INCOME TAXES

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. In addition, the effect of changes in enacted tax laws or rates or tax status is recognized in the interim period in which the change occurs.

The effective tax rate for the three and nine months ended September 30, 2024 was a tax benefit of 2% and 1%, respectively, which was lower than the statutory rate of 21% because the Company has recognized a full valuation allowance on its deferred tax assets, as well as an adjustment for the New York State income tax receivable upon completion of the 2023 tax return. The Company continued to evaluate the realizability of deferred tax assets, due to continued reduced profitability, concluded that a valuation allowance should continue to be recognized for any deferred tax assets generated during the quarter. The 2%, or $0.1 million benefit for the three months ended September 30, 2024 was the result of an adjustment for the New York State income tax receivable upon completion of the Company's 2023 tax return.

The effective tax rate for the three and nine months ended September 30, 2023 was 0% which was lower than the statutory rate of 21% due to continued reduced profitability. The Company concluded that a valuation allowance should continue to be recognized for any deferred tax assets generated during the quarter. As a result, there was no net income tax benefit recorded for pre-tax losses of the U.S. operations for the three and nine months ended September 30, 2023.