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INCOME TAXES | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES On December 22, 2017, the U.S. enacted the TCJA, which significantly changed U.S. tax law. The TCJA lowered the Company’s U.S. statutory federal income tax rate from 35% to 21% effective January 1, 2018, while imposing a deemed repatriation tax on previously deferred foreign income. Income before income taxes consists of:
Years Ended December 31, | 2020 |  | 2019 |  | 2018
United States | $ | 91,555 |  |  | $ | 94,612 |  |  | $ | 34,404 |
International | 209,600 |  |  | 247,457 |  |  | 231,616 |
Total | $ | 301,155 |  |  | $ | 342,069 |  |  | $ | 266,020 |
The provision (benefit) for income taxes is composed of:
Years Ended December 31, | 2020 |  | 2019 |  | 2018
Current: |  |  |  |  |
U.S. Federal | $ | 9,934 |  |  | $ | 2,129 |  |  | $ | 10,273 |
State/Local | 3,094 |  |  | 883 |  |  | 877 |
International | 82,235 |  |  | 88,084 |  |  | 83,456 |
| $ | 95,263 |  |  | $ | 91,096 |  |  | $ | 94,606 |
Deferred: |  |  |  |  |
U.S. Federal/State | $ | (2,270) |  |  | $ | 4,670 |  |  | $ | (17,019) |
International | (5,928) |  |  | 4,076 |  |  | (6,333) |
| $ | (8,198) |  |  | $ | 8,746 |  |  | $ | (23,352) |
Total | $ | 87,065 |  |  | $ | 99,842 |  |  | $ | 71,254 |
A reconciliation of the provision for income taxes with the amount computed by applying the statutory federal income tax rate of 21% to income before provision for income taxes is as follows:
Years Ended December 31, | 2020 |  | 2019 |  | 2018
Income tax at statutory rate | $ | 63,243 |  |  | $ | 71,835 |  |  | $ | 55,864 |
State income taxes (benefits), net of federal tax effect | 2,396 |  |  | 2,622 |  |  | (1,516) |
Investment incentives | (483) |  |  | (2,530) |  |  | (1,900) |
Tax resolutions | 820 |  |  | (1,915) |  |  | (3,400) |
Excess tax benefits from share-based compensation | (11,625) |  |  | (15,370) |  |  | (13,400) |
Deferred tax charges (benefits), incl. tax rate changes | 4,110 |  |  | — |  |  | (2,800) |
U.S. Global Intangible Low-Taxed Income ("GILTI") and Base Erosion Anti-Abuse Tax ("BEAT") | (3,909) |  |  | (1,485) |  |  | 5,625 |
U.S. tax reform - transition tax | — |  |  | — |  |  | (2,570) |
Valuation allowance | 1,332 |  |  | 10,623 |  |  | 3,170 |
Rate differential on earnings of foreign operations | 24,901 |  |  | 32,657 |  |  | 29,024 |
Other items, net | 6,280 |  |  | 3,405 |  |  | 3,157 |
Actual income tax provision | $ | 87,065 |  |  | $ | 99,842 |  |  | $ | 71,254 |
Effective income tax rate | 28.9 | % |  | 29.2 | % |  | 26.8 | %
The 2020 provision for income tax was favorably impacted by excess tax benefits on deductible share-based compensation. The tax provision for 2020 reflects a $11.6 million benefit from this item. The 2020 tax provision reflects a one-time adjustment of U.S. GILTI tax in response to regulations issued by the U.S. Department of the Treasury in July 2020. The 2020 provision also reflects a $3.0 million deferred tax charge to reflect a prior year true-up. Since a majority of our pretax income is earned in higher tax jurisdictions, this mix of income has an unfavorable tax rate impact. The 2019 tax provision was favorably impacted by excess tax benefits on deductible share-based compensation. The tax provision for 2019 reflects a $15.4 million benefit from this item. The mix of pretax income has an unfavorable impact, because the majority of our income is earned in higher tax jurisdictions. Additionally, we have incurred losses in jurisdictions where we cannot tax effect the loss. The 2018 tax provision was favorably impacted by excess tax benefits on deductible stock compensation. The tax provision for 2018 reflects a $13.4 million benefit from this item. The mix of pretax income has an unfavorable impact, reflecting that the majority of our income is earned in higher tax jurisdictions. The U.S. GILTI tax and BEAT also had a $5.6 million unfavorable impact. Significant deferred tax assets and liabilities as of December 31, 2020 and 2019 are composed of the following temporary differences:
| 2020 |  | 2019
Deferred Tax Assets: |  |  |
Net operating loss carryforwards | $ | 19,353 |  |  | $ | 24,941 |
Operating and finance leases | 24,529 |  |  | 25,440 |
Pension liabilities | 36,085 |  |  | 24,925 |
Share-based compensation | 5,946 |  |  | 6,082 |
U.S. federal tax credits | 8,826 |  |  | 8,575 |
U.S. state tax credits | 7,011 |  |  | 7,881 |
Vacation and bonus | 12,307 |  |  | 7,645 |
Research and development | 8,992 |  |  | 7,539 |
Inventory | 4,854 |  |  | 5,993 |
Workers compensation | 3,353 |  |  | 3,835 |
Other | 16,643 |  |  | 16,496 |
Total gross deferred tax assets | $ | 147,899 |  |  | $ | 139,352 |
Less valuation allowance | (23,105) |  |  | (23,320) |
Net deferred tax assets | $ | 124,794 |  |  | $ | 116,032 |
Deferred Tax Liabilities: |  |  |
Acquisition related intangibles | $ | 57,295 |  |  | $ | 62,851 |
Depreciation and amortization | 27,737 |  |  | 28,284 |
Operating and finance leases | 26,549 |  |  | 27,555 |
Other | 8,044 |  |  | 6,215 |
Total gross deferred tax liabilities | $ | 119,625 |  |  | $ | 124,905 |
Net deferred tax assets (liabilities) | $ | 5,169 |  |  | $ | (8,873) |
We evaluate the deferred tax assets and record a valuation allowance when it is believed it is more likely than not that the benefit will not be realized. We have established a valuation allowance for $16.7 million of the $19.4 million of tax effected net operating loss carryforwards. These losses are generally in locations that have not produced cumulative three year operating profit. A valuation allowance of $3.7 million has also been established against the $7.0 million of U.S. state tax credit carryforwards. The U.S. federal tax credits will expire in the years 2026 and 2027. There is no expiration date on $15.8 million of the tax-effected net operating loss carryforwards and $3.6 million (tax effected) will expire in the years 2020 to 2038. The U.S. state tax credit carryforwards of $7.0 million (tax effected) will expire in the years 2021 to 2034. None of the non-U.S. unremitted earnings will be subject to U.S. taxation. Aside from the pre-2020 earnings in Italy, Switzerland, and Colombia, we maintain our assertion that all other cash and distributable reserves at our non-U.S. affiliates will continue to be indefinitely reinvested. We estimate the amount of additional local and withholding tax that would be payable on distributions to be in the range of $15 million to $25 million. We have not provided for taxes on certain tax-deferred income related to a foreign operation. The income arose predominately from government grants. Taxes of approximately $1.5 million would become payable in the event the terms of the grant are not fulfilled. Income Tax Uncertainties We provide a liability for the amount of tax benefits realized from uncertain tax positions. A reconciliation of the beginning and ending amount of income tax uncertainties is as follows:
| 2020 |  | 2019 |  | 2018
Balance at January 1 | $ | 3,647 |  |  | $ | 3,559 |  |  | $ | 3,080 |
Increases based on tax positions for the current year | 212 |  |  | 412 |  |  | 360 |
Increases based on tax positions of prior years | 790 |  |  | 663 |  |  | 610 |
Settlements | — |  |  | (558) |  |  | (491) |
Lapse of statute of limitations | (145) |  |  | (429) |  |  | — |
Balance at December 31 | $ | 4,504 |  |  | $ | 3,647 |  |  | $ | 3,559 |
The amount of income tax uncertainties that, if recognized, would impact the effective tax rate is approximately $4.5 million. We estimate that it is reasonably possible that the liability for uncertain tax positions will decrease no more than $2.6 million in the next twelve months from the resolution of various uncertain positions as a result of the completion of tax audits, litigation and the expiration of the statute of limitations in various jurisdictions. We recognize interest and penalties accrued related to unrecognized tax benefits as a component of income taxes. As of December 31, 2020, 2019 and 2018, we had approximately $3.6 million, $1.7 million and $1.9 million, respectively, accrued for the payment of interest and penalties, of which approximately none and $0.2 million were recognized as a tax benefit for the years ended 2020 and 2019, respectively, and $0.4 million was recognized in income tax expense in the year ended December 31, 2018. Aptar or its subsidiaries file income tax returns in the U.S. Federal jurisdiction and various state and foreign jurisdictions. The major tax jurisdictions we file in, with the years still subject to income tax examinations, are listed below:
Major Tax Jurisdiction | Tax Years Subject to Examination
United States — Federal | 2017-2020
United States — State | 2011-2020
France | 2017-2020
Germany | 2016-2020
Italy | 2015-2020
China | 2011-2020

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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