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INCOME TAXES
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The Company’s effective tax rate for 2021, 2020 and 2019 was 23.3%, 20.5%, and 17.4%, respectively. The increase from 2020 to 2021 is primarily due to a reduction in certain tax credits, lower tax benefits from stock-based compensation, and higher enacted state tax rates.

On March 27, 2020 Congress passed the Coronavirus Aid, Relief, and Economic Security Act, and on December 31, 2020 Congress passed an additional round of COVID relief legislation as part of the Bipartisan-Bicameral Omnibus COVID Relief Deal. The Company has reviewed the change in law and determined that it does not have a significant impact on the Company’s tax provision or financial statements. In addition, Balchem will continue to evaluate and analyze the impact of the U.S. Tax Cuts
and Jobs Act that was enacted on December 22, 2017 and the additional guidance that has been issued, and may be issued, by the U.S. Department of Treasury, the SEC, and/or the Financial Accounting Standards Board ("FASB") regarding this act.

The Company considers the undistributed earnings of certain non-U.S. subsidiaries to be indefinitely reinvested outside of the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and the Company's specific plans for reinvestment of those subsidiary earnings. The Company projects that its foreign earnings will be utilized offshore for working capital and future foreign growth. The determination of the unrecognized deferred tax liability on those undistributed earnings is not practicable due to its legal entity structure and the complexity of U.S. and local country tax laws. If the Company decides to repatriate the undistributed foreign earnings, it will need to recognize the income tax effects in the period it changes its assertion on indefinite reinvestment.
Income tax expense consists of the following:
 202120202019
Current:   
Federal$25,019 $19,249 $17,757 
Foreign7,553 3,399 1,609 
State3,664 3,590 818 
Deferred:
Federal(3,709)(3,017)(3,707)
Foreign(3,038)167 67 
State(360)(1,594)263 
Total income tax provision$29,129 $21,794 $16,807 
The provision for income taxes differs from the amount computed by applying the Federal statutory rate of 21% for 2021, 2020, and 2019 to earnings before income tax expense due to the following:
 202120202019
Income tax at Federal statutory rate$26,299 $22,348 $20,260 
State income taxes, net of Federal income taxes2,406 2,288 (244)
Stock Options(924)(1,529)(222)
GILTI — — 2,507 
FDII(1,540)(1,400)(1,922)
Patent Box Decree (related to prior years)— — (1,948)
Foreign Tax Credits— — (1,125)
Other2,888 87 (499)
Total income tax provision$29,129 $21,794 $16,807 
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020 were as follows:
 20212020
Deferred tax assets:  
Inventories$495 $1,470 
Restricted stock and stock options4,082 3,862 
Lease liabilities1,807 1,641 
Currency and interest rate swap649 2,831 
Other3,657 3,308 
Total deferred tax assets10,690 13,112 
Deferred tax liabilities:
Amortization$28,133 $32,872 
Depreciation25,484 27,897 
Prepaid expenses733 915 
Right of use assets1,769 1,926 
Other1,026 731 
Total deferred tax liabilities57,145 64,341 
Valuation allowance— 130 
Net deferred tax liability$46,455 $51,359 

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not the Company will not realize the benefits of these deductible differences. The amount of deferred tax asset realizable, however, could change if management’s estimate of future taxable income should change.

As of December 31, 2021, the Company has state income tax net operating loss (NOL) carryforwards of $335. The state NOL carryforwards will expire between 2025 and 2034. The Company believes that the benefit from the state NOL carryforwards will be realized, therefore a valuation allowance is not required to be established on these assets. The Company also acquired an insignificant amount of NOL carryforwards with the acquisition of Chemogas.

The Company considers the undistributed earnings of certain non-U.S. subsidiaries to be indefinitely reinvested outside of the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and specific plans for reinvestment of those subsidiary earnings. The Company projects that foreign earnings will be utilized offshore for working capital and future foreign growth. The determination of the unrecognized deferred tax liability on those undistributed earnings is not practicable due to the Company's legal entity structure and the complexity of U.S. and local country tax laws. If Balchem decides to repatriate the undistributed foreign earnings, the income tax effects will need to be recognized in the period the Company changes its assertion on indefinite reinvestment.
Provisions of ASC 740-10 clarify whether or not to recognize assets or liabilities for tax positions taken that may be challenged by a tax authority. A reconciliation of the beginning and ending amount of unrecognized tax benefits, which is included in other long-term obligations on the Company’s consolidated balance sheets, is as follows:
 202120202019
Balance at beginning of period$5,335 $4,762 $5,709 
Increases for tax positions of prior years806 267 431 
Decreases for tax positions of prior years(260)(391)(1,978)
Increases for tax positions related to current year— 697 600 
Balance at end of period$5,881 $5,335 $4,762 
All of Balchem's unrecognized tax benefits, if recognized in future periods, would impact the Company's effective tax rate in such future periods.
The Company recognizes both interest and penalties as part of the income tax provision. During the years ended December 31, 2021, 2020 and 2019, these amounted to approximately $262, $232 and $132, respectively. As of December 31, 2021 and 2020, accrued interest and penalties were $2,106 and $1,845, respectively.
Balchem files income tax returns in the U.S. and in various states and foreign countries. In the major jurisdictions where the Company operates, it is generally no longer subject to income tax examinations by tax authorities for years before 2017 and management does not anticipate any material change in the total amount of unrecognized tax benefits to occur within the next twelve months.