Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company calculates the interim tax expense based on an annual effective tax rate ("AETR"). The AETR represents the Company’s estimated effective tax rate for the year based on full year projection of tax expense, divided by the projection of full year pretax book income/(loss) among the various foreign tax jurisdictions, adjusted for discrete transactions occurring during the period. The effective tax rates were 162.8% and 57.5% for the three months ended September 30, 2022 and 2021, respectively, and 97.7% and 155.4% for the nine months ended September 30, 2022 and 2021, respectively.

The change in the Company’s effective tax rate for the nine months ended September 30, 2022 from the nine months ended September 30, 2021 was primarily due to the mix of pretax earnings in jurisdictions with different jurisdictional tax rates. Additionally, the Company did not recognize any significant discrete tax items for the three months ended September 30, 2022, compared to the three months ended June 30, 2021 in which we recognized additional discreet expense for certain withholding taxes and uncertain tax positions.

The reserve for uncertain tax positions amounted to $5,621 and $8,855 at September 30, 2022 and December 31, 2021, respectively.

The Company’s policy is to record income tax related interest and penalties in income tax expense (benefit). The Company recorded expense (benefit) for any tax-related interest and penalties of $(20) and $434 for the three months ended September 30, 2022 and 2021, respectively, and $(395) and $461 for the nine months ended September 30, 2022 and 2021, respectively.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that all, or some portion, of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities and projected future taxable income in making this assessment. Management evaluates the need for valuation allowances on the deferred tax assets according to the provisions of ASC 740, Income Taxes. In making this determination, management assesses all available evidence, both positive and negative, at the balance sheet date. This includes, but is not limited to, recent earnings, internally-prepared income projections, and historical financial performance.