Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

(12) Income Taxes

We maintain the exception under ASC 740-270-30-36(b), "Accounting for Income Taxes", that jurisdictions do not have reliable estimates of ordinary income for the 2020 year due to the volatility in the industry. Based on the increased global financial uncertainty due to the COVID-19 pandemic and continued volatility in the industry, we have continued to use a year to date methodology in determining the quarterly effective tax rate for the quarter ended March 31, 2020.

For the quarter ended March 31, 2020, we recorded a tax benefit of $1,858, resulting in an effective tax rate of 8.9%. For the quarter ended March 31, 2019, we recorded a tax expense of $1,844, resulting in an effective tax rate of 8.20%. The difference between the statutory rate and the effective rate is driven primarily by the valuation allowances in various jurisdictions, the foreign rate differential between the U.S. tax rate and foreign tax rates, and the change in U.S. tax law allowing for the carryback of certain U.S. net operating losses ("NOLs") as explained in the subsequent paragraph.

In response to the global pandemic resulting from COVID-19, the U.S. government enacted tax legislation on March 27, 2020 under the Coronavirus Aid Relief, and Economic Security Act ("CARES Act"). This legislation allows us to carryback NOLs generated in the 2018 and 2019 tax years up to five years. We intend to carryback such NOLs to the 2013 and 2014 tax years and request a refund for cash taxes paid. During the current quarter, we recorded a tax receivable for the NOL carryback of $8,886. We also recorded the associated tax benefit of $3,175, which is net of recorded uncertain tax positions of $5,711. We have also assessed the non-income tax related provisions of the CARES Act and do not believe that they will have a material impact on our consolidated financial statements.

Due to the one-time transition tax, the majority of our previously unremitted earnings have now been subjected to U.S. federal income tax, although, other additional taxes such as withholding tax could be applicable. We continue to assert that our foreign earnings are indefinitely reinvested in our overseas operations with the exception of Japan. The change in this assertion has no material effect. As such, we have not provided for any additional taxes on approximately $182,050 of unremitted earnings. We estimate the unrecognized deferred tax liability related to these earnings is approximately $20,804.

Tax years 2013 and 2014 remain subject to examination by the IRS for certain tax credit carryforwards, while tax years 2016 through 2018 remain open to examination by the IRS. State income tax returns are generally subject to examination for a period of three to four years after filing the respective tax returns. We file income tax returns (which are open to examination beginning in the year shown in parentheses) in Australia (2015), Belgium (2016), Brazil (2014), China (2016), France (2016), Germany (2015), India (2014), Israel (2015), Italy (2014), Japan (2014), Korea (2014), Mexico (2014), Netherlands (2014), Switzerland (2014), the United Kingdom (2018) and Uruguay (2014).