Income Taxes

3 Months Ended

Mar. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company adjusts its effective tax rate each quarter to be consistent with the estimated annual effective tax rate. The Company also records the tax effect of unusual or infrequently occurring discrete items.

The provision for income taxes is shown in the table below:

	Three Months Ended March 31
	2021		2020
Income tax expense (benefit)	$	257	$	(4,850)

The income tax expense increased $5.2 million to $0.3 million in the first quarter of 2021 as compared to $4.9 million income tax benefit in the first quarter of 2020. The increase was mainly due to an increase in operating income, partially offset by amortization of excess deferred income tax as a result of the Tax Cuts and Jobs Acts (TCJA) in the 2018 GRC decision.

The Company’s effective tax rate was 6.02% before discrete items in the first quarter of 2021 as compared to 19.3% in the first quarter of 2020. The difference in effective income tax rate was primary due to the amortization of the excess deferred taxes as a result of the TCJA in the 2018 GRC decision.

The Company had unrecognized tax benefits of approximately $14.1 million and $11.7 million as of March 31, 2021 and 2020, respectively. Included in the balance of unrecognized tax benefits as of March 31, 2021 and 2020, is $3.7 million and $3.3 million, respectively, of tax benefits that, if recognized, would result in an adjustment to the Company’s effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly within the next 12 months.