C.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 2013. We are currently under an Internal Revenue Service audit for the 2015-2017 tax years.

In 2019 we removed our assertion that the unremitted earnings of our foreign subsidiaries were permanently reinvested with limited exceptions. 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 $2.0 million as of December 31, 2020.

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) in response to the COVID-19 pandemic. The CARES Act allows for a deferral of the employer share of federal payroll taxes otherwise due through December 31, 2020. Under the act, 50 percent of the deferred amount is due December 31, 2021, and the remaining 50 percent is due December 31, 2022. This provision allows us to defer certain federal payroll deposits and invest this cash back into the business without any interest cost. The CARES Act also provides for a tax credit of up to $5,000 related to wages and health benefits provided to an employee whose work from March 17, 2020, through December 31, 2020, was impacted by COVID-19. Through December 31, 2020, we have recognized a payroll deferral and tax credit of $28.5 million and $0.7 million, respectively, under the CARES Act.

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 adding new rules for Global Intangible Low-tax Income (“GILTI”) and Foreign Derived Intangible Income (“FDII”). We have included the tax impact of both GILTI and FDII in our income tax expense for the twelve months ended December 31, 2020 and 2019. The Treasury Department issued final regulatory guidance related to both GILTI and FDII on July 15, 2020. The effective date of these regulations is generally January 1, 2021, absent an election to apply these rules retroactively to a 2018 effective date. We are reviewing these regulations and the potential to elect a 2018 effective date. The impact of this new guidance is not expected to have a material impact on full-year 2020 results.

On September 29, 2020, the Treasury Department issued final and proposed regulations on determining the foreign tax credit, and allocating and apportioning deductions, under the Internal Revenue Code. We are still completing our review of these regulations, but the impact of this new guidance is not expected to have a material impact on our results.

On December 27, 2020, the U.S. government enacted the Consolidated Appropriations Act, 2021. The bill extends several CARES Act provisions, including the employee retention tax credit. It also contains miscellaneous tax provisions effective for tax years beginning after December 31, 2020. The impact of this new guidance does not have a material impact on full-year 2020 results.


	2020		2019		2018
Unrecognized tax benefits, beginning of period	$	33,938	$	31,515	$	31,806
Additions based on tax positions related to the current year	3,172		2,212		—
Additions for tax positions of prior years	1,568		2,148		1,662
Reductions for tax positions of prior years	(124)		—		(263)
Lapse in statute of limitations	(2,276)		(1,703)		(1,394)
Settlements	(62)		(234)		(296)
Unrecognized tax benefits, end of the period	$	36,216	$	33,938	$	31,515

Income tax expense considers amounts that 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, 2020, we had $42.3 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 $1.8 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, 2020, 2019, and 2018, we recognized approximately $1.0 million in interest and penalties. We had approximately $6.1 million and $6.0 million for the payment of interest and penalties related to uncertain tax positions accrued within noncurrent income taxes payable as of December 31, 2020 and 2019, respectively. These amounts are not included in the reconciliation above.


	2020		2019		2018
Tax provision:
Federal	$	99,901	$	106,009	$	152,627
State	19,825		25,788		38,626
Foreign	40,103		35,899		39,830
	159,829		167,696		231,083
Deferred provision (benefit):
Federal	(28,238)		1,554		(11,969)
State	(5,749)		316		(3,176)
Foreign	(3,932)		(4,277)		(170)
	(37,919)		(2,407)		(15,315)
Total provision	$	121,910	$	165,289	$	215,768


	2020		2019		2018
Federal statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	2.5		2.8		3.3
Tax Act impact	—		—		0.4

Share-based payment awards	(2.8)		(0.9)		(0.7)
Excess foreign tax credits	(2.2)		(1.5)		—
Foreign	1.3		1.7		0.6
Other	(0.4)		(0.8)		(0.1)
Effective income tax rate	19.4	%	22.3	%	24.5	%


	2020		2019
Deferred tax assets:
Lease liabilities	$	82,982	$	77,879
Compensation	60,160		54,226
Accrued expenses	39,987		23,179
Receivables	7,810		5,086
Tax credit carryforward	10,464		—
Other	8,574		7,417
Deferred tax liabilities:
Right-of-use assets	(77,513)		(75,352)
Intangible assets	(81,210)		(73,166)
Accrued revenue	(18,978)		(14,893)
Prepaid assets	(5,732)		(4,660)
Long-lived assets	(12,722)		(15,134)
Foreign withholding tax	(10,222)		(9,259)
Other	(7,142)		(1,614)
Net deferred tax liabilities	$	(3,542)	$	(26,291)

We had foreign net operating loss carryforwards with a tax effect of $11.0 million as of December 31, 2020, and $11.1 million as of December 31, 2019. The net operating loss carryforwards will expire at various dates from 2021 to 2026, 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, 2020 and 2019, we have recorded a valuation allowance of $7.6 million and $8.5 million, respectively, against the deferred tax asset related to the foreign operating loss carryforwards.