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Income Taxes | 9 Months Ended
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Sep. 30, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | 12. Income Taxes Our income tax provision and the respective effective income tax rates are as follows (in millions, except for income tax rates):
|  | For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Provision for income taxes |  | $ | 14.6 |  |  | $ | 10.8 |  |  | $ | 27.6 |  |  | $ | 24.8 |
Effective income tax rate |  | 29.5 | % |  | 23.4 | % |  | 14.0 | % |  | 21.9 | %
Our provision for income taxes for the three months ended September 30, 2024 includes a net discrete income tax expense of $2.9 million, of which a tax expense of $2.1 million relates to the tax on gain on sale of Avinode and a tax expense of $1.6 million relates to return-to-provision adjustments, partially offset by a net tax benefit of $0.7 million primarily related to changes in our reserve for uncertain tax positions. Our provision for income taxes for the three months ended September 30, 2023 includes a net discrete income tax benefit of $2.7 million, of which $3.2 million relates to the reversal of a valuation allowance previously recorded against the deferred tax assets of certain foreign subsidiaries and states, partially offset by a net tax expense of $0.5 million related to other worldwide adjustments. Our provision for income taxes for the nine months ended September 30, 2024 includes a net discrete income tax expense of $2.7 million, of which a net tax expense of $11.2 million relates to the tax on gain on sale of Avinode, partially offset by a net tax benefit of $9.2 million related to changes in our reserve for uncertain tax positions. Our provision for income taxes for the nine months ended September 30, 2023 includes a net discrete income tax benefit of $8.2 million, which includes a benefit of $8.2 million related to the reversal of valuation allowances previously recorded against deferred tax assets of certain foreign subsidiaries and states, as well as other offsetting worldwide adjustments. Our income tax provisions for the three and nine months ended September 30, 2024 and 2023 were calculated based on the estimated annual effective income tax rates for the 2024 and 2023 years, respectively. The actual effective income tax rate for the 2024 year may be materially different for several reasons including differences between estimated versus actual results and the geographic tax jurisdictions in which the results are earned. On October 4, 2021, 136 members of the Organisation for Economic Co-operation and Development ("OECD") agreed to a global minimum tax rate of 15%. On December 20, 2021, OECD published its model rules on the agreed minimum tax known as the Global Anti-Base Erosion ("GloBE") rules. The GloBE rules provide a framework for a coordinated multi-country system of taxation intended to ensure large multinational enterprise groups pay a minimum level of tax on the income arising in each of the jurisdictions where they operate. On December 14, 2022, the European Council approved its directive to implement Pillar Two of the GloBE rules regarding a 15% global minimum tax rate. Many G20 nations have also indicated their plan to follow the OECD guidance as early as January 1, 2024. Pillar Two legislation has been enacted or substantively enacted in several jurisdictions in which the Company operates. The legislation is effective for the Company’s financial year beginning January 1, 2024. The Company has completed its assessment and identified potential exposure to Pillar Two income taxes on profits earned in jurisdictions where the effective tax rate is lower than 15%. The estimated Pillar Two taxes do not have a material impact on the estimated annual effective tax rate for 2024 or the income tax provision for the three and nine months ended September 30, 2024. We have various tax returns under examination both in the U.S. and foreign jurisdictions. The most material of these is in Denmark, where one of our subsidiaries has been under audit since 2018. Through September 30, 2024, we have received final tax assessments for the 2013 and 2014 tax years that were immaterial, and proposed tax assessments for the 2015 through 2021 tax years of approximately $142.1 million (DKK 951.5 million), excluding interest. We believe we have substantial defenses to these assessments and expect to continue to pursue available administrative and judicial remedies to resolve this matter. An unfavorable resolution of one or more of the above matters could have a material adverse effect on our operating results or cash flows in the quarter or year in which the adjustments are recorded, or the tax is due or paid. As examinations are still in process or have not yet reached the final stages of the appeals process, the timing of the ultimate resolution or payments that may be required cannot be determined at this time.

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