Income Taxes |
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| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes |
Income Taxes
The following table includes the Company’s loss before income tax benefit, income tax benefit and effective tax rate:
For the three months ended September 30, 2019, the Company's effective tax rate differed from the statutory rate primarily due to the windfall from share-based compensation, the executive compensation deduction limitation, additional accruals for uncertain tax positions and differences between the foreign tax rates and statutory US tax rate.
For the nine months ended September 30, 2019, the Company's effective tax rate differed from the statutory rate primarily due to the release of the Company's valuation allowance of $21,907 primarily as a result of additional deferred tax liabilities recorded from the PIEtech Acquisition, the windfall from share-based compensation, federal and state research and development credits, the executive compensation deduction limitation, and additional accruals for uncertain tax positions.
For the three and nine months ended September 30, 2018, the Company's effective tax rate differed from the statutory rate primarily due to the release of the Company’s valuation allowance as a result of deferred tax liabilities recorded with the acquisition of FolioDynamix as well as differences between the foreign tax rates and statutory US tax rate.
In December 2017, the Tax Cuts and Jobs Act (“Tax Act”) was enacted into United States law. Beginning in 2018, the Tax Act includes the global intangible low-taxed income (“GILTI”) and BEAT provisions. The Company elected to account for GILTI tax in the period in which it is incurred. The GILTI provision requires the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company expects to fully offset any GILTI income with Net Operating Losses (“NOLs”). The Company has reevaluated the entity classification of certain of its Controlled Foreign Corporations (“CFCs”); and as such, has changed the classification of its Indian entities to a flow-through status. As a result, the Company does not currently expect to be subject to BEAT. Additionally, the two Indian entities are no longer subject to GILTI.
The Company's total gross liability for unrecognized tax benefits, exclusive of interest and penalties, was $18,536 and $15,628 at September 30, 2019 and December 31, 2018, respectively. Of this amount, a portion of the unrecognized tax benefits was recorded as a reduction of deferred tax assets instead of a non-current liability. The portion of the unrecognized tax benefits, exclusive of interest and penalties, recorded as a non-current liability is $6,599 and $4,429 at September 30, 2019 and December 31, 2018, respectively.
At September 30, 2019, the amount of unrecognized tax benefits, including interest and penalties, that would benefit the Company’s effective tax rate, if recognized, was $12,501. At this time, the Company estimates that the liability for unrecognized tax benefits could decrease in the next twelve months as it is anticipated that reviews by tax authorities will be completed.
The Company recognizes potential interest and penalties related to unrecognized tax benefits in income tax expense. Income tax expense includes $1,306 of potential interest and penalties related to unrecognized tax benefits for the nine months ended September 30, 2019. The Company had a net reversal of $221 of interest and penalties for the nine months ended September 30, 2018 related to the closure of open audits for one of the Company's Indian subsidiaries. The Company had accrued interest and penalties of $7,205 and $5,977 as of September 30, 2019 and December 31, 2018, respectively.
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