INCOME TAXES

3 Months Ended

Mar. 31, 2021


NOTE 6 – INCOME TAXES

The Company reported income tax expense of $13.8 million for the three months ended March 31, 2021 compared to a benefit of $38.4 million for the three months ended March 31, 2020. The effective tax rates for the three months ended March 31, 2021 and 2020 was an expense of 34.5% and a benefit of 65.9%, respectively. The tax rate for the three months ended March 31, 2021 reflects losses in jurisdictions that are not eligible for tax benefits on account of valuation allowances and equity-based compensation awards expiring without a tax benefit. The effective tax rate for the three months ended March 31, 2020 reflects a $39.4 million tax benefit related to the CARES Act as well as the tax impact from a divestiture related impairment that was primarily non-deductible.

In response to the COVID-19 pandemic:

•On March 11, 2021, the President signed into law the ARP Act, a legislative package which is generally not significant to the Company's current tax footprint; however, the Company will continue to assess the ARP Act on an ongoing basis.

•On December 27, 2020, the President signed the CAA 2021, which provides several business tax relief provisions, which are generally not significant to the Company's current tax footprint; however, the Company will continue to assess the CAA 2021 on an ongoing basis.

•On March 27, 2020, the President signed into law the CARES Act, which is a substantial tax-and-spending package. As a result of the CARES Act tax law changes, for the year ended December 31, 2020, we recognized a $44.4 million tax benefit related to our ability to carryback net operating losses to prior years that had higher tax rates. In July 2020, the Company received a cash refund of $48.0 million, and in December 2020, the Company received $64.2 million (of which $62.0 million was the cash refund claim, and $2.2 million was interest income). A remaining carryback claim associated with the finalization of the 2019 U.S. federal income tax return is currently filed with the IRS, and the anticipated refund is less than $1.0 million.

Similar tax provisions and other stimulus measures have been granted either before or after March 31, 2021 by certain foreign and U.S. state jurisdictions, which the Company continues to evaluate and apply, if applicable.

The Company filed a PFA with the IRS related to a claim under Internal Revenue Code Section 1341 concerning the tax rate to be applied to the SQ Settlement on the Company’s 2018 tax return. As a result of the enactment of the CARES Act, the Company was able to realize a benefit at the higher tax rate in prior years on a portion of the SQ Settlement. In 2020, in consideration of the CARES Act, the Company revised the PFA, a portion of the long-term receivable previously established for the Section 1341 claim was reclassified to a current income tax receivable and the related uncertain tax position was released as part of the tax benefit recognized in 2020.

Subsequently in late 2020, the Company amended the 2018 tax return to reduce the Section 1341 benefit as a result of discussions with the IRS as part of the PFA program. Consequently, the remaining long-term receivable established for the Section 1341 claim and the corresponding uncertain tax position has been reclassified to a current income tax receivable and current income tax liability, respectively, as both are expected to settle in cash in 2021. In April, 2021, the Company was advised that the IRS completed its review of the 2018 tax return and took no exception to the Section 1341 benefit. Consequently, the Company anticipates recording a tax benefit of approximately $5.5 million in the second quarter of 2021 associated with the Section 1341 claim.