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Income Taxes | 12 Months Ended
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Feb. 01, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The 2017 Tax Act made broad and complex changes to the U.S. tax code which had a significant impact on our fiscal 2018 and fiscal 2019 tax expense, including reducing the U.S. federal corporate tax rate from 35% to 21%, expanded rules regarding expensing of fixed assets, and required one-time transition tax on certain undistributed earnings of foreign subsidiaries. Other provisions that became effective in Fiscal 2019 impacting income taxes include: an exemption from U.S. tax on dividends of future foreign earnings, expanded limitations on executive compensation, a minimum tax on certain foreign earnings in excess of 10% of the foreign subsidiaries tangible assets (i.e. global intangible low-taxed income or “GILTI”), and allows a benefit for foreign derived intangible income (“FDII”). In December 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118, which allows a measurement period, not to exceed one year, to finalize the accounting for the income tax impacts of the 2017 Tax Act. We completed our analysis in the fourth quarter of fiscal 2019 and determined there was no material adjustment to the income tax expense. We have recorded current tax on GILTI relative to fiscal 2020 operations and will continue to account for GILTI as a period cost when incurred. For financial reporting purposes, components of income before income taxes are as follows:
| Fiscal Year Ended |  |
In thousands | February 1, 2020 | February 2, 2019 | February 3, 2018
|  |  | (53 weeks)
United States | $ | 3,742,227 |  | $ | 3,463,785 |  | $ | 3,255,057 |
Foreign | 663,956 |  | 709,426 |  | 601,531 |
Income before provision for income taxes | $ | 4,406,183 |  | $ | 4,173,211 |  | $ | 3,856,588 |
The provision for income taxes includes the following:
| Fiscal Year Ended |  |
In thousands | February 1, 2020 | February 2, 2019 | February 3, 2018
|  |  | (53 weeks)
Current: |  |  |
Federal | $ | 708,508 |  | $ | 711,369 |  | $ | 1,063,141 |
State | 250,830 |  | 251,187 |  | 160,650 |
Foreign | 181,061 |  | 238,692 |  | 161,974 |
Deferred: |  |  |
Federal | 9,409 |  | (62,278) |  | (164,523) |
State | (8,203) |  | (27,831) |  | 27,595 |
Foreign | (7,615) |  | 2,274 |  | (197) |
Provision for income taxes | $ | 1,133,990 |  | $ | 1,113,413 |  | $ | 1,248,640 |
TJX had net deferred tax (liabilities) assets as follows:
| Fiscal Year Ended |
In thousands | February 1, 2020 | February 2, 2019
Deferred tax assets: |  |
Net operating loss carryforward | $ | 57,886 |  | $ | 49,489 |
Reserves for lease obligations | 3,114 |  | 2,799 |
Pension, stock compensation, postretirement and employee benefits | 290,144 |  | 273,482 |
Leases(a) | — |  | 45,740 |
Operating lease liabilities(a) | 2,384,486 |  | — |
Accruals and reserves | 54,550 |  | 42,709 |
Other | 83,707 |  | 65,776 |
Total gross deferred tax assets | $ | 2,873,887 |  | $ | 479,995 |
Valuation allowance | (60,086) |  | (51,711) |
Net deferred tax asset | $ | 2,813,801 |  | $ | 428,284 |
Deferred tax liabilities: |  |
Property, plant and equipment | $ | 557,848 |  | $ | 497,906 |
Capitalized inventory | 46,778 |  | 42,981 |
Operating lease right of use assets(a) | 2,315,690 |  | — |
Tradename/intangibles | 15,705 |  | 14,019 |
Undistributed foreign earnings | 1,806 |  | 1,856 |
Other | 6,012 |  | 23,246 |
Total deferred tax liabilities | $ | 2,943,839 |  | $ | 580,008 |
Net deferred tax (liability) | $ | (130,038) |  | $ | (151,724) |
Non-current asset | $ | 12,132 |  | $ | 6,467 |
Non-current liability | (142,170) |  | (158,191) |
Total | $ | (130,038) |  | $ | (151,724) |
(a) See Leases in Note A—Basis of Presentation and Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements for impact of lease accounting changes. TJX has provided for all applicable state and foreign withholding taxes on all undistributed earnings of its foreign subsidiaries in Canada, Puerto Rico, Italy, India, Hong Kong and Vietnam through February 1, 2020. We have not provided for federal, state, or foreign withholding taxes on the approximately $1.5 billion of undistributed earnings related to all other foreign subsidiaries as such earnings are considered to be indefinitely reinvested in the business. The net amount of unrecognized state and foreign withholding tax liabilities related to the undistributed earnings is not material. As of February 1, 2020 and February 2, 2019, for state income tax purposes, TJX had net operating loss carryforwards of $190.3 million and $133.2 million respectively, which expire, if unused, in the years 2021 through 2039. TJX has analyzed the realization of the state net operating loss carryforwards on an individual state basis. For those states where the Company has determined that it is more likely than not that the state net operating loss carryforwards will not be realized, a valuation allowance of $13 million has been provided for the deferred tax asset as of February 1, 2020 and $10 million as of February 2, 2019. As of February 1, 2020 and February 2, 2019, the Company had available for foreign income tax purposes (related to Australia, Austria and the Netherlands) net operating loss carryforwards of $156.4 million and $138.8 million respectively, of which $22 million will expire, if unused, in fiscal years 2025 through 2028. The remaining loss carryforwards do not expire. For the deferred tax assets associated with the net operating loss carryforwards for which management has determined it is more likely than not that the deferred tax assets will not be realized, TJX had valuation allowances recorded of approximately $46.9 million as of February 1, 2020, and approximately $41.7 million as of February 2, 2019. The difference between the U.S. federal statutory income tax rate and TJX’s worldwide effective income tax rate is reconciled below:
| Fiscal Year Ended |  |
| February 1, 2020 | February 2, 2019 | February 3, 2018
|  |  | (53 weeks)
U.S. federal statutory income tax rate | 21.0 | % | 21.0 | % | 33.7 | %
Effective state income tax rate | 4.6 |  | 4.5 |  | 3.6 |
Impact of foreign operations | 0.8 |  | 1.2 |  | (0.1) |
Excess share-based compensation | (1.3) |  | (1.2) |  | (1.3) |
Impact of 2017 Tax Act | — |  | 1.5 |  | (2.3) |
All other | 0.6 |  | (0.3) |  | (1.2) |
Worldwide effective income tax rate | 25.7 | % | 26.7 | % | 32.4 | %
TJX’s effective income tax rate decreased for fiscal 2020 as compared to fiscal 2019. The decrease in the fiscal 2020 effective income tax rate is primarily driven by fiscal 2019 including a charge related to the 2017 Tax Act that was not incurred in fiscal 2020 and change in the jurisdictional mix of income. TJX had net unrecognized tax benefits of $254.8 million as of February 1, 2020, $233.4 million as of February 2, 2019 and $57.3 million as of February 3, 2018. A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows:
| Fiscal Year Ended |  |
In thousands | February 1, 2020 | February 2, 2019 | February 3, 2018
Balance, beginning of year | $ | 244,195 |  | $ | 61,704 |  | $ | 49,092 |
Additions for uncertain tax positions taken in current year | 21,559 |  | 7,406 |  | 6,504 |
Additions for uncertain tax positions taken in prior years | 722 |  | 177,741 |  | 7,990 |
Reductions for uncertain tax positions taken in prior years | — |  | — |  | (587) |
Reductions resulting from lapse of statute of limitations | (4,022) |  | (1,388) |  | (1,295) |
Settlements with tax authorities | (3,095) |  | (1,268) |  | — |
Balance, end of year | $ | 259,359 |  | $ | 244,195 |  | $ | 61,704 |
Included in the gross amount of unrecognized tax benefits are items that will impact future effective tax rates upon recognition. These items amounted to $240 million as of February 1, 2020, $222 million as of February 2, 2019 and $55.8 million as of February 3, 2018. TJX is subject to U.S. federal income tax as well as income tax in multiple state, local and foreign jurisdictions. In the U.S. and India, fiscal years through 2010 are no longer subject to examination. In all other jurisdictions, fiscal years through 2012 are no longer subject to examination. TJX’s accounting policy is to classify interest and penalties related to income tax matters as part of income tax expense. The amount of interest and penalties expensed was $4.7 million for the year ended February 1, 2020, $11.9 million for the year ended February 2, 2019 and $1.9 million for the year ended February 3, 2018. The accrued amounts for interest and penalties are $27.9 million as of February 1, 2020, $23.6 million as of February 2, 2019 and $11.9 million as of February 3, 2018. Based on the final resolution of tax examinations, judicial or administrative proceedings, changes in facts or law, expirations of statutes of limitations in specific jurisdictions or other resolutions of, or changes in, tax positions, it is reasonably possible that unrecognized tax benefits for certain tax positions taken on previously filed tax returns may change materially from those represented on the financial statements as of February 1, 2020. During the next twelve months, it is reasonably possible that tax audit resolutions may reduce unrecognized tax benefits by $0 to $31 million, which would reduce the provision for taxes on earnings.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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