Income Tax Matters

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Tax Matters

10. Income Tax Matters

The following table presents the income tax (provision) benefit by region (in millions of dollars):

	Quarter Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Domestic	$	(2.5	)	$	4.8		$	(7.0	)	$	2.0
Foreign		(0.5	)		(0.7	)		(0.9	)		(1.2	)
Total	$	(3.0	)	$	4.1		$	(7.9	)	$	0.8

The income tax (provision) benefit for the quarters ended June 30, 2023 and June 30, 2022 was $(3.0) million and $4.1 million, respectively, reflecting an effective tax rate of 14% and 23%, respectively. The difference between the effective tax rate and the projected blended statutory tax rate for the quarter ended June 30, 2023 was primarily due to a decrease of 13% related to Federal research and development and state tax credits, partially offset by: (i) an increase of 1% related to non-deductible compensation expense; (ii) an increase of 1% related to foreign withholding tax; and (iii) an increase of 1% for the recognition of excess book benefits from stock-based compensation.

There was no material difference between the effective tax rate and the projected blended statutory tax rate for the quarter ended June 30, 2022.

The income tax (provision) benefit for the six months ended June 30, 2023 and June 30, 2022 was $(7.9) million and $0.8 million, respectively, reflecting an effective tax rate of 19% and 13%, respectively. The difference between the effective tax rate and the projected blended statutory tax rate for the six months ended June 30, 2023 was primarily due to a decrease of 9% related to Federal research and development and state tax credits, partially offset by: (i) an increase of 1% related to non-deductible compensation expense and (ii) an increase of 1% related to foreign withholding tax.

The difference between the effective tax rate and the projected blended statutory tax rate for the six months ended June 30, 2022 was primarily due to: (i) a decrease of 8% for the recognition of excess book benefits from stock-based compensation; (ii) a decrease of 5% related to a Federal Research and Development Credit; and (iii) a decrease of 1% related to the valuation allowance for certain state net operating losses, partially offset by: (i) an increase of 2% related to non-deductible compensation expense and (ii) an increase of 1% related to foreign withholding tax.

Our gross unrecognized benefits relating to uncertain tax positions were $6.0 million and $5.0 million at June 30, 2023 and December 31, 2022, respectively, of which, $6.0 million and $5.0 million would be recorded through our income tax provision and thus, impact the effective tax rate at June 30, 2023 and December 31, 2022, respectively, if the gross unrecognized tax benefits were to be recognized.

We do not expect our gross unrecognized tax benefits to significantly change within the next 12 months.