Income Taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

(11) Income Taxes

Our effective income tax rates were 23.5% and 24.5% during the three-month periods ended September 30, 2021, and 2020, respectively, and 23.6% and 24.1% during the nine-month periods ended September 30, 2021, and 2020, respectively.  The decrease in the effective tax rate during the three-month period ended September 30, 2021, as compared to the comparable quarter of 2020, was primarily due to the $3 million favorable change in the tax benefit from employee share-based payments as compared to the third quarter of 2020.  The decrease in the effective tax rate during the nine-month period ended September 30, 2021, as compared with the same period in 2020, was primarily due to a $6 million favorable change in the tax benefit from employee share-based payments offset by a $1 million increase to the foreign provision as compared to the prior year.

The global intangible low-taxed income (“GILTI”) provisions from the Tax Cuts and Jobs Act of 2017 (“the TCJA-17”) require the inclusion of the earnings of certain foreign subsidiaries in excess of an acceptable rate of return on certain assets of the respective subsidiaries in our U.S. tax return for tax years beginning after December 31, 2017.  An accounting policy election was made during 2018 to treat taxes related to GILTI as a period cost when the tax is incurred. We recorded a GILTI tax provision of zero  for the nine months ended September 30, 2021 and 2020.

As of January 1, 2021, our unrecognized tax benefits were approximately $2 million. The amount, if recognized, that would favorably affect the effective tax rate is approximately $2 million. During the nine months ended September 30, 2021, changes to the estimated liabilities for uncertain tax positions (including accrued interest) relating to tax positions taken during prior and current periods did not have a material impact on our financial statements.

We recognize accrued interest and penalties associated with uncertain tax positions as part of the tax provision. As of September 30, 2021, we have less than $1 million of accrued interest and penalties. The U.S. federal statute of limitations remains open for 2017 and subsequent years. Foreign and U.S. state and local jurisdictions have statutes of limitations generally ranging from 3 to 4 years. The statute of limitations on certain jurisdictions could expire within the next twelve months.  It is reasonably possible that the amount of uncertain tax benefits will change during the next 12 months, however, it is anticipated that any such change, if it were to occur, would not have a material impact on our results of operations.

We operate in multiple jurisdictions with varying tax laws. We are subject to audits by any of these taxing authorities. Our tax returns have been examined by the Internal Revenue Service (“IRS”) through the year ended December 31, 2006. We believe that adequate accruals have been provided for federal, foreign and state taxes.