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INCOME TAXES | 9 Months Ended
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Sep. 30, 2020
INCOME TAXES |
INCOME TAXES | 13. INCOME TAXES The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws, settlements with taxing authorities and foreign currency fluctuations. The effective income tax rate as a percentage of income before income taxes was 25.4% and 36.9% in the third quarter 2020 and 2019, respectively. The effective tax rate includes a discrete tax benefit of (2.6)% and tax provision of 5.9% for the third quarters of 2020 and 2019 respectively. These discrete items primarily related to global intangible low-taxed income (GILTI) regulation changes in 2020 and the settlement of a foreign tax audit in 2019. For the nine months ended September 30, 2020 and 2019, the effective income tax rate as a percentage of income before income taxes was 27.6% and 31.1%, respectively. For the nine months ended September 30, 2020 and 2019 the effective tax rate includes a discrete tax benefit of (0.3%) and tax provision of 1.5%, respectively, related primarily to the items impacting the third quarter effective tax rates. The effective tax rate before discrete items varies from the statutory rate primarily due to differences in state taxes, the impact of international tax provisions in the U.S., the difference in foreign tax rates and the mix of foreign and domestic income. The decrease in the effective income tax rate as a percentage of income before income taxes from 2019 to 2020 is a result of an increase in our estimated research and development tax credit as a percentage of income before taxes, as well as a lower amount of GILTI. In July 2020, U.S. Treasury released Final and Proposed Regulations related to the treatment of income that is subject to high rate of foreign tax under the GILTI and Subpart F income regimes. These provisions would be effective for the Company starting in 2021, but includes retroactive provisions that may allow for early adoption. In the third quarter of 2020, the Company adopted these provisions, which resulted in a discrete tax benefit of (0.9%) during the quarter.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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