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INCOME TAXES
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income Before Provision for Income Taxes
Income before provision for income taxes based on geographic location is disclosed in the table below:
For the Years Ended December 31,
202220212020
Income before provision for income taxes:
United States$78,564 $128,498 $100,411 
Foreign428,694 404,894 278,068 
Total
$507,258 $533,392 $378,479 
Provision for Income Taxes
The provision for income taxes consists of the following:
For the Years Ended December 31,
202220212020
Current
Federal$20,044 $22,742 $19,249 
State10,116 6,735 7,022 
Foreign99,847 69,162 45,042 
Deferred
Federal(26,379)(40,421)(16,235)
State(3,483)(2,576)(1,682)
Foreign(12,303)(3,902)(2,077)
Total
$87,842 $51,740 $51,319 

As part of the U.S. Tax Act, as determined as of December 31, 2017, the Company was required to make annual installment payments for the one-time transition tax on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets and 8.0% on the remaining earnings. As of December 31, 2022, the remaining unpaid balance of this one-time transition tax was $34.3 million to be paid in annual installments with the final payment due in 2025.
As of December 31, 2022, the Company had approximately $1.522 billion of accumulated undistributed foreign earnings that are expected to be indefinitely reinvested. Due to the enactment of the U.S. Tax Act and the one-time transition tax on accumulated foreign subsidiary earnings, these accumulated foreign earnings are no longer expected to be subject to U.S. federal income tax if repatriated but could be subject to state and foreign income and withholding taxes.
Effective Tax Rate Reconciliation
The reconciliation of the provision for income taxes at the federal statutory income tax rate to the Company’s effective income tax rate is as follows:
For the Years Ended December 31,
202220212020
Provision for income taxes at federal statutory rate$106,514 $112,016 $79,481 
Increase/(decrease) in taxes resulting from:
GILTI and BEAT U.S. taxes 355 229 191 
Excess tax benefits relating to stock-based compensation(35,119)(71,628)(36,646)
Foreign tax expense and tax rate differential4,902 (206)(387)
Effect of permanent differences 7,812 4,756 3,507 
State taxes, net of federal benefit 9,323 9,192 5,323 
Stock-based compensation expense3,869 1,102 44 
Impact of election to change entity classification(8,264)— — 
Tax credits (2,876)(4,100)— 
Other 1,326 379 (194)
Provision for income taxes
$87,842 $51,740 $51,319 

The Company’s worldwide effective tax rate for the years ended December 31, 2022, 2021 and 2020 was 17.3%, 9.7% and 13.6%, respectively. The provision for income taxes in the year ended December 31, 2022 was favorably impacted by the recognition of $8.3 million of net deferred tax assets resulting from the Company’s decision to change the tax status and to classify certain of its foreign subsidiaries as disregarded for U.S. income tax purposes. The provision for income taxes in the year ended December 31, 2022 was unfavorably impacted by a charge of $7.6 million associated with changes to certain U.S. tax regulations causing an increase in net foreign tax expense. In addition, the Company recorded excess tax benefits upon vesting or exercise of stock-based awards of $35.1 million, $71.6 million and $36.6 million during the years ended December 31, 2022, 2021 and 2020, respectively.
In Belarus, member technology companies of High-Technologies Park, including the Company’s local subsidiary, have a full exemption from Belarus income tax on qualifying income through January 2049. However, beginning February 1, 2018, the earnings of the Company’s Belarus local subsidiary became subject to U. S. income taxation due to the Company’s decision to change the tax status of the subsidiary. There was no aggregate dollar benefit derived or impact on diluted net income per share from this tax holiday for the years ended December 31, 2022, 2021 and 2020.
Deferred Income Taxes
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:
As of December 31, 2022As of December 31, 2021
Deferred tax assets:
Property and equipment$11,587 $10,561 
Accrued expenses87,816 83,416 
Accrued sales discounts9,185 7,338 
Stock-based compensation 33,078 31,959 
Operating lease liabilities 43,662 52,806 
R&D capitalization36,915 — 
Deferred consideration14,030 — 
Foreign currency exchange11,284 11,750 
Other19,955 21,583 
Deferred tax assets$267,512 $219,413 
Less: valuation allowance(6,728)(4,538)
Total deferred tax assets$260,784 $214,875 
Deferred tax liabilities:
Property and equipment
$15,324 $1,095 
Intangible assets24,523 26,124 
Operating lease right-of-use assets
42,211 51,871 
U.S. taxation of foreign subsidiaries11,465 3,770 
Other7,232 6,402 
Total deferred tax liabilities$100,755 $89,262 
Net deferred tax assets$160,029 $125,613 
As of December 31, 2022 and 2021, the Company classified $12.8 million and $18.3 million, respectively, of deferred tax liabilities as Other noncurrent liabilities in the consolidated balance sheets.
Included in the stock-based compensation expense deferred tax asset at December 31, 2022 and 2021 is $4.6 million and $5.4 million, respectively, that is related to acquisitions and is amortized for tax purposes over a 10 to 15-year period.
As of December 31, 2022, the Company’s domestic and foreign net operating loss (“NOL”) carryforwards for income tax purposes were approximately $3.9 million and $32.3 million, respectively. If not utilized, the domestic NOL carryforwards will begin to expire in 2023. The foreign NOL carryforwards include $22.4 million from jurisdictions with no expiration date, with the remainder expiring as follows: $1.1 million in 2023, $1.9 million in 2024, $2.7 million in 2025, $1.3 million in 2026, $2.5 million in 2027, and $0.4 million beyond 2027. The Company maintains a valuation allowance primarily related to the net operating loss carryforwards in certain foreign jurisdictions that the Company believes are not likely to be realized, which totaled $30.8 million as of December 31, 2022.
Unrecognized Tax Benefits
As of December 31, 2022 and 2021, the total amount of gross unrecognized tax benefits was $7.9 million and $8.2 million, respectively. These amounts represent the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate in future periods and are included in Income taxes payable, noncurrent within the consolidated balance sheets.
The Company’s policy is to recognize interest and penalties related to uncertain tax positions as a component of its provision for income taxes. As of December 31, 2022 and 2021, the Company accrued $0.7 million and $0.6 million respectively, of interest and penalties resulting from such unrecognized tax benefits.
A reconciliation of the beginning and ending balances of the gross unrecognized tax benefits changes for the years ended December 31, 2022, December 31, 2021 and December 31, 2020 are as follows:
For the Years Ended December 31,
202220212020
Beginning Balance$8,155 $3,317 $2,914 
Increases in tax positions from current year4,739 5,310 902 
Increases in tax positions from acquisitions393 — — 
Increases in tax positions from prior years2,447 1,350 — 
Decreases in tax positions from prior years(6,945)— — 
Decreases due to lapse of statute of limitations(1,121)(1,298)(528)
Currency197 (524)29 
Ending Balance$7,865 $8,155 $3,317 
There were no tax positions for which it was reasonably possible that unrecognized tax benefits will significantly increase or decrease within twelve months of the reporting date.
The Company is subject to taxation in the United States and various states and foreign jurisdictions including Germany, Ukraine, the United Kingdom, Hungary, Switzerland, Netherlands, Poland, India, and Mexico. With few exceptions, as of December 31, 2022, the Company is no longer subject to U.S. federal, state, local or foreign examinations by tax authorities for years before 2018.