the liability for unrecognized tax benefits may increase or decrease during the next 12 months as a result of the remaining items under IRS audit for those years. We reported a net increase in unrecognized tax benefits in the three and six months ended June 30, 2019 of $7.7 million and $9.7 million, respectively, primarily related to U.S audit assessment and interest accrual on existing positions. Interest and penalties on tax assessments are included in income tax expense. With respect to the 2014 tax year, the IRS has proposed to disallow the deduction of the approximately $1.49 billion for the settlement payments made pursuant to the Settlement agreement, as defined in Note 19, "Commitments and Contingencies," to the Notes to Condensed Consolidated Financial Statements, and the reduction of our U.S. federal tax liability by approximately $525 million. Although we believe that we have meritorious defenses to the proposed disallowance and are protesting it with the IRS, this matter may not be resolved in 2020. It is possible that future developments in this matter could have a material impact on the uncertain tax position balances and results of operations, including cash flow, within the next 12 months. We have no outstanding liability with respect to Transition Tax associated with the U.S. Tax Cuts and Jobs Act of 2017. In April 2020 we became aware of a withholding tax regulation that could be interpreted to apply to certain aspects of the intra-group use or transfer of intellectual property. We have completed our evaluation of the interpretation of this regulation and recorded $0.4 million to expense in the three months ending June 30, 2020. In July 2020, the U.S. Department of Treasury issued final tax regulations with respect to the GILTI proposed tax regulations originally published in 2019. These regulations permit an election to exclude from the GILTI calculation items of income which are subject to a high effective rate of foreign tax. If elected, the adoption of these final regulations will be accounted for in subsequent periods and is not expected to unfavorably impact our income tax expense. We are in the process of assessing the expected impact of these final regulations on our consolidated financial statements.

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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 http://asc.fasb.org/extlink&oid=84230637&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 http://asc.fasb.org/extlink&oid=116825942&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 http://asc.fasb.org/extlink&oid=84230637&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 http://asc.fasb.org/extlink&oid=116825942&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 http://asc.fasb.org/extlink&oid=84230637&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 http://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 http://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 http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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