Income Taxes

9 Months Ended

Oct. 01, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

In connection with a current examination of the tax returns in two foreign jurisdictions, the taxing authorities have issued income tax deficiencies related to transfer pricing aggregating approximately $147.4 million (including interest and penalties) for tax years 2012 through 2016. We strongly disagree with the proposed adjustments and have filed a protest with each of the taxing authorities as we believe that the proposed adjustments are without technical merit.

In one of the foreign jurisdictions, we filed an appeal in judicial court on April 30, 2020. On September 10, 2020, we were notified that we lost our final appeal at the administrative level for the audit years 2012-2015, and likewise on October 7, 2021 for the audit year 2016. We intend to file an appeal in the judicial court in November 2021 with respect to the administrative ruling for the audit year 2016. For the audit years 2012-2015, we have filed a request for an injunction in judicial court which would defer payment, if any, until the end of the judicial process, and we intend to do the same for the audit year 2016.

In the other foreign jurisdiction, the administrative process has been completed and we filed a case in judicial court on March 4, 2020.

We expect to continue to vigorously contest the adjustments and to exhaust all administrative and judicial remedies necessary in both jurisdictions to resolve the matters, which could be a lengthy process.

Income tax (benefit) provision was $(6.6) million for the third quarter of 2021 compared to $4.9 million for the third quarter of 2020, and $9.1 million for the first nine months of 2021 compared to $9.4 million for the first nine months of 2020. The decrease in the income tax provision in both periods was primarily due to decreased earnings in certain higher tax jurisdictions. The income tax provision for the first nine months of 2021 and first nine months of 2020 also include a $0.8 million and $1.7 million benefit, respectively, relating to the NOL carryback provision of the Coronavirus Aid, Relief and Economic Security (CARES) Act, which was enacted on March 27, 2020.