Income Taxes

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

	Three Months Ended						Six Months Ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
	(in thousands, except percentages)
Provision for income taxes	$	182,103		$	240,776		$	564,348		$	568,563
Effective tax rate	11		%	15		%	16		%	16		%

The effective tax rates for the three and six months ended June 30, 2022 differed from the Federal statutory rate primarily due to an increase in foreign taxes, offset by the impact of international provisions of the Tax Cuts and Jobs Act, the Federal and California Research and Development (“R&D”) credits, and the recognition of excess tax benefits of stock-based compensation. The effective tax rates for the three and six months ended June 30, 2021 differed from the Federal statutory rate primarily due to the impact of international provisions of the Tax Cuts and Jobs Act and recognition of excess tax benefits of stock-based compensation.

The decrease in the effective tax rate for the three months ended June 30, 2022, as compared to the same period in 2021 was primarily due to the impact of the international provisions of the Tax Cuts and Jobs Act and the Federal and California R&D credits. The effective tax rate for the six months ended June 30, 2022 was consistent compared to the same period in 2021. For the three and six months ended June 30, 2022, the Company recognized a discrete tax benefit related to the excess tax benefits from stock-based compensation of $18 million and $43 million, compared to the three and six months ended June 30, 2021 of $19 million and $66 million.

Gross unrecognized tax benefits were $224 million and $203 million as of June 30, 2022 and December 31, 2021, respectively. The gross unrecognized tax benefits as of June 30, 2022, if recognized by the Company, will result in a reduction of approximately $149 million to the provision for income taxes thereby favorably impacting the Company’s effective tax rate.

The Company files U.S. Federal, state and foreign tax returns. The Company is currently under examination by the IRS for 2016 through 2018 and is subject to examination for 2019 through 2021. The foreign and state tax returns for years 2015 through 2021 are subject to examination by various states and foreign jurisdictions.

Given the potential outcome of the current examinations, as well as the impact of the current examinations on the potential expiration of the statute of limitations, it is reasonably possible that the balance of unrecognized tax benefits could significantly change within the next twelve months. However, an estimate of the range of reasonably possible adjustments cannot be made at this time.