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INCOME TAXES | 6 Months Ended
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Jun. 30, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Our income tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items. Provision (benefit) for income taxes and Income (loss) before provision (benefit) for income taxes for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Provision (benefit) for income taxes | $ | 9,287 |  |  | $ | 2,323 |  |  | $ | 15,481 |  |  | $ | 3,441 |
Income (loss) before provision (benefit) for income taxes | $ | (125) |  |  | $ | (9,681) |  |  | $ | (5,437) |  |  | $ | (37,176) |
Our U.S. Federal income tax rate is 21%. The primary factor impacting the effective tax rate for the three and six months ended June 30, 2024 and 2023 was the pretax losses incurred in jurisdictions that have valuation allowances against their net deferred tax assets. For the three and six months ended June 30, 2024 and 2023, we continue to maintain a full valuation allowance against all U.S. federal and state deferred tax assets. We expect that our consolidated effective tax rate in future periods will continue to differ significantly from the U.S. federal income tax rate as a result of our tax obligations in jurisdictions with profits and valuation allowances in jurisdictions with losses. We are currently under audit by several foreign jurisdictions. It is likely that the examination phase of some of those audits will conclude in the next 12 months. There are many factors, including factors outside of our control, which influence the progress and completion of those audits. We are subject to claims for tax assessments by foreign jurisdictions, including a proposed assess ment for $120.4 million, inclusive of estimated incremental interest from the original Assessment. The subsidiary subject to the Assessment is Groupon S.r.l., one of the Company's Italian subsidiaries with operations relating specifically to the local voucher business in Italy. In December 2023, Groupon S.r.l. received an unfavorable ruling at the lowest court level, but lodged a second-level appeal, based on what it believes to be meritorious defenses to the Assessment. Additionally, Groupon S.r.l. requested a suspension of provisional payment demands of approximately $81.9 million. On April 9, 2024, Groupon S.r.l.'s payment suspension request was denied with an expedited hearing date of July 9, 2024, set for the second-level appeal. The hearing originally scheduled for July 9, 2024 has been rescheduled by the court until September 24, 2024. After the suspension denial, Groupon S.r.l. is required to post a bond of approximately $30.0 million, due immediately, and unless the appeal has been resolved in Groupon S.r.l's favor by October 22, 2024, an additional $51.9 million will be required to be posted on or before that date. As a result of the immediate payment demands, a lien was placed on Groupon S.r.l.'s bank account. In May 2024 Groupon S.r.l. entered into an installment plan for the approximately $30.0 million currently due and the bank account lien was removed. The related cash is no longer classified as restricted cash in our Condensed Consolidated Balance Sheets as of June 30, 2024. We believe the denial of the suspension request has no impact on the merits of Groupon S.r.l.'s appeal of the Assessment, therefore, the Company continues to believe that the Assessment, which primarily relates to transfer pricing on transactions occurring in 2011, is without merit. Groupon S.r.l. continues to vigorously defend itself in this matter and believes it will prevail on the merits of the case. Additionally, unrelated to this matter, in July 2024, Groupon S.r.l. received final assessments of approximately $31.5 million related to a 2017 distribution made to its parent entity. We believe this assessment is also without merit and Groupon S.r.l. intends to vigorously defend against such assessment. No liability has been recorded for either tax assessment matter. In addition to any potential increases in our liabilities for uncertain tax positions from the ultimate resolution of these assessments, we believe it is reasonably possible that reductions of up to $5.5 million in unrecognized tax benefits may occur within the 12 months following June 30, 2024 upon closing of income tax audits or the expiration of applicable statutes of limitations. In general, it is our practice and intention to reinvest the earnings of our non-U.S. subsidiaries in those operations or remit such earnings in a tax-efficient manner. Additionally, an actual repatriation from our non-U.S. subsidiaries could be subject to foreign and U.S. state income taxes. Aside from limited exceptions for which the related deferred tax liabilities recognized as of June 30, 2024 and December 31, 2023 are immaterial, we do not intend to distribute earnings of foreign subsidiaries for which we have an excess of the financial reporting basis over the tax basis of our investments and therefore have not recorded any deferred taxes related to such amounts. The actual tax cost resulting from a distribution would depend on income tax laws and circumstances at the time of distribution. Determination of the amount of unrecognized deferred tax liability related to the excess of the financial reporting basis over the tax basis of our foreign subsidiaries is not practical due to the complexities associated with the calculation.

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