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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes In 2023, 2022 and 2021, we recorded tax provisions of $90.4 million, $238.0 million and $225.0 million, respectively. Cash tax payments, net of refunds were $357.7 million, $192.2 million and $112.6 million for 2023, 2022 and 2021, respectively. Tax Cuts and Jobs Act Beginning in 2022, taxpayers are required to capitalize research and development costs and amortize them over a 5 or 15 year life. The impact of this change on the financial statements is reflected as an increase in the deferred tax asset related to capitalized expenses. Inflation Reduction Act The Inflation Reduction Act ("IRA") was signed into law on August 16, 2022. The IRA includes climate and energy provisions and introduces a 15% corporate alternative minimum tax, among other items. The enactment of the IRA did not result in any adjustments to our income tax provision in 2023. We do not expect the legislation to have a material impact on our consolidated financial statements. The components of earnings before income tax provision were as follows:
|  | Year Ended December 31,
(In millions) |  | 2023 |  | 2022 |  | 2021
Domestic |  | $ | 134.8 |  |  | $ | 434.0 |  |  | $ | 346.2 |
Foreign |  | 294.9 |  |  | 295.3 |  |  | 370.0 |
Total |  | $ | 429.7 |  |  | $ | 729.3 |  |  | $ | 716.2 |
The components of our income tax provision were as follows:
|  | Year Ended December 31,
(In millions) |  | 2023 |  | 2022 |  | 2021
Current tax expense: |  |  |  |  |  |
Federal |  | $ | 23.6 |  |  | $ | 154.1 |  |  | $ | 63.1 |
State and local |  | 13.2 |  |  | 25.6 |  |  | 17.2 |
Foreign |  | 81.8 |  |  | 88.7 |  |  | 106.6 |
Total current expense |  | $ | 118.6 |  |  | $ | 268.4 |  |  | $ | 186.9 |
Deferred tax (benefit) expense: |  |  |  |  |  |
Federal |  | $ | (28.1) |  |  | $ | (23.4) |  |  | $ | 9.6 |
State and local |  | (5.8) |  |  | 2.3 |  |  | 6.9 |
Foreign |  | 5.7 |  |  | (9.3) |  |  | 21.6 |
Total deferred tax (benefit) expense |  | (28.2) |  |  | (30.4) |  |  | 38.1 |
Total income tax provision |  | $ | 90.4 |  |  | $ | 238.0 |  |  | $ | 225.0 |
Deferred tax assets (liabilities) consist of the following:
|  | December 31,
(In millions) |  | 2023 |  | 2022
Accruals not yet deductible for tax purposes |  | $ | 27.5 |  |  | $ | 17.6 |
Net operating loss carryforwards |  | 222.2 |  |  | 208.4 |
Foreign, federal and state credits |  | 13.6 |  |  | 9.5 |
Employee benefit items |  | 41.9 |  |  | 40.3 |
Capitalized expenses |  | 114.8 |  |  | 36.5 |
Intangible assets |  | — |  |  | 12.6 |
Derivatives and other |  | 52.2 |  |  | 44.7 |
Sub-total deferred tax assets |  | 472.2 |  |  | 369.6 |
Valuation allowance |  | (205.6) |  |  | (179.5) |
Total deferred tax assets |  | $ | 266.6 |  |  | $ | 190.1 |
Depreciation and amortization |  | $ | (111.4) |  |  | $ | (89.1) |
Unremitted foreign earnings |  | (1.6) |  |  | — |
Intangible assets |  | (65.0) |  |  | — |
Total deferred tax liabilities |  | (178.0) |  |  | (89.1) |
Net deferred tax assets |  | $ | 88.6 |  |  | $ | 101.0 |
The increase in deferred tax assets is primarily related to disallowed interest expense and capitalized research expense. The increase in deferred tax liabilities is primarily related to purchase accounting adjustments associated with the Liquibox acquisition. Valuation allowances have been provided based on the uncertainty of realizing the tax benefits of certain deferred tax assets, primarily: •$191.9 million of foreign items, primarily net operating losses; and •$10.9 million of tax credits. For the year ended December 31, 2023, the valuation allowances increased by $26.1 million. The change is primarily driven by increases in foreign net operating losses and amounts recorded in purchase accounting related to Liquibox attributes. As of December 31, 2023, we have foreign net operating loss carryforwards of $857.2 million expiring in years beginning in 2024, with most losses having an unlimited carryover. The state net operating loss carryforwards totaling $336.4 million expire in various amounts over 1 to 19 years. As of December 31, 2023, we have $6.1 million of federal tax credit carryforwards and $9.5 million of state credit carryovers expiring between 2024 and 2033. Most of the credit carryovers have a valuation allowance recorded against them. The Company has indefinitely reinvested most of its foreign earnings, which are the principal component of U.S. and foreign outside basis differences. The total amount of unremitted foreign earnings is approximately $5.3 billion upon which the U.S. federal income tax effect has largely been recorded because of the one-time mandatory tax on previously deferred foreign earnings of foreign subsidiaries provision (“Transition Tax”) associated with the Tax Cuts and Jobs Act of 2017. Remitting these foreign earnings would result in additional foreign and U.S. income tax consequences, the net tax costs of which are not practicable to determine. Only a minimal deferred tax liability associated with Liquibox future distributions has been recorded as of December 31, 2023. A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate, 21%, to income before provision for income taxes, is as follows:
|  | Year Ended December 31,
(In millions) |  | 2023 |  | 2022 |  | 2021
Computed expected tax |  | $ | 90.2 |  |  | 21.0 | % |  | $ | 153.2 |  |  | 21.0 | % |  | $ | 150.4 |  |  | 21.0 | %
State income taxes, net of federal tax benefit |  | 4.8 |  |  | 1.1 | % |  | 18.3 |  |  | 2.5 | % |  | 15.6 |  |  | 2.2 | %
Foreign earnings taxed at different rates |  | 4.5 |  |  | 1.0 | % |  | 10.3 |  |  | 1.4 | % |  | 16.2 |  |  | 2.2 | %
U.S. tax on foreign earnings |  | 14.9 |  |  | 3.5 | % |  | 16.8 |  |  | 2.3 | % |  | 14.3 |  |  | 2.0 | %
Tax credits |  | (27.6) |  |  | (6.4) | % |  | (30.6) |  |  | (4.2) | % |  | (30.2) |  |  | (4.2) | %
Withholding tax |  | 6.0 |  |  | 1.4 | % |  | 7.0 |  |  | 1.0 | % |  | 4.7 |  |  | 0.7 | %
Net change in valuation allowance |  | 13.0 |  |  | 3.0 | % |  | 1.0 |  |  | 0.1 | % |  | 3.6 |  |  | 0.5 | %
Net change in unrecognized tax benefits |  | (22.3) |  |  | (5.2) | % |  | 65.3 |  |  | 9.0 | % |  | 19.6 |  |  | 2.7 | %
Legislative changes |  | — |  |  | — | % |  | — |  |  | — | % |  | 5.1 |  |  | 0.7 | %
Deferred tax adjustments |  | 0.4 |  |  | 0.1 | % |  | — |  |  | — | % |  | 11.4 |  |  | 1.6 | %
Other |  | 6.5 |  |  | 1.5 | % |  | (3.3) |  |  | (0.5) | % |  | 14.3 |  |  | 2.0 | %
Income tax provision and rate |  | $ | 90.4 |  |  | 21.0 | % |  | $ | 238.0 |  |  | 32.6 | % |  | $ | 225.0 |  |  | 31.4 | %
Unrecognized Tax Benefits We are providing the following disclosures related to our unrecognized tax benefits and the effect on our effective income tax rate if recognized:
|  | Year Ended December 31,
(In millions) |  | 2023 |  | 2022 |  | 2021
Beginning balance of unrecognized tax benefits |  | $ | 420.1 |  |  | $ | 389.0 |  |  | $ | 379.6 |
Additions for tax positions of current year |  | 0.9 |  |  | 1.3 |  |  | 1.8 |
Additions for tax positions of prior years |  | 7.5 |  |  | 41.6 |  |  | 9.7 |
Reductions for tax positions of prior years |  | (0.4) |  |  | (4.1) |  |  | (1.9) |
Reductions for lapses of statutes of limitation and settlements |  | (191.5) |  |  | (7.7) |  |  | (0.2) |
Ending balance of unrecognized tax benefits |  | $ | 236.6 |  |  | $ | 420.1 |  |  | $ | 389.0 |
In 2023, our unrecognized tax benefit decreased by $183.5 million primarily related to the definitive agreement reached with the IRS Independent Office of Appeals for the 2014 taxable year. See "Income Tax Returns" below. In 2022, our unrecognized tax benefit increased by $31.1 million, primarily related to interest accruals and other adjustments to existing unrecognized tax benefit positions. If the unrecognized tax benefits at December 31, 2023 were recognized, our income tax provision would decrease by $213.3 million, resulting in a substantially lower effective tax rate. Based on the potential outcome of the Company’s global tax examinations and the expiration of the statute of limitations for specific jurisdictions, it is possible that the unrecognized tax benefits could change significantly within the next 12 months. Absent resolution of significant tax controversy, the impact on the ending balance is estimated to be a decrease of approximately $1.7 million during 2024. We recognize interest and penalties associated with unrecognized tax benefits in our Income tax provision in the Consolidated Statements of Operations. Interest and penalties recorded were $8.4 million, $29.0 million, and $10.5 million, respectively in 2023, 2022 and 2021. We had gross liabilities for interest and penalties of $97.3 million at December 31, 2023, $120.8 million at December 31, 2022 and $80.0 million at December 31, 2021. Most of the unrecognized tax benefit amount of $236.6 million relates to the Americas. The OECD has issued Pillar Two model rules introducing a new global minimum tax of 15% intended to be effective on January 1, 2024. While the U.S. has not yet adopted the Pillar Two rules, various other governments around the world are enacting legislation. As currently designed, Pillar Two will ultimately apply to our worldwide operations. There remains uncertainty as to the implementation of the Pillar Two model rules and we will continue to monitor U.S. and global legislative developments related to Pillar Two for potential impacts. Income Tax Returns As previously disclosed, the IRS proposed to disallow for the 2014 taxable year the entirety of the deduction of the approximately $1.49 billion settlement payments made pursuant to the Settlement agreement (as defined in Note 20, “Commitments and Contingencies”) and the resulting reduction of our U.S. federal tax liability by approximately $525 million. On April 20, 2023, we deposited $175.0 million with the IRS based on an estimate of the federal tax and interest anticipated to be due. During the fourth quarter of 2023, we reached a definitive agreement with the IRS Independent Office of Appeals to settle this matter which resulted in a $203 million reduction to our unrecognized tax benefits, a $122 million reduction to the deposit, and a $38 million reduction to our income tax provision for the year ended December 31, 2023. The remaining balance of the deposit is reflected as a current asset within Advances and deposits on the Consolidated Balance Sheet at December 31, 2023. State income tax returns are generally subject to examination for a period of 3 to 5 years after their filing date. We have various state income tax returns in the process of examination and are generally open to examination for periods after 2017. Our foreign income tax returns are under examination in various jurisdictions in which we conduct business. The statute of limitations in foreign jurisdictions generally range from 3 to 5 years after the tax return filing date. We have various foreign returns in the process of examination and have generally concluded income tax matters in other foreign jurisdictions for the years prior to 2017. Management believes that an adequate income tax provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any of the issues addressed in the Company’s tax audits are resolved in a manner that is inconsistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs and could be required to make significant payments as a result.

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