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Income Taxes
 9 Months Ended
Sep. 30, 2023
Income Taxes  
Income Taxes

Note 11.  Income Taxes

The provision for income taxes is determined using an effective tax rate. For the three and nine months ended September 30, 2023, the Company’s estimated effective tax rate of (0.12)% and (0.90)% were lower than the U.S. federal statutory rate primarily due to the generation of U.S. net operating loss (NOL) and R&D tax credit carryforwards which are partially offset by a valuation allowance, as well as state and foreign income taxes. The effective tax rate may be subject to fluctuations during the year as new information is obtained that may affect the assumptions used to estimate the effective tax rate, including factors such as expected utilization of NOL carryforwards, changes in or the interpretation of tax laws in jurisdictions where the Company conducts business, expansion of the Company’s taxable presence in domestic and foreign markets, and the amount of valuation allowances against deferred tax assets. For the three and nine months ended September 30, 2023, the Company recorded a provision for income taxes of less than $0.1 million and $0.9 million, respectively. For the three and nine months ended September 30, 2022, the Company recorded a provision for income taxes of $0.2 million and $0.5 million, respectively. For each of the three and nine months ended September 30, 2023 and September 30, 2022, the provision for income taxes was primarily comprised of state and foreign income tax expense, net of release of uncertain tax positions for which the statute of limitations has expired.

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Additionally, the Company follows an accounting standard addressing the accounting for uncertainty in income taxes that prescribes rules for recognition, measurement and classification in the financial statements of tax positions taken or expected to be taken in a tax return. As of September 30, 2023 and December 31, 2022, the Company had gross unrecognized tax benefits of $31.7 million and $29.0 million, respectively.

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On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which includes a 15% minimum tax on the adjusted financial statement income of corporations with a three taxable year average annual adjusted financial statement income in excess of $1 billion, a 1% excise tax on net stock repurchases made by publicly traded U.S. corporations and several tax incentives to promote clean energy. The alternative minimum tax and the excise tax are effective in taxable years beginning after December 31, 2022. These tax law changes are not expected to significantly impact the Company's consolidated financial statements. The Company will continue to evaluate its impact as further information becomes available.

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Beginning in 2022, the Tax Cut and Jobs Act of 2017 requires taxpayers to capitalize and amortize R&D expenditures over five years for domestic research and 15 years for foreign research, pursuant to Section 174 of the Internal Revenue Code of 1986, as amended (IRC). There was no material impact to the Company’s provision for income taxes for the three and nine months ended September 30, 2023 as a result of the capitalization.

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