Income Taxes

3 Months Ended

Mar. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Our income tax provision and the respective effective income tax rates are as follows (in millions, except for income tax rates):

	For the Three Months Ended
	March 31,
	2021			2020
Income tax provision	$	8.8		$	16.0
Effective income tax rate	31.8		%	27.7		%

    Our provision for income taxes for the three months ended March 31, 2021 was $8.8 million, resulting in an effective income tax rate of 31.8%. The provision includes a discrete income tax benefit of $1.2 million, net of which $1.6 million relates to a tax adjustment for the final purchase price allocation on the sale of the MultiService payment solutions business ("MSTS"), reduced by a discrete tax expense of $0.4 million, net related to other worldwide tax adjustments. For the three months ended March 31, 2020, our provision for income taxes was $16.0 million resulting in an effective tax rate of 27.7%, which included a discrete income tax expense of $1.0 million, net for the period.

Our income tax concession in Singapore, which reduces the income tax rate on qualified sales and derivative gains and losses, decreased foreign income taxes by $0.4 million and $2.0 million for the three months ended March 31, 2021 and 2020, respectively. The impact of the income tax concession was $0.01 and $0.03 on basic earnings per common share and $0.01 and $0.03 on diluted earnings per common share for the three months ended March 31, 2021 and 2020, respectively.

Our provision for income taxes for the three months ended March 31, 2021 and 2020 was calculated based on the estimated annual effective income tax rate for the 2021 and 2020 fiscal years. The actual effective income tax rate for the 2021 fiscal year may be materially different as a result of differences between estimated versus actual results and the geographic tax jurisdictions in which the results are earned.

We have various tax returns under examination both in the U.S. and foreign jurisdictions. The most significant of these are in Denmark for the 2013 - 2019 tax years, South Korea for the 2011 - 2014 tax years, and the U.S. for 2017 - 2018 tax years. One of our subsidiaries in Denmark has been under audit for its 2013 - 2015 tax years since 2018. In January 2021, we received final tax assessments for the 2013 and 2014 tax years of approximately $0.6 million (DKK 3.7 million) and $0.8 million (DKK 4.9 million), respectively. We believe these assessments are without merit and are currently appealing the actions. In addition, in March 2021, we received notice that the Danish subsidiary’s 2016 – 2019 tax years were also under examination. Finally, on April 28, 2021, we received a proposed tax assessment for the 2015 tax year of approximately $15.7 million (DKK 96.1 million), which we believe is without merit. We are in the process of responding to the proposed assessment and the 2016 - 2019 information requests. We have not yet received any proposed assessments related to the 2016 - 2019 tax years, which could be materially larger than the previous assessments if a similar methodology is applied. In 2017, the Korean Branch of one of our subsidiaries received income tax assessment notices for $10.0 million (KRW 11.3 billion) from the South Korea tax authorities. We believe that these assessments are without merit and are currently appealing the actions. In addition, in January of 2020, we received a notice of examination from the IRS for the 2017 - 2018 tax years and are continuing to respond to information requests. An unfavorable resolution of one or more of the above matters could have a material adverse effect on our operating results or cash flows in the quarter or year in which the adjustments are recorded, or the tax is due or paid. As examinations are still in process, or have not yet reached the final stages of the appeals process, the timing of the ultimate resolution or payments that may be required cannot be determined at this time.