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INCOME TAXES
 3 Months Ended
Mar. 31, 2023
INCOME TAXES  
INCOME TAXES

NOTE (11)   INCOME TAXES

The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, primarily related to excess tax benefits from stock option exercises and the tax impact of the change in fair value of contingent consideration. For the three months ended March 31, 2023 and 2022, discrete items adjusted were $1.5 million and $0.5 million, respectively. At March 31, 2023 and 2022, the Company is currently estimating an annual effective tax rate of approximately 24.5% and 25.1%, respectively. 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 various factors.

The provision for income taxes is recorded at the end of each interim period based on the Company’s estimate of its effective income tax rate expected to be applicable for the full fiscal year. The Company’s effective income tax rate was 2% and 30% for the three months ended March 31, 2023 and 2022, respectively. The decrease in the Company’s effective income tax rate for the three months ended March 31, 2023 compared to the same period in 2022, primarily relate to the tax impact of discrete items. Discrete items recognized during the three months ended March 31, 2023 and 2022, resulted in a tax benefit of approximately $0.4 million and a tax expense of approximately $0.1 million, respectively. The Company recorded an income tax expense of $33,000 and a tax expense of $605,000 for the three months ended March 31, 2023 and 2022, respectively.

No taxes were paid during the three months ended March 31, 2023 and 2022.