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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income from continuing operations before income taxes for the years ended December 31, 2022, 2021 and 2020 was as follows (in thousands):
| Years Ended December 31,
| 2022 |  | 2021 |  | 2020
Domestic | $ | 7,772 |  |  | $ | 80,655 |  |  | $ | 49,673 |
Foreign | 91,141 |  |  | 80,429 |  |  | 102,783 |
Income before income taxes | $ | 98,913 |  |  | $ | 161,084 |  |  | $ | 152,456 |
Income tax expense (benefit) related to continuing operations consisted of the following (in thousands):
| Years Ended December 31,
| 2022 |  | 2021 |  | 2020
Current: |  |  |  |  |
Federal | $ | 13,327 |  |  | $ | 22,368 |  |  | $ | 5,831 |
State | 1,941 |  |  | 1,445 |  |  | 923 |
Foreign | 12,669 |  |  | 9,496 |  |  | 17,756 |
Total current | 27,937 |  |  | 33,309 |  |  | 24,510 |
Deferred: |  |  |  |  |
Federal | (5,851) |  |  | (4,902) |  |  | (151) |
State | (1,359) |  |  | 3,575 |  |  | 762 |
Foreign | 5,472 |  |  | 7,928 |  |  | 4,922 |
Total deferred | (1,738) |  |  | 6,601 |  |  | 5,533 |
Income tax expense | $ | 26,199 |  |  | $ | 39,910 |  |  | $ | 30,043 |
A reconciliation of the statutory federal income tax rate with Consensus’ effective income tax rate is as follows:
| Years Ended December 31,
| 2022 |  | 2021 |  | 2020
Statutory tax rate | 21 | % |  | 21 | % |  | 21 | %
State income taxes, net | 1.2 |  |  | 2.9 |  |  | 0.9 |
Foreign rate differential | (1.8) |  |  | (0.1) |  |  | (2.8) |
Foreign income inclusion | 6.3 |  |  | 4.9 |  |  | 4.3 |
Foreign tax credit | (3.6) |  |  | (4.0) |  |  | (3.5) |
Reserve for uncertain tax positions | 2.1 |  |  | 0.5 |  |  | 0.1 |
Impact on deferred taxes of enacted tax law and rate changes | 0.1 |  |  | — |  |  | — |
Tax credits and incentives | (2.4) |  |  | (0.1) |  |  | (0.1) |
Executive compensation | 3.1 |  |  | 0.2 |  |  | — |
Return to provision adjustments | 0.8 |  |  | — |  |  | 1.3 |
Other | (0.3) |  |  | (0.5) |  |  | (1.4) |
Effective tax rates | 26.5 | % |  | 24.8 | % |  | 19.8 | %
The effective tax rate for the year ended December 31, 2022 differs from the federal statutory rate primarily due to the Global Intangible Low-Taxes Income inclusion, impact of jurisdictional mix of earnings, an increase in the net reserve for uncertain tax positions during 2022, various tax credits and certain expenses not deductible for tax purposes, such as, non-deductible executive compensation. The effective tax rate for the year ended December 31, 2021 differs from the federal statutory rate primarily due to impacts of the Global Intangible Low-Taxed Income inclusion, an increase in the reserve for uncertain tax positions during 2021 and various tax credits. The effective tax rate for the year ended December 31, 2020 differs from the federal statutory rate primarily due to the Global Intangible Low-Taxes income inclusion, impact of jurisdictional mix of earnings and various tax credits. 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 are as follows (in thousands):
| Years Ended December 31,
| 2022 |  | 2021
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 44 |  |  | $ | 48 |
Tax credit carryforwards | 503 |  |  | 173 |
Accrued expenses | 3,586 |  |  | 2,669 |
Allowance for bad debt | 1,414 |  |  | 860 |
Share-based compensation expense | 611 |  |  | 245 |
Basis difference in intangibles | 20,056 |  |  | 30,887 |
Basis difference in developed software | 1,089 |  |  | — |
Deferred revenue | 425 |  |  | — |
Operating lease | 4,269 |  |  | 4,196 |
State taxes | 187 |  |  | 135 |
Section 163(j) interest limitation | 5,521 |  |  | 1,144 |
Other | 974 |  |  | 1,530 |
| $ | 38,679 |  |  | $ | 41,887 |
Less: valuation allowance | (45) |  |  | (45) |
Total deferred tax assets | $ | 38,634 |  |  | $ | 41,842 |
Deferred tax liabilities: |  |  |
Basis difference in property and equipment | $ | (487) |  |  | $ | (3,304) |
ROU asset | (1,987) |  |  | (1,773) |
Prepaid insurance | (907) |  |  | (312) |
Other | — |  |  | (638) |
Total deferred tax liabilities | $ | (3,381) |  |  | $ | (6,027) |
Net deferred tax assets | $ | 35,253 |  |  | $ | 35,815 |
The Company had approximately $35.3 million and $35.8 million in net deferred tax assets as of December 31, 2022 and 2021, respectively, related primarily to basis differences in tangible and intangible assets. 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. As of December 31, 2022 and 2021, the Company has a minimal amount of valuation allowance against its deferred tax assets of foreign net operating losses. As of December 31, 2022 and 2021, the Company has interest expense limitation carryovers of $23.4 million and $4.9 million, respectively, which carries forward indefinitely. As of December 31, 2022 and 2021, the Company had $0.5 million and $0.2 million foreign tax credit carryforward, respectively. If unused, these credits expire between 2031 and 2032. In addition, as of December 31, 2022 and 2021, the Company had state research and development tax credits of $1.0 million and $0.1 million, respectively, which can be carried forward indefinitely. Federal and state laws can impose substantial restrictions on the utilization of tax credit carry-forwards in the event of an “ownership change,” as defined in Section 382 of the Internal Revenue Code. The Company has determined that no significant limitation would be placed on the utilization of its tax credit carry-forwards due to ownership changes. The Company has not provided deferred taxes on approximately $330.9 million of undistributed earnings from foreign subsidiaries as of December 31, 2022. The Company has not provided 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, it is not practicable to determine the amount of the unrecognized deferred tax liability related to the undistributed earnings if eventually remitted. Certain tax payments are prepaid during the year and included within prepaid expenses and other current assets on the Consolidated Balance Sheets. The Company’s prepaid tax payments were $8.0 million and zero at December 31, 2022 and 2021, respectively. Uncertain Income Tax Positions 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, 2022, the total amount of unrecognized tax benefits, excluding interest and penalties, was $5.7 million, of which $5.7 million, if recognized, would affect the Company’s effective tax rate. As of December 31, 2021, the total amount of unrecognized tax benefits, excluding interest and penalties, was $3.7 million, of which $3.7 million, if recognized, would affect the Company’s effective tax rate. As of December 31, 2020, the total amount of unrecognized tax benefits, excluding interest and penalties, was $3.1 million, of which $3.1 million, if recognized would affect the Company’s effective tax rate. The aggregated changes in the balance of unrecognized tax benefits, which excludes interest and penalties, for 2022, 2021 and 2020, is as follows (in thousands):
| Years Ended December 31,
| 2022 |  | 2021 |  | 2020
Beginning balance | $ | 3,735 |  |  | $ | 3,050 |  |  | $ | 3,015 |
Decreases related to tax positions taken during a prior year | (863) |  |  | — |  |  | — |
Increases related to tax positions taken in the current year | 2,870 |  |  | 685 |  |  | 35 |
Decreases related to expiration of statute of limitations | — |  |  | — |  |  | — |
Ending balance | $ | 5,742 |  |  | $ | 3,735 |  |  | $ | 3,050 |
The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes. As of December 31, 2022, 2021 and 2020, the total amount of interest and penalties accrued was $1.0 million, $1.0 million and $0.9 million, respectively, which is classified as a liability for uncertain tax positions on the Consolidated Balance Sheets. In connection with tax matters, the Company recognized interest and penalty expense in 2022, 2021 and 2020 of $0.1 million, $0.2 million and $0.2 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. The Company files tax returns in the U.S., Ireland, Netherlands, France, Canada, Japan and Hong Kong. As of December 31, 2022, the Company is not under audit in any jurisdiction that it operates within. The Company has recently filed its first set of post-spin tax returns including some international subsidiaries who have previously filed in their local jurisdictions. In respect to these international subsidiaries, tax returns filed for the years from 2016 onwards are still open to examination by tax authorities.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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