Note 12 - Income Taxes |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2026 | |||
| Notes to Financial Statements | |||
| Income Tax Disclosure [Text Block] |
The Company does not measure income tax expense for interim periods using the annual effective tax rate (“AETR”) method, as its estimated taxable income for future periods is not determined on a legal entity basis. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations for years before and state examinations for years before For foreign subsidiaries, the Company is no longer subject to examination for years before in Asia and generally in Europe.
The Company is currently under examination by the Internal Revenue Service (“IRS”) for the tax year 2024. The Company is unable to reasonably estimate the amount or range of potential changes currently because the examination is in its early stages and the outcome depends on future developments, including the IRS’s final positions and timing of any resolution.
The Company is currently under examination by the state of New Jersey for the tax years 2021-2024. The Company is unable to reasonably estimate the amount or range of potential changes currently because the examination is in its early stages and the outcome depends on future developments, including the state of New Jersey’s final positions and timing of any resolution.
In June 2026, the Company received communication from local tax authorities regarding our Guangxi, China factory disputing the deduction of certain service fee expenses relating to intercompany services provided by our Dongguan, China factory. We have settled the dispute with the relevant tax authorities, which resulted in a $0.1 million additional tax expense relating to the 2022-2025 tax years.
Due to the expiration of the statutes of limitations for certain jurisdictions, it is reasonably possible that the amount of unrecognized tax benefits may change materially from those recorded at September 30, 2026. Liabilities for uncertain tax positions totaled $16.5 million at September 30, 2026 and $17.5 million at December 31, 2025. As of September 30, 2026, approximately $1.2 million of uncertain tax positions expired and $0.8 million are expected to be resolved within the next twelve months due to expiration of the related statute of limitations. If recognized, these amounts would reduce the effective tax rate.
The Company recognizes interest and penalties related to uncertain tax positions as a component of the current provision for income taxes. For the nine months ended September 30, 2026 and 2025, the Company recognized $0.2 million in each period, in interest and penalties in the condensed consolidated statements of operations. Accrued interest and penalties included in the liabilities for uncertain tax positions were $1.0 million at each of September 30, 2026 and December 31, 2025.
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