Income Taxes	9 Months Ended
Sep. 30, 2020
Income Taxes
Income Taxes	Note 6. Income Taxes The 2017 Tax Cuts and Jobs Act ("Tax Act") was signed into law on December 22, 2017. The Tax Act revised the U.S. corporate income tax by, among other things, lowering the statutory corporate tax rate from 35% to 21% in 2018. The Company generates income in higher tax rate foreign locations, which result in foreign tax credits. The lower federal corporate tax rate reduces the likelihood of our utilization of foreign tax credits created by income taxes paid in Puerto Rico and Latin America, resulting in a valuation allowance. Additionally, the Company evaluated the potential interest limitation established under the Tax Act and determined that no limitation would affect the 2020 provision for income taxes. The Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was signed into law on March 27, 2020. The CARES Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company determined that the CARES Act would not have a material impact on our accompanying Condensed Consolidated Financial Statements. For the nine months ended September 30, 2020 and 2019, our income tax expense has been computed utilizing an estimated annual effective tax rate of 37.4% and 34.6%, respectively. The difference between the annual effective rate of 37.4% and the statutory Federal income tax rate of 21% in the nine month period ended September 30, 2020, is primarily due to the impact of the Tax Act, which impacted the valuation allowance on foreign tax credits, and limitations on the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code. The annual effective tax rate related to income generated in the U.S. is 27.1%. Due to the reduced U.S. tax rate, the Company determined that a portion of its foreign income, which is taxed at a higher rate, will result in the generation of excess foreign tax credits that will not be available to offset U.S. income tax. As a result, 10.3% of the annual effective rate relates to the required valuation allowance against the excess foreign tax credits, bringing the annual effective tax rate for the nine month period ended September 30, 2020 to 37.4%. Additionally, the Company is evaluating the impact related to state filings and tax incentives in Puerto Rico, which may result in a tax beneficial position. It is anticipated that any adjustments will be recorded in the period ending December 31, 2020. For the nine month period ended September 30, 2019, the difference between the annual effective tax rate of 34.6% and the statutory Federal income tax rate of 21% is primarily due to the impact of the Tax Act and the related impact to the valuation allowance on foreign tax credits, and limitations on the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code. Income tax expense was $4.7 million and $3.7 million for the three months ended September 30, 2020 and 2019, respectively. Income tax expense was $5.9 million and $9.9 million for the nine months ended September 30, 2020 and 2019, respectively.

Income Taxes

9 Months Ended

Sep. 30, 2020

Note 6. Income Taxes

The 2017 Tax Cuts and Jobs Act ("Tax Act") was signed into law on December 22, 2017. The Tax Act revised the U.S. corporate income tax by, among other things, lowering the statutory corporate tax rate from 35% to 21% in 2018. The Company generates income in higher tax rate foreign locations, which result in foreign tax credits. The lower federal corporate tax rate reduces the likelihood of our utilization of foreign tax credits created by income taxes paid in Puerto Rico and Latin America, resulting in a valuation allowance. Additionally, the Company evaluated the potential interest limitation established under the Tax Act and determined that no limitation would affect the 2020 provision for income taxes.

The Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was signed into law on March 27, 2020. The CARES Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company determined that the CARES Act would not have a material impact on our accompanying Condensed Consolidated Financial Statements.

For the nine months ended September 30, 2020 and 2019, our income tax expense has been computed utilizing an estimated annual effective tax rate of 37.4% and 34.6%, respectively. The difference between the annual effective rate of 37.4% and the statutory Federal income tax rate of 21% in the nine month period ended September 30, 2020, is primarily due to the impact of the Tax Act, which impacted the valuation allowance on foreign tax credits, and limitations on the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code. The annual effective tax rate related to income generated in the U.S. is 27.1%. Due to the reduced U.S. tax rate, the Company determined that a portion of its foreign income, which is taxed at a higher rate, will result in the generation of excess foreign tax credits that will not be available to offset U.S. income tax. As a result, 10.3% of the annual effective rate relates to the required valuation allowance against the excess foreign tax credits, bringing the annual effective tax rate for the nine month period ended September 30, 2020 to 37.4%. Additionally, the Company is evaluating the impact related to state filings and tax incentives in Puerto Rico, which may result in a tax beneficial position. It is anticipated that any adjustments will be recorded in the period ending December 31, 2020. For the nine month period ended September 30, 2019, the difference between the annual effective tax rate of 34.6% and the statutory Federal income tax rate of 21% is primarily due to the impact of the Tax Act and the related impact to the valuation allowance on foreign tax credits, and limitations on the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code.

Income tax expense was $4.7 million and $3.7 million for the three months ended September 30, 2020 and 2019, respectively. Income tax expense was $5.9 million and $9.9 million for the nine months ended September 30, 2020 and 2019, respectively.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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