
	Years Ended December 31,
	2021		2020		2019
Current:
Federal	$	(8,435)	$	15,112	$	14,227
State	(248)		4,300		1,002
Foreign	15,931		18,631		6,045
Total current	7,248		38,043		21,274

Deferred:
Federal	(17,132)		(6,022)		(2,004)
State	(5,044)		(67)		(3,849)
Foreign	729		6,396		(1,661)
Total deferred	(21,447)		307		(7,514)
Total provision	$	(14,199)	$	38,350	$	13,760


	Years Ended December 31,
	2021		2020		2019
Statutory tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net	(1.3)		1.8		0.8
Foreign rate differential	(0.3)		2.8		(0.7)
Foreign income inclusion	0.7		5.2		4.4
Foreign tax credit	(0.8)		(4.3)		(4.5)
Reserve for uncertain tax positions	(2.4)		11.5		9.3
Valuation allowance	(1.7)		9.9		0.2



Impact on deferred taxes of enacted tax law and rate changes	(0.5)		3.3		(1.3)
Tax credits and incentives	(1.5)		(7.2)		(9.2)
Mark-to market on investment in Consensus	(18.0)		—		—
Return to provision adjustments	0.5		2.4		0.2
Executive compensation	0.7		2.7		5.3


Other	(0.4)		(0.2)		(0.4)
Effective tax rates	(4.0)	%	48.9	%	25.1	%

The effective tax rate for continuing operations the year ended December 31, 2021 differs from the federal statutory rate primarily due to a book-tax difference related to the $298.5 million of book income recognized related to the Company’s shares held in Consensus stock. The income is not subject to tax since the Company has the ability to dispose of the investment in a tax-free manner based on guidance and requirements set out by the Internal Revenue Service.

Additional reasons the effective tax rate differs from the federal statutory tax rate include the impact of a decrease in the net reserve for uncertain tax positions during 2021 and a reduction in the valuation allowance on deferred tax assets related to realized and unrealized capital losses. The decrease in the reserve for uncertain tax positions is primarily due to the lapse of the statute of limitations for U.S. tax reserves. The reduction in the valuation allowance is primarily due to an increase in unrealized capital gains on investments held by the Company which can provide a source of capital gain income in future years to realize the benefit of the capital losses.

The effective tax rate for continuing operations for 2020 differs from the federal statutory rate primarily due to the Company recording a net increase in the reserve for uncertain tax positions during 2020 and recording a valuation allowance for a capital loss recognized due to the sale of assets related to its Voice business unit in Australia and New Zealand and the impairment of certain U.S. investments.

The effective tax rate for 2019 differs from the federal statutory rate primarily due to a net increase in the reserve for uncertain tax positions related to prior years and the impacts of the jurisdictional mix of income and disallowance of certain losses and expenses.

Deferred tax assets and liabilities result from differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Temporary differences and carryforwards which give rise to deferred tax assets and liabilities from continuing operations are as follows (in thousands):


	Years Ended December 31,
	2021		2020
Deferred tax assets:
Net operating loss carryforwards	$	28,393	$	21,134
Tax credit carryforwards	2,801		9,022
Accrued expenses	12,548		17,393
Allowance for bad debt	2,116		3,757
Share-based compensation expense	3,545		5,923

Impairment of investments	—		6,714

Deferred revenue	4,331		912
State taxes	3,771		4,948
Other	9,426		11,071
	66,931		80,874
Less: valuation allowance	(1,812)		(8,262)
Total deferred tax assets	$	65,119	$	72,612

Deferred tax liabilities:

Basis difference in property and equipment	$	(8,337)	$	(17,126)
Basis difference in intangible assets	(117,244)		(129,301)
Unrealized gains on investments	(11,291)		—
Prepaid insurance	(3,121)		(2,703)

Convertible debt	(21,972)		(65,192)
Other	(6,219)		(3,403)
Total deferred tax liabilities	(168,184)		(217,725)
Net deferred tax liabilities	$	(103,065)	$	(145,113)

The Company had approximately $65.1 million and $72.6 million in deferred tax assets from continuing operations as of December 31, 2021 and 2020, respectively, related primarily to net operating loss carryforwards, basis difference in intangible assets including differences related to intra-entity transfers, tax credit carryforwards and accrued expenses treated differently between its financial statements and its tax returns. Based on the weight of available evidence, the Company assesses whether it is more likely than not that some portion or all of a deferred tax asset will not be realized. If necessary, the Company records a valuation allowance sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized. The deferred tax assets should be realized through future operating results and the reversal of temporary differences.

The Company had a valuation allowance on deferred tax assets from continuing operations of $1.8 million and $8.3 million as of December 31, 2021 and 2020, respectively. The valuation allowance decreased $6.5 million as a result of the release of valuation allowance related to the impairment and sales of investments that would result in a capital loss in the year of sale. The deduction for the capital losses would be limited to other capital gains recognized during the year. A $6.3 million valuation allowance was recorded in 2020 related to these items. During 2021, the Company recognized unrealized capital gains at its investments that provided a sufficient source of future income to be more likely than not to realize the deferred tax assets related to capital losses.

As of December 31, 2021, the Company had federal net operating loss carryforwards (“NOLs”) of $37.2 million, after considering substantial restrictions on the utilization of these NOLs due to “ownership changes”, as defined in the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The Company estimates that all of the above-mentioned federal NOLs will be available for use before their expiration. $36.7 million of NOLs for losses incurred prior to January 1, 2018 expire through the year 2037 and $0.5 million of the NOLs carry forward indefinitely depending on the year the loss was incurred.

As of December 31, 2021 and 2020, the Company has interest expense limitation carryovers of $23.3 million and $0, respectively, which last indefinitely. The Company also has federal capital loss limitation carryforwards as of December 31, 2021 and 2020 of $28.7 million and $0, respectively that begin to expire in 2031. In addition, as of December 31, 2021 and 2020, we had available state research and development tax credit carryforwards of $5.1 million and $9.1 million, respectively, which last indefinitely. The Company has no foreign tax credit carryforwards as of December 31, 2021 and 2020.

The Company has not provided for deferred taxes on approximately $322.8 million of undistributed earnings from foreign subsidiaries as of December 31, 2021. The Company has not provided for any additional deferred taxes with respect to items such as foreign withholding taxes, state income tax or foreign exchange gain or loss that would be due when cash is actually repatriated to the U.S. because those foreign earnings are considered permanently reinvested in the business or may be remitted substantially free of any additional taxes. Because of the various avenues in which to repatriate the earnings, the determination of the amount of the unrecognized deferred tax liability related to the undistributed earnings if eventually remitted is not practicable.

Cash paid for income taxes net of refunds received for continuing operations and discontinued operations was $61.2 million, $45.0 million and $45.9 million for the year ended December 31, 2021, 2020 and 2019, respectively.

Certain tax payments are prepaid during the year and included within prepaid expenses and other current assets on the Consolidated Balance Sheet. The Company’s prepaid tax payments were $0.8 million and $3.0 million at December 31, 2021 and 2020, respectively.

Income from continuing operations before income taxes included income from domestic operations of $279.7 million, $(2.0) million and $1.4 million for the years ended December 31, 2021, 2020 and 2019, respectively, and income from foreign operations of $71.7 million, $80.4 million and $53.4 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Tax positions are evaluated in a two-step process. The Company first determines whether it is more likely than not that a tax position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold, it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company classifies gross interest and penalties and unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as non-current liabilities in the Consolidated Balance Sheets.

As of December 31, 2021, the total amount of unrecognized tax benefits for continuing operations was $39.5 million, of which $35.6 million, if recognized, would affect the Company’s effective tax rate. As of December 31, 2020, the total amount of unrecognized tax benefits for continuing operations was $46.0 million, of which $44.9 million, if recognized, would affect the Company’s effective tax rate. As of December 31, 2019, the total amount of unrecognized tax benefits for continuing operations was $43.7 million, of which $42.7 million, if recognized, would affect the Company’s effective tax rate.


	Years Ended December 31,
	2021		2020		2019
Beginning balance	$	46,032	$	43,687	$	40,842
Increases related to tax positions during a prior year	3,448		3,953		5,285
Decreases related to tax positions taken during a prior year	(5,511)		(244)		—
Increases related to tax positions taken in the current year	4,675		4,264		3,991
Settlements	—		(5,628)		(5,831)
Decreases related to expiration of statute of limitations	(9,117)		—		(600)
Ending balance	$	39,527	$	46,032	$	43,687

The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes. As of December 31, 2021, 2020 and 2019, the total amount of interest and penalties accrued was $5.7 million, $7.2 million, and $5.0 million, respectively, which is classified as a liability for uncertain tax positions on the Consolidated Balance Sheets. In connection with the liability for unrecognized tax benefits, the Company recognized interest and penalty expense (benefit) in 2021, 2020 and 2019 of $(1.5) million, $2.8 million, and $2.6 million, respectively.

Uncertain income tax positions are reasonably possible to significantly change during the next 12 months as a result of completion of income tax audits and expiration of statutes of limitations. At this point it is not possible to provide an estimate of the amount, if any, of significant changes in reserves for uncertain income tax positions as a result of the completion of income tax audits that are reasonably possible to occur in the next 12 months. In addition, the Company cannot currently estimate the amount of, if any, uncertain income tax positions which will be released in the next 12 months as a result of expiration of statutes of limitations due to ongoing audits. As a result of ongoing federal, state and foreign income tax audits (discussed below), it is reasonably possible that the Company’s entire reserve for uncertain income tax positions for the periods under audit will be released. It is also reasonably possible that the Company’s reserves will be inadequate to cover the entire amount of any such income tax liability.

The Company is in various stages of audit by the U.S. Internal Revenue Service (“IRS”) for its 2012 through 2016 tax years. On February 24, 2021, the Company received a Notice of Deficiency for tax years 2012 through 2014 which disallowed certain deductions for domestic production. The Company disagrees with the Notice and has filed a petition with the United States Tax Court on May 24, 2021. As of December 31, 2021, the audits are ongoing.

The Company is under audit by the California Franchise Tax Board (“FTB”) for its tax years 2012 and 2013. The FTB, however, has agreed to suspend its audit for 2012 and 2013 pending the outcome of the IRS audit for such tax years. In August 2018, the FTB notified the Company that it will commence an audit of tax years 2015 and 2016. As of December 31, 2021, the audits are ongoing.

In June 2019, the New York State Department of Taxation and Finance (“NYS”) notified the Company that it will commence an audit for tax year 2015. In April 2020, the NYS notified the Company that it will also commence an audit for tax years 2016 and 2017. As of December 31, 2021, the audits are ongoing.

We conduct business on a global basis and as a result, one or more of our subsidiaries files income tax returns in the U.S. federal and in multiple state, local, and foreign tax jurisdictions. As noted previously, our U.S. federal income tax returns for years 2012 through 2016 are under various stages of audit by the IRS. We are also under audit for various U.S. state and local tax purposes as noted above for our significant jurisdictions. With limited exception, our significant foreign tax jurisdictions are no longer subject to an income tax audit by the various tax authorities for tax years prior to 2014.