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INCOME TAXES | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXESC.H. Robinson Worldwide, Inc. and its 80 percent (or more) owned U.S. subsidiaries file a consolidated federal income tax return. We file unitary or separate state returns based on state filing requirements. With few exceptions, we are no longer subject to audits of U.S. federal, state and local, or non-U.S. income tax returns before 2012. We are currently under an Internal Revenue Service audit for the 2015-2017 tax years. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made broad and complex changes to the U.S. tax code, including but not limited to, reducing the U.S. federal corporate tax rate from 35 percent to 21 percent and requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries and adding new rules for Global Intangible Low-tax Income (“GILTI”) and Foreign Derived Intangible Income (“FDII”). Although enacted more than two years ago, regulatory guidance on the application of FDII has not been finalized. We have included the tax impact of both GILTI and FDII in our income tax expense for the twelve months ended December 31, 2019, based on our understanding of the rules available at the time of this filing. However, our calculations could be impacted by future regulations as guidance is finalized. We will continue to monitor any new guidance related to FDII and determine any impact it may have on our calculations. In 2019 we removed our assertion, except for regarding the working capital of our largest China subsidiary, that the unremitted earnings of our foreign subsidiaries were permanently reinvested. Following the removal of that assertion, we recorded tax expense of $13.9 million related to foreign withholding taxes paid and accrued during the fourth quarter of 2019. That expense was partially offset by tax benefits of $11.1 million related to excess foreign tax credits, and a tax benefit of $1.8 million related to foreign exchange losses on previously taxed income. If we repatriated all foreign earnings that are still considered to be permanently reinvested, the estimated effect on income taxes payable would be an increase of approximately $3.9 million as of December 31, 2019. Income before provision for income taxes consisted of (in thousands):
| 2019 |  | 2018 |  | 2017
Domestic | $ | 649,742 |  |  | $ | 738,927 |  |  | $ | 638,718 |
Foreign | 92,515 |  |  | 141,346 |  |  | 89,745 |
Total | $ | 742,257 |  |  | $ | 880,273 |  |  | $ | 728,463 |
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands):
| 2019 |  | 2018 |  | 2017
Unrecognized tax benefits, beginning of period | $ | 31,515 |  |  | $ | 31,806 |  |  | $ | 12,268 |
Additions based on tax positions related to the current year | 2,212 |  |  | — |  |  | 4,014 |
Additions for tax positions of prior years | 2,148 |  |  | 1,662 |  |  | 16,713 |
Reductions for tax positions of prior years | — |  |  | (263) |  |  | — |
Lapse in statute of limitations | (1,703) |  |  | (1,394) |  |  | (1,189) |
Settlements | (234) |  |  | (296) |  |  | — |
Unrecognized tax benefits, end of the period | $ | 33,938 |  |  | $ | 31,515 |  |  | $ | 31,806 |
Income tax expense considers amounts which may be needed to cover exposures for open tax years. We do not expect any material impact related to open tax years; however, actual settlements may differ from amounts accrued. As of December 31, 2019, we had $39.9 million of unrecognized tax benefits and related interest and penalties, all of which would affect our effective tax rate if recognized. We are not aware of any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefit will significantly increase or decrease in the next 12 months. The total liability for unrecognized tax benefits is expected to decrease by approximately $3.1 million in the next 12 months due to lapsing of statutes. We recognize interest and penalties related to uncertain tax positions in the provision for income taxes. During the years ended December 31, 2019, 2018, and 2017, we recognized approximately $1.0 million, $1.0 million, and $0.7 million, respectively, in interest and penalties. We had approximately $6.0 million and $6.5 million for the payment of interest and penalties related to uncertain tax positions accrued within noncurrent income taxes payable as of December 31, 2019 and 2018. These amounts are not included in the reconciliation above. The components of the provision for income taxes consist of the following for the years ended December 31 (in thousands):
| 2019 |  | 2018 |  | 2017
Tax provision: |  |  |  |  |
Federal | $ | 106,009 |  |  | $ | 152,627 |  |  | $ | 189,708 |
State | 25,788 |  |  | 38,626 |  |  | 29,320 |
Foreign | 35,899 |  |  | 39,830 |  |  | 32,638 |
| 167,696 |  |  | 231,083 |  |  | 251,666 |
Deferred provision (benefit): |  |  |  |  |
Federal | 1,554 |  |  | (11,969) |  |  | (21,389) |
State | 316 |  |  | (3,176) |  |  | (3,048) |
Foreign | (4,277) |  |  | (170) |  |  | (3,659) |
| (2,407) |  |  | (15,315) |  |  | (28,096) |
Total provision | $ | 165,289 |  |  | $ | 215,768 |  |  | $ | 223,570 |
A reconciliation of the provision for income taxes using the statutory federal income tax rate to our effective income tax rate for the years ended December 31, is as follows:
| 2019 |  | 2018 |  | 2017
Federal statutory rate | 21.0 | % |  | 21.0 | % |  | 35.0 | %
State income taxes, net of federal benefit | 2.8 |  |  | 3.3 |  |  | 2.6 |
Tax Act impact | — |  |  | 0.4 |  |  | (1.7) |
Section 199 deduction | — |  |  | — |  |  | (2.8) |
Share-based payment awards | (0.9) |  |  | (0.7) |  |  | (1.9) |
Excess foreign tax credits | (1.5) |  |  | — |  |  | — |
Foreign | 1.7 |  |  | 0.6 |  |  | (0.9) |
Other | (0.8) |  |  | (0.1) |  |  | 0.4 |
Effective income tax rate | 22.3 | % |  | 24.5 | % |  | 30.7 | %
Deferred tax assets (liabilities) are comprised of the following at December 31 (in thousands):
| 2019 |  | 2018
Deferred tax assets: |  |  |
Lease liabilities | $ | 77,879 |  |  | $ | — |
Compensation | 54,226 |  |  | 57,666 |
Accrued expenses | 23,179 |  |  | 27,683 |
Receivables | 5,086 |  |  | 8,093 |
Other | 7,417 |  |  | 6,004 |
Deferred tax liabilities: |  |  |
Right-of-use assets | (75,352) |  |  | — |
Intangible assets | (73,166) |  |  | (77,059) |
Accrued revenue | (14,893) |  |  | (19,571) |
Prepaid assets | (4,660) |  |  | (5,798) |
Long-lived assets | (15,134) |  |  | (15,615) |
Other | (10,873) |  |  | (7,167) |
Net deferred tax liabilities | $ | (26,291) |  |  | $ | (25,764) |
We had foreign net operating loss carryforwards with a tax effect of $11.1 million as of December 31, 2019, and $8.1 million as of December 31, 2018. The net operating loss carryforwards will expire at various dates from 2020 to 2025, with certain jurisdictions having indefinite carryforward terms. We continually monitor and review the foreign net operating loss carryforwards to determine the ability to realize the deferred tax assets associated with the foreign net operating loss carryforwards. As of December 31, 2019, and 2018, we have recorded a valuation allowance of $8.5 million and $6.4 million against the deferred tax asset related to the foreign operating loss carryforwards.

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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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