Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

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Income Taxes
 3 Months Ended
Mar. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income tax expense and effective tax rates were as follows:
Three Months Ended March 31,
2022 2021
(in thousands, except effective tax rate)
Income (loss) before income taxes $ 12,382  $ (11,407)
Income tax expense 818  572 
Effective tax rate 6.6  % 5.0  %

In general, with certain exceptions ASC 740-270, Income Taxes, requires the use of an estimated annual effective tax rate to compute the tax provision during an interim period. For the three months ended March 31, 2022, the Company has net income before income taxes and used an estimated annual effective tax rate to compute the income tax provision. However, due to operating losses for the three months ended March 31, 2021, the Company determined that it was unable to reliably estimate its annual effective tax rate. As such, for the three months ended March 31, 2021, the Company used a discrete-period effective tax rate, which reflected the actual tax attributable to year-to-date earnings and losses for the period.

Income tax expense for the three months ended March 31, 2022 and 2021 was $0.8 million and $0.6 million, respectively. The rate for the three months ended March 31, 2022 differs from the Federal statutory rate of 21% primarily due to valuation allowances, state taxes, and U.S. tax on foreign operations. The rate for the three months ended March 31, 2021 differs from the Federal statutory rate of 21% primarily due to valuation allowances and state taxes. The effective tax rate for the three months ended March 31, 2022 was 6.6% compared to 5.0% for the three months ended March 31, 2021. The change in the effective tax rate was primarily driven by higher state tax expense due to the increase in pre-tax income.

Realization of the Company’s deferred tax assets is dependent upon future earnings, if any. The timing and amount of future earnings are uncertain. Because of the Company’s lack of U.S. earnings history, the Company’s net U.S. deferred tax assets have been fully offset by a valuation allowance, excluding a portion of its deferred tax liabilities for tax deductible goodwill.