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INCOME TAXES | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES 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 2014. 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, 2021. 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 was 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, 2021, we have recognized a payroll deferral and tax credit of $14.7 million and $0.7 million, respectively, under the CARES Act. On December 28, 2021, the Treasury Department released final regulations on determining the foreign tax credit, and allocating and apportioning deductions, under the Internal Revenue Code. The impact of this finalized guidance is not expected to have a material impact on our results. Income before provision for income taxes consisted of (in thousands):
| 2021 |  | 2020 |  | 2019
Domestic | $ | 566,847 |  |  | $ | 499,384 |  |  | $ | 649,742 |
Foreign | 455,444 |  |  | 128,947 |  |  | 92,515 |
Total | $ | 1,022,291 |  |  | $ | 628,331 |  |  | $ | 742,257 |
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands):
| 2021 |  | 2020 |  | 2019
Unrecognized tax benefits, beginning of period | $ | 36,216 |  |  | $ | 33,938 |  |  | $ | 31,515 |
Additions based on tax positions related to the current year | 3,530 |  |  | 3,172 |  |  | 2,212 |
Additions for tax positions of prior years | 1,919 |  |  | 1,568 |  |  | 2,148 |
Reductions for tax positions of prior years | (2,431) |  |  | (124) |  |  | — |
Lapse in statute of limitations | (1,932) |  |  | (2,276) |  |  | (1,703) |
Settlements | — |  |  | (62) |  |  | (234) |
Unrecognized tax benefits, end of the period | $ | 37,302 |  |  | $ | 36,216 |  |  | $ | 33,938 |
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, 2021, we had $42.9 million of unrecognized tax benefits and related interest and penalties, all of which would affect our effective tax rate if recognized. In the unlikely event these unrecognized tax benefits and related interest and penalties were recognized fully in 2021, the impact to the annual effective tax rate would have been 4.2 percent. 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 $5.9 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, 2021, 2020, and 2019, we recognized approximately $0.9 million, $1.0 million, and $1.0 million in interest and penalties. We had approximately $5.6 million and $6.1 million for the payment of interest and penalties related to uncertain tax positions accrued within noncurrent income taxes payable as of December 31, 2021 and 2020, respectively. 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):
| 2021 |  | 2020 |  | 2019
Tax provision: |  |  |  |  |
Federal | $ | 165,218 |  |  | $ | 99,901 |  |  | $ | 106,009 |
State | 36,718 |  |  | 19,825 |  |  | 25,788 |
Foreign | 85,654 |  |  | 40,103 |  |  | 35,899 |
| 287,590 |  |  | 159,829 |  |  | 167,696 |
Deferred provision (benefit): |  |  |  |  |
Federal | (90,960) |  |  | (28,238) |  |  | 1,554 |
State | (16,176) |  |  | (5,749) |  |  | 316 |
Foreign | (2,408) |  |  | (3,932) |  |  | (4,277) |
| (109,544) |  |  | (37,919) |  |  | (2,407) |
Total provision | $ | 178,046 |  |  | $ | 121,910 |  |  | $ | 165,289 |
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:
| 2021 |  | 2020 |  | 2019
Federal statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal benefit | 1.7 |  |  | 2.5 |  |  | 2.8 |
Share-based payment awards | (0.6) |  |  | (2.8) |  |  | (0.9) |
Excess foreign tax credits | (0.4) |  |  | (2.2) |  |  | (1.5) |
Other U.S. tax credits and incentives | (3.3) |  |  | (1.4) |  |  | (0.9) |
Foreign | (1.2) |  |  | 1.3 |  |  | 1.7 |
Other | 0.2 |  |  | 1.0 |  |  | 0.1 |
Effective income tax rate | 17.4 | % |  | 19.4 | % |  | 22.3 | %
Deferred tax assets (liabilities) are comprised of the following at December 31 (in thousands):
| 2021 |  | 2020
Deferred tax assets: |  |  |
Lease liabilities | $ | 60,846 |  |  | $ | 82,982 |
Compensation | 71,770 |  |  | 60,160 |
Accrued expenses | 92,936 |  |  | 39,987 |
Foreign affiliate prepayment | 88,399 |  |  | — |
Other | 22,925 |  |  | 26,848 |
Deferred tax liabilities: |  |  |
Right-of-use assets | (56,044) |  |  | (77,513) |
Intangible assets | (79,198) |  |  | (81,210) |
Accrued revenue | (47,255) |  |  | (18,978) |
Prepaid assets | (14,021) |  |  | (5,732) |
Long-lived assets | (10,387) |  |  | (12,722) |
Foreign withholding tax | (11,917) |  |  | (10,222) |
Other | (9,267) |  |  | (7,142) |
Net deferred tax assets (liabilities) | $ | 108,787 |  |  | $ | (3,542) |
We had foreign net operating loss carryforwards with a tax effect of $8.6 million as of December 31, 2021, and $11.0 million as of December 31, 2020. The net operating loss carryforwards will expire at various dates from 2022 to 2028, 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, 2021 and 2020, we have recorded a valuation allowance of $2.5 million and $7.6 million, respectively, against the deferred tax asset related to the foreign operating loss carryforwards.

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