Income Taxes

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

10. 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 June 30,						For the Six Months Ended June 30,
	2022			2021			2022			2021
Income tax provision	$	(2.5)		$	2.0		$	3.8		$	10.8
Effective income tax rate	(11.3)		%	10.2		%	7.0		%	22.9		%

Our provision for income taxes for the three months ended June 30, 2022 includes a discrete income tax benefit of $10.6 million, net, of which $6.3 million relates to the reversal of a valuation allowance previously recorded against the deferred tax assets of one of our foreign subsidiaries, $3.0 million relates to the remeasurement of an uncertain tax position and expiration of statute of limitation periods for one of our foreign subsidiaries, and $1.2 million, net, relates to other worldwide tax adjustments. For the three months ended June 30, 2021, the provision includes a net discrete income tax benefit of $2.6 million, of which $4.5 million relates to the impact of a change in the United Kingdom's tax rate, reduced by a net discrete tax expense of $1.9 million related to other worldwide tax adjustments.

Our provision for income taxes for the six months ended June 30, 2022 includes a discrete income tax benefit of $11.8 million, net, of which $7.1 million relates to the remeasurement of an uncertain tax position and expiration of statute of limitation periods for one of our foreign subsidiaries and $6.3 million relates to the reversal of a valuation allowance previously recorded against the deferred tax assets of one of our foreign subsidiaries, reduced by a net tax expense of $1.6 million related to other worldwide tax adjustments. For the six months ended June 30, 2021, the provision includes a net discrete income tax benefit of $3.8 million, which includes a $4.5 million tax benefit related to the impact of a change in the United Kingdom's tax rate and a $1.6 million tax benefit related to an adjustment for the final purchase price allocation on the sale of the MultiService payment solutions business ("MSTS"), offset by a net discrete tax expense of $2.3 million related to other worldwide tax adjustments.

Our income tax provisions for the three and six months ended June 30, 2022 and 2021 were calculated based on the estimated annual effective income tax rates for the 2022 and 2021 years, respectively. The actual effective income tax rate for the 2022 year may be materially different for several reasons including 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 material of these is in Denmark for the 2013 - 2019 tax years. One of our subsidiaries in Denmark has been under audit for its 2013 - 2015 tax years since 2018 and was notified in March 2021 that its 2016 - 2019 tax years were also under examination. Through the six months ended June 30, 2022, we have received final tax assessments for the 2013 and 2014 tax years that were immaterial and a proposed tax assessment for the 2015 tax year of approximately $13.6 million (DKK 96.1 million). In April 2022, we received a proposed tax assessment for the 2016 and 2017 tax years of approximately $18.9 million (DKK 133.8 million) and $21.9 million (DKK 155.5 million), respectively. We believe these assessments are without merit and are vigorously defending against the actions. We have not yet received any proposed assessments related to the 2018 - 2019 tax years, which could be materially larger than the previous assessments if a similar methodology is applied.

In March 2022, we received a proposed settlement for the 2011 to 2014 tax years of the Korea branch of one of our subsidiaries related to income tax assessment notices received in 2017 totaling $8.8 million (KRW 11.3 billion) and revised in 2021 to $8.3 million (KRW 10.6 billion). The proposed settlement reduced the total South Korean assessment for the 2011 to 2014 tax years to approximately $1.6 million (KRW 2.0 billion), including tax, interest, and penalties. We agreed to the proposed settlement in the second quarter of 2022.

The U.S. IRS examination for our 2019 tax year was closed in June 2022, without any adjustments. We have not yet received notification that the examinations of our 2017 and 2018 tax years are closed but do not anticipate any changes from what we previously agreed in March 2022.

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.